# House prices to keep falling for years



## Pommiegranite (13 July 2008)

With today's news from Residex, that there have been widespread falls across Australia, I believe this thread is now appropriate. I therefore request that the 'House prices to keep rising for years' thread be closed, due to the fallacy of it's title.

Questions:


How long will the falls continue?
What is causing the falls
What will arrest the falls?
Due to Australia's real estate boom being even greater than other Western economies, can we assume that the bust will be even greater?
Are these falls evidence that decoupling theory can be put to bed?


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## explod (13 July 2008)

Great thread idea Pomm.

I like to look at big pictures.   The last bad down turn was 1929 (The Crash)  However those times began some years before.

To cut a long story short, and probably get into trouble for oversimplification, this is my take.

Germany went to the wall as the US is now doing in 1924.  The crash of 29 on the world stock markets contined till about 1933.   The collateral damage to life for ordinary citizens played out over 30 years.   It is the effect on ordinary people that will have its say on real estate.

There is no doubt that real estate probably had fair value comensurate with living standards in the 1990's.   Since then we followed the US with cheap money and it got right out of hand.   Of course in correcting down the pendulum will probably go beyond the pale to the rediculous.  However if many are put out of work due to food, oil and financial problems the pale could be ok too.

Anyway, just a few cents on a coupla reds, for Sunday celebration time of course with the Papa here and all.


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## Pommiegranite (13 July 2008)

explod said:


> *Great thread idea Pomm*.
> 
> I like to look at big pictures. The last bad down turn was 1929 (The Crash) However those times began some years before.
> 
> ...




Thanks Explod. It just didn't make sense posting on the other thread as house prices are obviously not going to keep rising for years. Maybe the title of the other thread should be changed to simply 'House Prices to keep rising or falling for years'.

You are not oversimplifying, as it is quite simple that assets are priced on the neverending supply of money being printed by the printing presses. The more paper out there, the less the real value of those assets.

We are in judgement year. Its only a matter of time before the masses cotton on and fear becomes widespread.


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## juw177 (13 July 2008)

The cities are way too over developed and we need a constant flow of immigrant workers to support it. The question is, will the government put a stop to this short term profiteering and encourage a more sustainable society?

The direction we are going does not look like we are lowering housing demand, it is an increasing of supply.


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## Pommiegranite (13 July 2008)

juw177 said:


> The cities are way too over developed and we need a constant flow of immigrant workers to support it. The question is, will the government put a stop to this short term profiteering and encourage a more sustainable society?
> 
> The direction we are going does not look like we are lowering housing demand, it is an increasing of supply.




Demand will also dry up once jobs dry up. Immigrantion will fall, and those who have arrived will head home with their tales between their legs. It is happening in other countries eg the Polish returning home from the UK.
A housing surplus here is inevitable.


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## Snakey (13 July 2008)

Nice thread pommie
a breath of fresh air
im predicting a minimum three year downturn in prices as tougher times with jobs and higher fuel prices take their toll on peoples back pockets. 
I wonder what all those property investment advisers slash money wealth creation tossers are gonna do now???


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## So_Cynical (13 July 2008)

Hello

So im guessing Robots wont be posting here?


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## pepperoni (13 July 2008)

explod said:


> There is no doubt that real estate probably had fair value comensurate with living standards in the 1990's.   Since then we followed the US with cheap money and it got right out of hand.




Agree with this ... if there is a correction that level of affordability and growth was sustainable.

Darn cheap money ... the fed seems to have been overcompensating with it ever since the tech crash and 911.


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## Pommiegranite (13 July 2008)

pepperoni said:


> Agree with this ... if there is a correction that level of affordability and growth was sustainable.
> 
> Darn cheap money ... the fed seems to have been overcompensating with it ever since the tech crash and 911.





I'm afraid that it's been going on for longer than that, which is why the suffering will also continue for a long time. I remember my visit to NY in the 90's and seeing this:

*The NYC National Debt Clock*







The history of the NYC national debt clock:
Invented and bankrolled by New York real estate developer Seymour Durst, the 11-by-26 foot National Debt Clock was erected in 1989. When it first was plugged in, the odometer-style clock whirred furiously as the national debt rose by $13,000 a second. Often the last few digits increased so fast they were just a blur. And at one point in the mid-1990s, the debt was rising so fast the clock’s computer crashed.
Under the presidency of Bill Clinton and a push for a balanced budget, though, the clock started ticking in the opposite direction, shaving off roughly $30 a second towards the turn of the century. Durst’s son felt that was “sending the wrong message at [that] point” and the clock was shut down untiul 2002 when the fiscal conservative administration (tongue planted firmly in cheek) of George W. Bush reversed course and brought meaning back to the ticker.​


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## Pommiegranite (13 July 2008)

..and here's the latest on the debt clock:frown::

*National Debt Clock To Add Digits*

Jump to Comments




*New York, New York (HOS*) - The National Debt Clock, a unique electronic green sign that has chronicled the second-to-second growth in the U.S. debt since 1989, has announced it will overhaul the digital number system to account for America’s record fiscal irresponsibility.
The clock is located in Midtown Manhattan and runs by a computer which takes the exact figure of the national debt at the same time every week and then calculates the rate of change. In the mid-90’s, the debt was increasing so fast that it temporarily crashed the computer. This week the clock shuts down for a similar reason; excessive spending and borrowing. “No one ever thought it could get this bad” said Douglas Durst, son of the real estate tycoon who developed, erected, and maintained the clock to graphically warn the public of the rapidly growing debt.
Mr. Durst is scheduled to meet with officials from the Chinese Government in Zurich, Switzerland next month to discuss subsidizing the project. Many economists blame China’s policies on perpetuating the negative cycle of debt. Durst insists China bears some of the responsibility and should pay for a portion of the renovations. In a phone interview he reiterated “our objective with this project is to add enough digits to last the length of a potential McCain Presidency”


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## theasxgorilla (14 July 2008)

Pommiegranite said:


> With today's news from Residex, that there have been widespread falls across Australia, I believe this thread is now appropriate. *I therefore request that the 'House prices to keep rising for years' thread be closed, due to the fallacy of it's title*.




The thread you refer to was opened on 14th-February-2008, not even six months ago.  Are you making a prediction?


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## Pommiegranite (14 July 2008)

theasxgorilla said:


> The thread you refer to was opened on 14th-February-2008, not even six months ago. Are you making a prediction?




So we should give it a few years to see if house prices have been going up for years, before closing the thread? With each piece of news, the title of that thread becomes more an more ridiculous. 

If we waited for trends to be established, as in when viewing stocks, we would be waiting until 2010 to say that the trend is down. Real Estate is different to stocks in that when the worm starts turning, it stays turned for a while.


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## Pommiegranite (14 July 2008)

So here it is in black and white. It's just a matter of time before the chickens come home to roost:

http://www.theage.com.au/national/f...-ride-credit-storm-20080713-3eiz.html?page=-1


Future Fund billions help banks ride credit storm
*Tim Colebatch, Canberra *
July 14, 2008
Page 1 of 2 | Single Page View
THE Federal Government's Future Fund and the Reserve Bank have quietly propped up the banks through the global financial turmoil of the past year, ABN-Amro economists have revealed.
*They say the two institutions provided a quarter of the massive growth in bank funding to fight off the global credit crunch.*

As the standard mortgage rates charged by the banks approach 10%, their analysis implies that, *without that support from Government, the banks would have been forced to lift mortgage rates even higher *to attract money in the markets, or else cut their lending. The *National Australia Bank and Westpac are tipped to raise their mortgage rates this week in line with those just announced by St George, the Commonwealth and the ANZ.*
*Rates charged by the Commonwealth and the ANZ will rise by 14 basis points today, to 9.58% and 9.62% respectively.*
Banks raise the money they lend us essentially from a mixture of deposits, borrowing on financial markets, and selling off mortgage loans to other investors as securities.
But the subprime crisis has virtually shut down the market for securities, and steeply lifted the price at which banks can attract loans. And with investors nervous, even big companies have become unable to issue their own bonds and are being forced to borrow from the banks.
In a startling revelation, ABN-Amro economists Kieran Davies and Felicity Emmett say the Future Fund — set up to invest in the sharemarket — held $35 billion in bank deposits and other forms of cash in April.
Mr Davies and Ms Emmett say the fund's holdings accounted for 4% of all bank deposits in Australia, and one-third of all the rapid growth in deposits over the past year, when banks have been forced to attract deposit growth to reduce their dependence on global markets. *The Future Fund could not be contacted last night to explain why it had left its money in the bank.*
*It would appear to be nervous about investing tens of billions of dollars in a falling market.*
At the same time, Mr Davies and Ms Emmett said the *Reserve Bank has provided $21 billion of extra funding to the banks* through repurchase agreements by which it has temporarily swapped its rolled-gold assets for their slightly riskier ones, thus making the banks' more attractive to lenders.
"Adding the Reserve Bank funding to the cash held by the Future Fund, this equates to about one-quarter of the 20% annualised growth in (bank) liabilities so far during the credit crunch," they said.
But both kinds of funding, they warned, could only be temporary. The Future Fund will eventually put its money into shares, while the Reserve's swaps are only temporary.
As sharemarket analyst Marcus Padley pointed out in _The Age_ on Saturday, Westpac already has had to offer a 10.1% yield to attract lenders in a glutted market. With the dollar at a 25-year high, foreign markets are wary of the risk of those yields being wiped out by a currency plunge.
Senator Steve Fielding, of Family First, yesterday called on the Government to require banks to seek the approval of the Reserve Bank before raising rates independently.
But the Reserve's governor, Glenn Stevens, has consistently defended the banks' actions in raising margins.
The past week has seen a series of shocks for the economy. Westpac and the Melbourne Institute reported that consumer confidence has sunk to its lowest since 1992. The NAB reported that business confidence has plunged to its lowest level since 1991.


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## theasxgorilla (14 July 2008)

Pommiegranite said:


> If we waited for trends to be established, as in when viewing stocks, we would be waiting until 2010 to say that the trend is down. Real Estate is different to stocks in that when the worm starts turning, it stays turned for a while.




Hold that thought, because the thread that spawned the thread you are talking about was called "House prices to stagnate for 'years'"...it's create date was 19th-September-2005 and the initial post was a cut-and-paste of a piece of *news*.


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## dhukka (14 July 2008)

Though only indirectly related to housing I thought this article from the courier mail would be at home in this thread. A sign of the times we are living in.

*Private school students to flood state system: trend*

A WAVE of private-school students is expected to flood the public education system in Queensland as families face increasing financial pressure.
Fee-paying schools are already advertising heavily for enrolments while offering concessions and payment plans for struggling families.

One north Queensland boarding school has lost 10 per cent of its pupil base in a year.

The trend could reverse a five-year move in Queensland toward private school education, which has seen enrolments rise nearly 30 per cent since 2001. About 219,000 students – or 32.4 per cent of the market – are enrolled in private schools, which charge $3000 to $20,000 a year.

It comes as we reveal the State Government is considering single-sex schooling and variable hours for state schools.

Lutheran and Anglican schools confirmed they had already lost families for financial reasons and were expecting an exodus of many more in the next two years.

Brisbane Catholic Education said it was also dealing with increasing numbers of parents unable to pay fees as mortgage, fuel and living costs hit home.

State Education Minister Rod Welford said he was aware that many were struggling in the private system and the State Government was preparing for a boost in student numbers.

He said: "We would need to ensure our facilities and teaching staff are well equipped for any surge in numbers."

More than 455,000 students are enrolled in state schools, compared with about 440,000 five years ago. The growth has been put down to interstate migration and improved standards in the public system.

Mr Welford ruled out extra funding for private schools facing a revenue shortfall.

"Private schools are already heavily funded by the State and Federal Governments," he said. "They provide an alternative option for some parents but they have to make up their own minds whether the alternative school they use is worth the additional costs.

"We are ready, willing and able to take any students who need to be accounted for in the state school system."

Lutheran Education Queensland business manager Graeme Drapper said the situation was a double whammy as the cost of running schools was also rising and he called on the Government to boost funding.

Last year all Lutheran school fees rose by 5 to 10 per cent to cover rising operational costs.

Catholic Education spokesman John Phelan said some parents from their 286 schools across Queensland and 133 in Brisbane were under severe financial pressure but there is a policy of not letting students go for financial reasons only.

"Increasing costs of mortgages, rent and the general cost of living are having a severe impact on some families," he said. "Families are coming to us because they really don't want to take their kids out of Catholic education but they feel they have no choice. We don't let that happen."


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## gfresh (14 July 2008)

And the floodgates have started on this thread already.. 

I'm crying crocodile tears... 

http://www.theage.com.au/national/bear-market-to-sink-its-claws-into-agents-jobs-20080713-3ej9.html



> One agency director, who asked to have his name withheld, told The Age that agents who were not regularly making sales — and paying back their retainer — could expect to find themselves out of a job within months.




Can imagine this is going to have an impact on bringing sale price expectations down as well in slower areas. If your job is under threat and sales are low for the month, agents aren't going to be pressing buyers for high prices.


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## Pommiegranite (14 July 2008)

gfresh said:


> And the floodgates have started on this thread already..
> 
> I'm crying crocodile tears...
> 
> ...




The agent who sold my house is around 21 years old. He bought a brand new BMW a month ago. I do feel sorry for him as he is a really nice guy and did a sterling job when selling my house, but alas for him, has no experience of property downturns.


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## numbercruncher (14 July 2008)

I guess its too late for the money renters who bought last year, they are toast and will probably never recoup their investement in their entire lives .......

The Chindia will save us theory seems to be running awfully thin .......

I notice the amount of RE forsale in Queensland is treble of what it was this time last year and the flood gates are only beginning to open ......

Ive noticed desperation in the sales adverts, as an example Stockland in the weekend bulletin preaching how those who hesitate lose money, those who boughht (land) in 1996 are now 300k better off (haha) , buy now buy now, it almost reads like begging, lala .....

Anyways, any of the regulars here at ASF would of known well in advance of what was coming and why it was coming and positioned accordingly so I imagine its happy days for most asfers .....


Credit is the ultimate fundamental baby  ....


Enjoy the negative feedback loop folks ...


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## Mofra (14 July 2008)

numbercruncher said:


> Ive noticed desperation in the sales adverts, as an example Stockland in the weekend bulletin preaching how those who hesitate lose money,



Interesting they use the word hesitate... given they themselves are one of the biggest land-bankers in the country


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## pepperoni (14 July 2008)

numbercruncher said:


> I guess its too late for the money renters who bought last year, they are toast and will probably never recoup their investement in their entire lives .......
> 
> The Chindia will save us theory seems to be running awfully thin .......
> 
> ...




What about the decoupling theory ... anyone making policy or investing on this basis deserves what they get.

Love this story ...

http://business.smh.com.au/lending-finance-plummets-20080714-3erj.html

Surprise surprise .... there is only so much debt you can pile on money renters, and there was always going to be a finite supply of them.


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## theasxgorilla (14 July 2008)

pepperoni said:


> Surprise surprise .... there is only *so much debt *you can pile on money renters, and there was always going to be a finite supply of them.




And to think that only 12-18 months ago "the world was awash with capital".  Most people to have not been able to join the dots.


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## Pommiegranite (14 July 2008)

pepperoni said:


> What about the decoupling theory ... anyone making policy or investing on this basis deserves what they get.
> 
> Love this story ...
> 
> ...




China's inflation is the elephant in the room. In the short term, yes we have benefited from rising commodity prices. The RE market, in turn has been an indirect benefactor of this. 

We have a choice: Hyperinflation or years of deflation. Either is inevitable. Deflation is obviously the lesser evil.

FWIW...IMO..anyone who subscribes to 'decoupling' theories, is taking a very one dimensional view.


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## gfresh (16 July 2008)

> U.K. Unemployment Jumped the Most Since 1992 in June (Update3)
> 
> By Svenja O'Donnell
> 
> ...




This is what happens when finance companies and construction companies are forced to lay off staff. Of course that would never happen here, it's all going fine .. er, isn't it.. hello... echo

At the very best, 1991 is coming right at us..  where the US, UK, and Australia dived head-on into a rather nasty recession.


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## gfresh (17 July 2008)

Looks like the trend is down .. even according to former property bulls RP Data..  

Total listings up nearly 50% from the same time last year. New listings starting to fall below the average, as people give up hope in getting a good price for their sale.. Next may come the forced sales.. 

Volume of sales nearly the lowest in a decade, nobody is buying.. and it could get worse. What happens if you *must* sell however to very few buyers? no prizes..


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## gfresh (17 July 2008)

Even property pumpers Residex are facing reality.. (source of the "worst in 100 year" story).. 



			
				residex said:
			
		

> The speed of the decay in all housing markets is an issue. I am concerned to draw Government's and the RBA's attention to that decay. It is an exceptional situation to see all markets as one moving into adjustment. It would be normal to see some markets adjusting, but not all.




and



			
				residex said:
			
		

> The areas where we will find most stress and adjustment will be in our new home suburbs where we find our young Australians who have been allowed to take on far too much debt. At the moment the mortgage default rates are relatively low but will soon increase as these default rates are being artificially kept in place by excessive use of credit cards to meet costs. The limits on these credit cards will soon be maxed out. This is potentially where our banks are going to see some significant problems which will flow into some housing markets.





Their figures.. 

Surprisingly, our biggest "resource story" states are suffering the most. 

Brisbane Houses median values down 1.52%
Brisbane Units median values down 1.04%
Perth Houses median down 1.69%

Melbourne Units down 1.17%
Sydney Houses down 1.05%

and this is just for June so far..


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## chops_a_must (17 July 2008)

From one of the developers I hear from occassionally, well, he was saying he was laying staff of back in February.

Only keeping the good tradies, and only looking at having enough work to keep them going. A lot of tradie rates are falling heavily as well anecdotally - not before time either.

Mirvac having a heap of trouble selling properties in a lot of areas. Near us, they've only sold 40% of their development, which has been on the market for 18 months. 

Might be a bit obfuscated in Perth however, considering the infill. Cockburn look to be catering for another 30-40k people alone over the next 2-3 years. So what happens in those developments will say a lot I reckon. Seems to be a lot of people interested to see what happens in these areas, development wise.


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## gfresh (17 July 2008)

One of the developers down here (could be Stockland) has big signs up on the main highway now,  advertising "$10k free fuel if you purchase one of our developments" or something along these lines. Fighting their own concern by feeding off another (to me) seems to smack of desperation. 

Many of these estates on the north gold coast have just been finished after a few years of construction - not the best timing to be finding them new owners.


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## pepperoni (17 July 2008)

New listings in my area have been almost non existent all year.  Total listings are pretty normal, but only because actual sales are like hens teeth.


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## grace (18 July 2008)

Much has been said about residential housing here and I certainly agree with this thread (vs the other one that robots loves)

Everyone talks of the AG boom, and how we are running out of food.  I happen to have thoughts and opinions on this, and as they differ to a lot of what I hear on this site, I'll keep them to myself.

Just thought I would post up an Agent's view of rural property in yesterday's Queensland Country Life. 



> Ray White Rural
> 
> Any vendors pricing their properties to hang on to or not genuinely wishing to meet the market should not consider selling at this stage.  The property market looks like it has entered a plateau stage after the excellent growth phases of the early 2000s.
> 
> ...



This is the first bit of sense I have heard written about rural property for quite some time.  In our area, rural property peaked 12 months ago.  I see places now with Auction cancelled, not even one inspection.  Our costs have gone up 50%, but income has only marginally climbed.

If it were not for the listed PrimeAg buying up, there would have been very few sales in the last 12 months in our area!


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## explod (18 July 2008)

grace said:


> Everyone talks of the AG boom, and how we are running out of food.  I happen to have thoughts and opinions on this, and as they differ to a lot of what I hear on this site, I'll keep them to myself.
> 
> This is the first bit of sense I have heard written about rural property for quite some time.  In our area, rural property peaked 12 months ago.  I see places now with Auction cancelled, not even one inspection.  Our costs have gone up 50%, but income has only marginally climbed.
> 
> If it were not for the listed PrimeAg buying up, there would have been very few sales in the last 12 months in our area!




I like your post and input.  I grew up on a farm and have maintained an interest.  Also worked in central Qld for some years as well so appreciate some of where you are coming from.

If you have water or rains that are reasonably reliable your day in the sun may come sooner that you realise.  Yes the rising dollar is a considerable problem which is mainly attributable to the US dollar which because they are broke will continue to fall off the cliff.   However the value of other currencies are appreciating also.   Europe, India and China (the latter two are expanding exponentially) will grow in need of food, the cost of which is already going through the roof.  The combination in my opinion will soon see a whole new view of rural values.  It has begun here in Victoria where small rural holdings near water are almost unnatainable.

Hang in there and for one moment dont' hesitate in speaking your mind, feel sure you will have backers and support.


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## robots (18 July 2008)

explod said:


> Hang in there and for one moment dont' hesitate in speaking your mind, feel sure you will have backers and support.




hello,

great words explod, everybody can take something from those

thankyou

robots


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## explod (18 July 2008)

robots said:


> hello,
> 
> great words explod, everybody can take something from those
> 
> ...





Robots old pal good to have your vote.   

Pommie you have achieved what no one else ever thought they could, now perhaps finding the bottom will be the tough one.

Stevens sounded batterred, bewildered and confused the other day.  The line to the US Fed though still open is crackling with morse code type stuff.  Done with short and longs I thunk.


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## CamKawa (19 July 2008)

Some interesting reading.
Debunking housing myths

The Age on the other hand has sold out to it's REA advertisers.
Surprise auction action bucks the tepid trend


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## robots (19 July 2008)

hello,

yes great article CamKawa, love that second line:

"rents to rise", while we into name calling its going to be great as the "slumlords" keep pumping up the rents for the "poverty pack"

thankyou

robots


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## CamKawa (19 July 2008)

The rents will rise myth needs to be debunked as well. These is figures are the number of rental properties advertised on Domain.com.au in the Melbourne area. As you can the number of properties has increased on average by an extra 66 every week for the last 7 weeks. I can't see rents going up in the face of increased supply, though I'm sure you can robots.

07.06.2008...*7770*
14.06.2008...*7949*
21.06.2008...*8100*
28.06.2008...*8158*
05.07.2008...*8185*
12.07.2008...*8166*
19.07.2008...*8236*


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## robots (19 July 2008)

hello,

thats right,

do you rent CamKawa? please let me know when it goes down or up

thankyou
robots


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## Beej (19 July 2008)

CamKawa said:


> The rents will rise myth needs to be debunked as well. These is figures are the number of rental properties advertised on Domain.com.au in the Melbourne area. As you can the number of properties has increased on average by an extra 66 every week for the last 7 weeks. I can't see rents going up in the face of increased supply, though I'm sure you can robots.
> 
> 07.06.2008...*7770*
> 14.06.2008...*7949*
> ...




Whatever the truth of the matter, you cannot rely on those stats in the form you present them - you have to seasonally adjust the figures. 

Statistics 101: I'll give you an example; I bet around xmas time/new year, the number of properties advertised for rent will drop dramatically - would that tell us anything about any *change* in the fundamental supply of rental accommodation? No way, as everyone is on holidays, planning family dos, parties etc. Hardly anyone moves house, plans to move house, looks for a new place etc at that time of year. This an extreme example but demonstrates nicely why you have to compare the figures with the previous years at the same "season" or time of year to determine if supply is actually increasing or decreasing.

Cheers,

Beej


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## pepperoni (19 July 2008)

Beej said:


> Whatever the truth of the matter, you cannot rely on those stats in the form you present them - you have to seasonally adjust the figures.
> 
> Statistics 101: I'll give you an example; I bet around xmas time/new year, the number of properties advertised for rent will drop dramatically - would that tell us anything about any *change* in the fundamental supply of rental accommodation? No way, as everyone is on holidays, planning family dos, parties etc. Hardly anyone moves house, plans to move house, looks for a new place etc at that time of year. This an extreme example but demonstrates nicely why you have to compare the figures with the previous years at the same "season" or time of year to determine if supply is actually increasing or decreasing.
> 
> ...




Agree ... rents are all over the place ... and they are nowhere near a level that will support property prices.

Which is why we have this property price fall topic.


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## pepperoni (19 July 2008)

CamKawa said:


> Some interesting reading.
> Debunking housing myths
> [/COLOR][/URL]




Great article ...some eerie similrities to our threads .... especially like this "Rents will rise and house prices fall until housing returns are comparable with other assets." 

When rents plus realistic CG are near 10% houses will rise .... but prices will fall then recover gradually before that happens.



    * Economist says house prices can and will fall
    * The number of unsold houses on the market is rising
    * International markets have already seen sharp price drops 

THERE are two housing myths worth debunking. The first is that house prices never fall. The second is that because underlying demand currently exceeds new supply, house prices will keep rising.

Neither is true, Australian house prices can and will fall.

US house price falls of 15.3 per cent over the past year get most publicity, but Irish and British house prices are also falling sharply.

Ireland is down 9.5 per cent and Britain 8.7 per cent. Forecasters predict falls of 30 per cent in US and British house prices and 15 per cent in Ireland.

New housing starts have halved in Ireland and dropped about 30 per cent in the US and Britain.

ANZ economists claimed recently that Australian house prices have never fallen and there is no reason why they will. They are not historians. The house price series they use only starts in the mid-1960s.
Related Coverage

    * Price predictions gloomy reading for rentersNEWS.com.au, 16 Jun 2008
    * Rates drive fall in house pricesNEWS.com.au, 30 Apr 2008
    * Home buyers unmoved by BudgetNEWS.com.au, 19 May 2008
    * Rates bite at home loan numbersNEWS.com.au, 14 Apr 2008
    * Rents heading up as housing sales tumbleNEWS.com.au, 17 Jul 2008 

Nigel Stapledon from UNSW has published house price data back to 1880 showing Australian house prices fell sharply several times.

You may think house prices never fall because you have never experienced them. However, Australian house prices have fallen previously and house prices are falling overseas.

Of course that does not necessarily mean Australian house prices will fall now, but there is no law of nature that says they cannot fall.

The optimists argue that underlying annual demand for Australian housing is 180,000 units and new starts are only 150,000. They conclude that house prices are likely to rise.

However, underlying demand is a theoretical concept using long-run trends in population growth and household formation. In practice, high house prices mean kids stay home longer, rather than buy new housing and students rent houses together rather than separately.

Actual demand for new houses is currently below underlying demand.

The house price surge was largely due to people bidding up prices of existing housing as interest rates fell and they could access funds more easily.

The rise in interest rates and tightening credit standards reverses the incentive to trade up to better housing. Home loan approvals have dropped 23 per cent in four months, so demand is falling and rates are still rising.

The number of new houses built does not determine supply. About 10 per cent of houses, or over 800,000 houses, are vacant at any time,  for example  holiday houses.

Financial pressures push empty houses onto the market. Lower clearance rates mean the number of unsold houses is rising. Supply will rise further as share prices fall and unemployment rises, forcing sales of existing houses.

Australia has rapid population growth and mining is boosting income growth. We did not have the large influx of new low-income house buyers that more lax US credit standards allowed. So while house prices may not fall as sharply here as overseas, they will still fall.

Investors renting out houses will be squeezed by rising rates and realise capital losses are possible.

Rents will rise and house prices fall until housing returns are comparable with other assets.

That will improve housing affordability for first-home buyers and eventually stimulate the next upturn.


----------



## gfresh (20 July 2008)

beej said:
			
		

> Hardly anyone moves house, plans to move house, looks for a new place etc at that time of year.




Maybe works for property sales, but most renters have a fixed term lease, you cannot simply "pick and choose" when  you wish to leave during the year. If you lease is up, you have to move within that period, doesn't matter when in the year it is. It's probably much less seasonal. 

Personally, I can observe no large rental increases in my area yet, and still plenty of supply. I can see some properties available with what seems a higher rental (num bedrooms, compared to other cheaper properties) but these seem to remain un-tenanted for weeks. Seem to be the flashier ones recently built, but they've picked the wrong area for high-paid tenants. 

I hope for them the foregone rent ($900 - $1200 or so + listing costs on a $300/wk property, weekly $23/wk increase) is worth it as a result of setting an unrealistic price. *It's an uncertain environment, those that can keep rents low will continue do so to provide certainty to their income.* Tenants will choose those properties, not the more expensive ones. 

Renters will be fine, they can adjust their habits a lot quicker than home owners, they can move to cheaper areas in 6-12 months at low cost, they can lock a rental price in for 6 or 12 months, they will go where there is more work. They can effectively refuse a rental increase if they see another better property for a cheaper price nearby, etc. In economic terms, I believe it's called Elasticity


----------



## pepperoni (21 July 2008)

gfresh said:


> Maybe works for property sales, but most renters have a fixed term lease, you cannot simply "pick and choose" when  you wish to leave during the year. If you lease is up, you have to move within that period, doesn't matter when in the year it is. It's probably much less seasonal.
> 
> Personally, I can observe no large rental increases in my area yet, and still plenty of supply. I can see some properties available with what seems a higher rental (num bedrooms, compared to other cheaper properties) but these seem to remain un-tenanted for weeks. Seem to be the flashier ones recently built, but they've picked the wrong area for high-paid tenants.
> 
> ...





I might be moving soon.  Closer to work.  Everytime my office moves I move ... I think I average 10 min commute, $20 a week petrol and no $150,000 stamp duty bill through 3 office moves   the greatest single luxury of renting!!!!!!!!!

Anyway there are tonnes of excellent properties for rent in and around chatswood ... sitting on the market for many weeks.  Rents look OK maybe a little more than last year but they arent going.

Frankly the rental market in these areas is still flat many years later.  I think some poor owners have been brainwashed by the "rent explosion" stories and are holding out for the extra $20 a week while their properties sit empty.  Not good for the increasing "mortgage stress" problem.


----------



## Beej (21 July 2008)

gfresh said:


> Maybe works for property sales, but most renters have a fixed term lease, you cannot simply "pick and choose" when  you wish to leave during the year. If you lease is up, you have to move within that period, doesn't matter when in the year it is. It's probably much less seasonal.




Rubbish - if a fixed term lease ends say in Dec 24th, most people (and the landlords would be more than happy with this) would simply stay and rent month-month for a couple of months until they can find a new place to move to, or simply renew the lease and worry about it in 6 months. Few landlords will be "forcing" a tenant out at that time of year as the know they will have to wait for 1-2 months before finding a new one! Seasonality absolutely DOES exists in the rental space.



> Personally, I can observe no large rental increases in my area yet, and still plenty of supply. I can see some properties available with what seems a higher rental (num bedrooms, compared to other cheaper properties) but these seem to remain un-tenanted for weeks. Seem to be the flashier ones recently built, but they've picked the wrong area for high-paid tenants.




Well rents absolutely have gone up somewhere in Sydney haven't they as the stats show a 15% average rent increase in the last 12 months??? I know I have put rent up by about 10% this year, and we are still below the "market" (in order to minimise risk of existing tenants leaving) and the tenants have not moved out as they know they cannot do better elsewhere.



> Renters will be fine, they can adjust their habits a lot quicker than home owners, they can move to cheaper areas in 6-12 months at low cost, they can lock a rental price in for 6 or 12 months, they will go where there is more work. They can effectively refuse a rental increase if they see another better property for a cheaper price nearby, etc. In economic terms, I believe it's called Elasticity




If that's what you want sure. Me - I own the house I want to live in the area I want to live in, I walk to work (have done so for 3 different employers over the past 10 years), so I have no desire to move, or be forced to move thanks very much! My "rent" is locked in for ever - $0/week indexed to inflation  I think my deal is better than yours! In 10 years time that will be the case even more so 

Cheers,

Beej


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## Mofra (21 July 2008)

Beej said:


> My "rent" is locked in for ever - $0/week indexed to inflation  I think my deal is better than yours! In 10 years time that will be the case even more so



There are a chorus of perma-bears who would try to convince you to "sell now!" due to short term fluctuations in the value of a long term asset. I doubt you could see the point of that any more than I could.

You sound happy - congratulations, you seem to be doing much better than many here


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## gfresh (22 July 2008)

> Well rents absolutely have gone up somewhere in Sydney haven't they as the stats show a 15% average rent increase in the last 12 months??? I know I have put rent up by about 10% this year, and we are still below the "market" (in order to minimise risk of existing tenants leaving) and the tenants have not moved out as they know they cannot do better elsewhere.




Don't live in Sydney, and would never consider it even if hell froze over. Sydney is not the center of the universe, and I was speaking about my area only, and other areas I am familiar with in South East Queensland (and VIC as I still have connections there).. Some seem to think blanket rental increases across all areas, and shortages in all areas - this is plainly not true 



			
				mofra said:
			
		

> There are a chorus of perma-bears who would try to convince you to "sell now!" due to short term fluctuations in the value of a long term asset.




I don't think there are any perma-bears in here, just realists who realise that *now* is not the right time to buying property! and that a correction is due, just like it has done so in the late 80's, early 80's, and 1970's. Property cannot keep rising as it has done, and external factors are going to make it very hard to replicate those gains over the next few years, and in fact anybody that has borrowed over their heads will be in deep strife if in fact property values come down significantly.


----------



## Tysonboss1 (22 July 2008)

gfresh said:


> Some seem to think blanket rental increases across all areas, and shortages in all areas - this is plainly not true




I would say they same about blanket price falls, and over supply


----------



## adamim1 (22 July 2008)

What about rural areas? All the stats talk about Sydney, Melbourne, Perth etc..

I am looking to purchase some land in Newcastle NSW. There are a lot of new estate areas popping up all over the place. I am choosing one thats still relatively close to the CBD (about 20min). This was the fastest growing postcode in 2007 (I think in Newcastle).  In the last 3 months it has grown by 4% (I dont know how good the source is).

My question basically is, due to Newcastle being close to Sydney and with Sydney housing becoming too expensive, is Newcastle experiencing housing growth in the outer suburbs? I've heard that Newcastle's population is set to double in 10 years time - so i assume this people all have to live somewhere and intercity Newcastle is chock a block.


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## pepperoni (22 July 2008)

Property Bull thread is thataway -------> 

Back to sensible talk ... I know someone who is in the process of losing 2 houses he bought in the 90s and had revalued borrowed against "equity" many times.

With the clearly changed economic conditions he is in the process of losing both.

One is on the market for low 1ms, the second will be asking $2m as its renovated.  

What did he pay for these is in the saner years of the 90s ... 650k and 780k.

Mind you he probably borrowed the firstmentioned figures against them ... banks will take big hits on foreclosures if property prices go anywhere near the 90s prices.

One other property  I was looking at for 1.3m ish supposedly had 2.8m lent against it.

Greedy banks should take most of the blame and hit.


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## adamim1 (23 July 2008)

pepperoni said:


> Property Bull thread is thataway ------->
> 
> Back to sensible talk ... I know someone who is in the process of losing 2 houses he bought in the 90s and had revalued borrowed against "equity" many times.
> 
> ...




Mate if property prices went back down to 90's level i'd be in heaven.


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## Tysonboss1 (23 July 2008)

pepperoni said:


> Back to sensible talk ... I know someone who is in the process of losing 2 houses he bought in the 90s and had revalued borrowed against "equity" many times.
> 
> .




This is a problem of bad capital management more than a problem with the underlying assets,..... what did he do with the equity he borrowed, did he buy cars and boats, if so then it's the cars and boats that were the problem.

It's peoples atitude to debt that gets them into trouble.

If your mate had kept the original debt on priciple and interest payments, Increased the rent over the years with inflation he would now have a sizable equity base producing a steady positive cashflow each week..... just because he failed to use that equity wisely doesn't mean the underlying asset class is flawed.


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## wayneL (23 July 2008)

Tysonboss1 said:


> This is a problem of bad capital management more than a problem with the underlying assets,..... what did he do with the equity he borrowed, did he buy cars and boats, if so then it's the cars and boats that were the problem.
> 
> It's peoples atitude to debt that gets them into trouble.
> 
> If your mate had kept the original debt on priciple and interest payments, Increased the rent over the years with inflation he would now have a sizable equity base producing a steady positive cashflow each week..... just because he failed to use that equity wisely doesn't mean the underlying asset class is flawed.



This is very true. But the fact is, there are many "investors" who have exactly this attitude to debt.

So many BTLs got into the market, whether by design or luck, at exactly the perfect time, have heaps of equity in their original purchases, but MEW themselves to the hilt. 

It isn't always on BS either, lots MEWed into more and more BTLs at the absurd valuations we saw leading up to the peak of the market. All was OK while the bubble continued.

But today there is carnage for those people, and there are lots of them here, and I believe you will see this more in OZ in the coming time. There are so few with sensible LVRs such as yourself.

Yes they got themselves into a schtuck of their own making, but it was with the full complicity and encouragement of the finance industry and gu'mint. The seminar industry heavily promoted such lunacy. (it's not lunacy sensibly done, but the way it was promoted without reference to historical vectors of value, definitely is)

Most mortgagee sales are BTL here, and there are lots of them.


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## robots (23 July 2008)

hello,

yes BTL has wound up big time in UK, my friend who had business in Mayfair with BTL packed up and left about 6mths ago and now in Sydney (originally being from Melbourne),

the "property markets" are interesting world wide, 

as at the time in 02-03 when things were changing in Aus (things settled after run) he ventured over to the UK "market", set up BTL and done very nicely

sure, you can argue people were suckered

similar to Henry Kaye many who want "everything" done, pay for everything being done,

is that different to buying a 600ml coke for $3.50 from 7-eleven? instead of getting a 1.25lt from Woolies for $2.00, i dont think so

thankyou
robots


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## wayneL (23 July 2008)

robots said:


> hello,
> 
> yes BTL has wound up big time in UK, my friend who had business in Mayfair with BTL packed up and left about 6mths ago and now in Sydney (originally being from Melbourne),
> 
> ...



BTL has most certainly not wound up in this country. It has however transmogrified into a vultures caper. The smarties have been building up war chests full of cash and are picking off distress sales all over the place.

It has spawned a new industry with a new anagram, BMV. (below market value) These companies are now all over the place.

The basic idea is to buy up distress sales at a substantial discount to "market value" (LOL) and lease back to the vendor, ostensibly on a permanent lease... BUT with onerous conditions that usually see the ex-owners eventually evicted. The satisfying feature is that some these clowns are now in a loss situation as well. Without realizing it, they have set the new market value for the immediate area. :

The really smart BTLs are keeping in touch with the agents and waiting for the numbers to stack up again. In some instances it's happening now, but it won't happen _en masse_ for a couple more years.

I've looked at a couple of deals already, (Not BMV deals as per above) but straight out purchases, but the numbers still don't quite add up. 

The amazing thing is that banks are now very old fashioned about deposits, earnings/mortgage ratios, and valuation... back to how it used to be before the bubble. LOL


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## Tysonboss1 (23 July 2008)

wayneL said:


> BTL has most certainly not wound up in this country.




Forgive me,... But what is BTL.


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## wayneL (23 July 2008)

Tysonboss1 said:


> Forgive me,... But what is BTL.



Sorry, its a Brit term.

*B*uy *T*o *L*et

Same as IP there.


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## robots (23 July 2008)

hello,

are the "glossy brochure BTL businesses" still around?

thankyou

robots


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## pepperoni (23 July 2008)

robots said:


> hello,
> 
> yes BTL has wound up big time in UK, my friend who had business in Mayfair with BTL packed up and left about 6mths ago and now in Sydney (originally being from Melbourne),
> 
> ...




Am I reading this wrong or is this an interesting balanced post by robots.

Maybe his account has been hacked (joking ;-P)


----------



## robots (23 July 2008)

hello,

just trying to keep the "eat, drink be merry" have a great day theme going strong homes

thankyou
robots


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## gfresh (23 July 2008)

The selling up and renting it back to the owner, already seems to be taking place a few situations, have come across a couple on the realestate sites. 

_"Owner wishes to lease back for 18 months at a starting rent of $310 a week; this is in line with the resident manager's rental estimate"_
^^^
Arundel (above), QLD was listed in a w/e article as one of QLD's strongest areas for mortgage repossessions... 

If you look on realestate, Incredible amount of listings in a strong McMansion suburb, and everybody seems to be moving elsewhere.. It's not actually a large area (have lived nearby), but some 150 properties listed for sale of maybe 2000-3000 homes is massive.

No, it is not the entire property market, but it is a snapshot of a mortgage-belt suburb out there.


----------



## wayneL (23 July 2008)

robots said:


> hello,
> 
> are the "glossy brochure BTL businesses" still around?
> 
> ...




That would be the "glossy brochure BTL *seminar* businesses" you're probably refering to.

Oh yes they died a miserable death.

But like I said in the previous post the "glossy brochure BTL businesses" have metamorphosed into "glossy brochure *BMV *businesses".

EG http://www.ahuja.co.uk/


----------



## Tysonboss1 (23 July 2008)

wayneL said:


> That would be the "glossy brochure BTL *seminar* businesses" you're probably refering to.
> 
> Oh yes they died a miserable death.
> 
> ...




what are buy to lease businesses,.... is buying rental properties not common over there,


----------



## wayneL (23 July 2008)

Tysonboss1 said:


> what are buy to lease businesses,.... is buying rental properties not common over there,



It's similar proportions to Oz

70% OO
30% split between public and private rentals (can't remember the exact proportion)

Every self-respecting champagne socialist has a property portfolio. : Even ones whose political ideology includes state ownership of all property. 

It's as common as muck.


----------



## robots (23 July 2008)

hello,

I would consider the likes of mirvac, central equity, meriton etc as "pseudo" BTL companies,

ie. they build property, gloss it all up and sell to investors (ie. buying rental properties)

my friend bought whole blocks from developer's (making them and bank happy) and then on sold thru newsletter, join our club etc promotion

many developers in aus now just offer "discounts" to the likes of RE agents, promotion companies, FA's, FP's and so on

it is a catch twenty2 though, as with "our" market stalling around 02-03 and building pretty much ceasing (evident with the likes of central equity and Meriton)

we now in the situation with rental demand and rental rise as outlined by CPI today

thankyou
robots


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## pepperoni (23 July 2008)

Mortgages double

    *
    * Email
    * Printer friendly version
    * Normal font
    * Large font

July 23, 2008 - 4:25PM
Advertisement

The amount first home buyers borrowed to make their housing purchase doubled in the 10 years to 2005-06, new statistics show.

The average loan per household rose to $213,000, according to the latest Australian Social Trends.

During the same period, the average value of first-buyer homes rose to $310,000.

But the proportion of first home buyers purchasing new houses fell to 14 per cent, from 23 per cent.

More popular were townhouses and apartments which made up 27 per cent of purchases, up from 15 per cent.

Nearly 30 per cent of households were renting their homes and the biggest renting age group was 35- to 44-year-olds.

The majority of renters were young adults and low-income families.


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## Tysonboss1 (23 July 2008)

pepperoni said:


> Mortgages double
> 
> *
> * Email
> ...




some one should also mention that a big mac rose from $2.25 to $3.85 over the same period.

also coke rose from $1.80 to $3.80 for a 600ml buddy bottle.

Also I am fore casting a crash in mc donalds since the 30c cone has undergone a sharp increase to 50c,


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## wayneL (23 July 2008)

Tysonboss1 said:


> some one should also mention that a big mac rose from $2.25 to $3.85 over the same period.
> 
> also coke rose from $1.80 to $3.80 for a 600ml buddy bottle



Hang on!!! We should be using the same measure of inflation the gu'mint does... flat screen TVs, DVD players and iPods.


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## Tysonboss1 (23 July 2008)

wayneL said:


> Hang on!!! We should be using the same measure of inflation the gu'mint does... flat screen TVs, DVD players and iPods.




what do you mean,..


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## pepperoni (24 July 2008)

Tysonboss1 said:


> some one should also mention that a big mac rose from $2.25 to $3.85 over the same period.
> 
> also coke rose from $1.80 to $3.80 for a 600ml buddy bottle.
> 
> Also I am fore casting a crash in mc donalds since the 30c cone has undergone a sharp increase to 50c,




Does that make it easier or harder for punters to service these doubled loans?


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## gfresh (24 July 2008)

Well talking Big Macs and bottles of Coke, everybody can still afford a bottle of coke and a Big Mac (you'd hope!) on an average wage, but if the proportion of the cost compared to their weekly wage has doubled in the last 25 years, fewer and fewer people would be buying Big Mac and bottles of Coke. 

And if in fact nobody was buying Big Mac's and Coke at the time, maybe the supplier would have to consider dropping the price somewhat 

Some good reading: http://www.aph.gov.au/senate/committee/hsaf_ctte/report/index.htm

Presently a house costs 7x yearly earnings, in 1984 it was just over 3x ..Look at that house/income ratio chart - every single market listed there has corrected somewhat .. 

(excluding our Candian friends, where the ratio is not as large)


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## Mofra (24 July 2008)

gfresh said:


> Arundel (above), QLD was listed in a w/e article as one of QLD's strongest areas for mortgage repossessions...
> 
> If you look on realestate, Incredible amount of listings in a strong McMansion suburb, and everybody seems to be moving elsewhere.. It's not actually a large area (have lived nearby), but some 150 properties listed for sale of maybe 2000-3000 homes is massive.
> 
> No, it is not the entire property market, but it is *a snapshot of a mortgage-belt suburb* out there.



Would be interesting to read some up to date LVR statistics for these suburbs.

Last report I read regarding LVRs was to March Qtr 08 which showed a definate trend in higher LVRs towards "McMansion" suburbs - Cat 1 suburbs that were new developments. Shows that many FHBs were gearing themselves to hilt to buy in outer suburban areas, whilst (as strange as it may seem) LVRs averaged lower in established suburbs. 

I doubt there would be a rapid departure from such figures for the June Qtr.


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## pepperoni (24 July 2008)

news story from today in same vein ... i swear they follow our threads ;-)

http://business.smh.com.au/business/home-price-rises-hit-middle-class-20080724-3k55.html

Home price rises hit middle class


    * Chris Zappone
    * July 25, 2008 - 9:44AM
    *

Middle-class Melburnians are bearing a heavy burden of rising home prices, with housing costs rising at twice the pace of incomes.

Housing costs for the segment grew 62% between 2001 and 2006 while incomes rose only 28%, according to a AMP and National Centre for Social and Economic Modelling (NATSEM) report.

''For many households in Sydney, Melbourne and Adelaide, substantial income increases appear to have been largely offset by rising housing costs and price increases generally, resulting in little improvement in their standard of living,'' the report says.

Across all income groups, Melbourne registered a 27% increase in household income, less than half of the 62% rise in housing costs. Melbourne's income growth trailed that of Canberra which jumped 37%.

Homeowners can expect little relief from rising home prices. Yesterday's inflation data showed prices rising 1.5% in the June quarter, driven by increases in mortgages and banking fees.

Household income in Perth, where the resources boom is in full swing, increased 39%, according to the report. Housing costs in Canberra and Perth grew 64% and 60% respectively.

Nationally, the average increase in housing costs in capital cities was 62%, with Brisbane leading the pack at 68%. Darwin gained the least at 36%.

Adelaide and Sydney, whose economies benefit only marginally from the resources boom, turned in a 28% increase in household incomes. In remote Queensland and Western Australia, the effects of a two-speed economy were stark. Incomes in those regions soared 41% in that period.

Nationally, incomes in ''affluent'' areas increased 36.5% compared with those in ''low income'' areas which registered a 29% rise, the report said. Low income households have endured a 48% rise in housing costs, according to the report.

''The impressive increases in household incomes were largely offset by increased spending on housing and increases in the cost of living - and it's the households in middle income areas who were the least likely to enjoy these prosperous times,'' said AMP Financial Services managing director Craig Meller in a statement.

''This could go some way to explaining the shift in behaviour we have seen in Australian communities in recent times; where high employment, high incomes and strong economic conditions have not necessarily reflected the perceptions of average Australians.''

The 2006 gross household incomes of the upper-class were more than double that of lower-income households, the report said.

Youth Hit Hard

Victoria leads the nation in the percentage of Generation Y members living at home with their parents.

The rising cost of real estate has contributed to 53.6% of Victorians born between 1976-1991 living at home in 2006, according to a report by the Housing Industry Association.

The trend comes as soaring rents, home prices, and the barrier of large deposits on mortgages put home ownership out of reach for Australians graduating from school and entering the job market.

Gen Y members from NSW ranked just behind Victoria with 53.5% living at home.

''If you're in your 20s, on a low to middle income, and looking to buy a home, its becoming virtually impossible,'' said HIA chief economist Harley Dale in a statement.

Nationally, more than 50% of Australians born between 1976-1991 were living at home in 2006, up from 39.4% in 1989.

Almost 18% of 25 to 29 year olds live at home as well, up from 12% in 1989, the report said.


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## kotim (25 July 2008)

everything is a domino, we know that consumer sentiment is down substantially, this flows first of all into discretionary spending, so places that sell provide discretionary spending items lose money and hence put of some staff, meaning that the number of unemployed must increase, whether small or large is another matter depending upon time frame.

Borrowing 350 grand which is not a lot today bearing in mind that theaverage house price in most larger cities is substantially aboe that means that house repayments are with rates etc are between 35 to 40 grand a year allowing for rates and insurances and blah blah blah.

Anyway if we use the average wage then one persons whole wage is easily eaten up by the home ownership cost.  So we have one person left, in terms of a dual income family earning money, look at everyone buying new cars and this and that, anyway when all is said and done the average family with two workers with a 350 grand loan will in the current market be barely getting by.

There is simply no room for house price growth in general.

Once the little economic setback  we are experiencing bites a little harder and people start losing jobs, then watch the dominos drop.

It is said the average house price drop in a "pullback" is about 25%, not that much in good areas but more than that in worse areas which gives us our average.

What kills the golden goose is the fear and pain and it takes a while to turn it around.  Look at the number of people querying about moving their super becasue one year out of 4-5 after good years is a bad year.

When things are good the impact on peoples lives and emotions are nowhere near as good as the damage that is done when people have to suffer.  Fear is much more painful than joy is wonderful to the vast majority of people.

Funny that citybank the other day decided to issue a sell on a bank or two after they had allready fallen about 40 odd percent, bit late to be telling people that.

We are better off than yankee land becasue above all we have a huge amount of commodities that despite global slowdown will still produce good profits.

Go and have a look at property graphs(much the same as share charts), usually a boom for 3-4 years, backwards for a year or two, sideways for a bit more and then the cycle repeats.

The real problem we have is that advisors tell us that it is time n the market now timing the market that is important, what a load of crap, they ahve to promote that to keep the commissions rolling in.

Imagine an advisor telling you that we are in a share bear market and that in the last 30 years a bear market has lasted between 1-3 years and generally dropped 20-30%, so waite until the market drops according to that and then wack your money in.

Naturally enough they won't say it becasue they rely on your buyingand selling for commissions etc. 

Timing does not matter unless of course you get intowards the top.

Go back to the last really big financial crisis we had in the 87-89 area and have a look at the bank stocks.  If you had purchased anz or westpac towards the top of 87 it was many, many years before your bank stock made real money(almost 10 years) Ask those who invested in ANZ/wbc bank back in 1987 whether it was good buy when it basically went nowhere for the next decade.

The same times are upon us agin.

The falls in the banking sector are the biggest since late 80's.  The banks control the direction of the stock market, so all those with super or investment funds, watch the banks and don't expect good results until the banks show good prices/gains again.


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## wayneL (26 July 2008)

Today BBC4 ran a bit of an expose' on the UK version of the Henry Kaye style nonsense (Inside Track) If you have half an hour check it out:

http://www.bbc.co.uk/radio4/facethefacts/

It will only be there for the next few days.


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## explod (26 July 2008)

Yep, headline news 3AW, 6.30 instant.   Outer suburban home prices hit due to rising fuel prices.   Its been a no brainer for some time.   Just feel very sorry for those starting out, having the large mortgage and kids to raise.


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## Sean K (26 July 2008)

explod said:


> Just feel very sorry for those starting out, having the large mortgage and kids to raise.



Next thing you know the Federal Government will be handing out more free money so you can afford the deposit and maybe the first years repayments, to get you right in the doo doo. 

That first homebuyers grant was a complete farce. The government's actually complicit in contributing to people getting in over their heads at a time of rising interest rates.


----------



## Mofra (26 July 2008)

Further evidence of our two tier market:



> *Home sales dip 20km from city*
> 
> THE property divide between inner and outer Melbourne is expanding as higher petrol prices and steeper interest rates force down house prices on the outskirts of the city, while some suburbs closer to key infrastructure and services maintain or increase value.
> 
> ...





http://www.theage.com.au/national/home-sales-dip-20km-from-city-20080725-3l3h.html


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## Tysonboss1 (26 July 2008)

kennas said:


> That first homebuyers grant was a complete farce.




Aggreed, it just contributed to higher prices.


----------



## Spanning Tree (26 July 2008)

Here's a recent article Debunking Housing Myths from the Herald Sun. I found the following interesting:



> The optimists argue that underlying annual demand for Australian housing is 180,000 units and new starts are only 150,000. They conclude that house prices are likely to rise.
> 
> However, underlying demand is a theoretical concept using long-run trends in population growth and household formation. In practice, high house prices mean kids stay home longer, rather than buy new housing and students rent houses together rather than separately.




This is precisely what I'm seeing. About 60 per cent of 20-25 year olds live with their parents. It's quite easy and most parents I'm sure won't mind if their children pay them rent. Even if each kid pays $200 per month that will likely cover the costs (e.g. food, bills, etc) while also giving the parents extra cash flow to handle higher mortgage repayments or higher fuel costs.

Many of those bullish on property claim demand will always be high because "everyone needs houses." But Aussies can always live at home and use family networks for access to cheap accommodation.

Immigration is another story. Usually an immigrant who comes to Australia will have to buy or rent on the market. However, as property prices and interest rates go up and up in Australia, why would any rational immigrant come here? They will instead move to another country where property is cheaper. Thus demand will adjust to prices. That is, as prices go up demand will fall, which pushes down prices again.


----------



## Garpal Gumnut (26 July 2008)

Spanning Tree said:


> Here's a recent article Debunking Housing Myths from the Herald Sun. I found the following interesting:
> 
> 
> 
> ...




Most immigrants in my experience buy a house as soon as they can afford the deposit. I take your point though about the 20-25 yo.

gg


----------



## pepperoni (27 July 2008)

pepperoni said:


> Anyway there are tonnes of excellent properties for rent in and around chatswood ... sitting on the market for many weeks.  Rents look OK maybe a little more than last year but they arent going.
> 
> Frankly the rental market in these areas is still flat many years later.  I think some poor owners have been brainwashed by the "rent explosion" stories and are holding out for the extra $20 a week while their properties sit empty.  Not good for the increasing "mortgage stress" problem.






Hate to say I told you so but ...

http://www.theaustralian.news.com.au/story/0,25197,24079562-2702,00.html

http://www.abc.net.au/news/stories/2008/07/26/2315275.htm

My agent is saying he will have a hard time re letting my balmoral slopes abode at the $750 I pay, and I got it down from $800 in the middle of the crisis.

The only rent crisis is that they are so shockingly low considering holding costs?????  Any cheaper and they would be paying you to move in.

Also bad news for sorely needed rate falls ...

http://www.skynews.com.au/business/article.aspx?id=252997

Oh yeah ... nothing selling in sydneys north.  Many properties have been taken off the market ... as many as are still on the market ... there is clearly an ENORMOUS backlog of $1m plus homes in syds north that people are unable to move.

Unless there is some major change in markets falls of 5-10% will become crystal clear in most better areas within 6-12 months.  And seeing as though my market watch has been so spot on Il guaran damn tee it.  

*notes post for later I told you so post* ;-)


----------



## gfresh (27 July 2008)

Ha, beat me to the punch pepperoni.. Exactly what I've been saying a few times, unsold properties will become rental properties, increasing supply in many areas. 



> Managing director Louis Christopher says many developers have dumped their unsold stock onto the rental market and there are now nearly twice as many available properties as there were last year.
> 
> He says many owners are asking for exorbitant rents.
> 
> ...




Here is another, Canberra starting to ease:

http://www.abc.net.au/news/stories/2008/07/26/2315210.htm?section=business

The SQM data may be useful for some, can search by postcode: http://www.sqmresearch.com.au/graphs/vacancy.php?t=1


Misleading figures put forward by the REIA ? never.. 



> Conflicts of interest?
> 
> Mr Christopher is critical of the REIA’s data and said there are potential conflicts of interest in the way the information is collected.
> 
> ...


----------



## pepperoni (29 July 2008)

Gone a bit quiet on the local property front.  Seems Aussie property press are really only interested in printing outrageous growth figures.

Probably because the average Joe is a home owner has no ambition to upgrading to a better home and therefore thinks he is better off with high property growth. 

Contrast that with pom and yank press that at least some times tell it how it is.


----------



## xoa (29 July 2008)

Rental vacancies are soaring in every capital city. That's good news.


----------



## CamKawa (29 July 2008)

This is quote from a buyer advocate company in Melbourne. It’s interesting to see how the REIV figures aren’t lining up with what they are seeing in the market. Could the REIV be stretching the truth? I know who I believe.


"Overall another very negative weekend for auctions evidenced by the fact that only 2 sold from the 16 we attended as a group. The clearance rates at auction for $1m+ homes is nowhere near the reported overall low 60's % of the last month.

Our comment on the market is that is has dropped another 5 to 10% in the last 3 weeks on top of the earlier drop of 10-20% in March and April. 

Depending on your nature this is either a half empty or half full glass situation. If you are a half glass full kind of person, then there are opportunities out there. As the upper end market contracts now, it comes closer to the lower end now. If you are buying and selling in this market and you have the right advice then you should be able to trade up on a better overall deal – providing of course you do have the right advice. Meaning in Sep 2007 the price difference between the top properties and the median ones was a lot greater than it is on July 2008. So you may have had a changeover of $1 million in Sep 2007 and that changeover could well now be as low as $500,000 July 2008 for certain properties. Of course this is anecdotal and you do need some luck as well as the good advice. Some homes are still attracting multiple bidding and the drops have been nowhere near as great as made out in the previous sentence."
Source: http://www.jamesbuyeradvocates.com.au/marketnews.html#mal


----------



## pepperoni (29 July 2008)

CamKawa said:


> Our comment on the market is that is has dropped another 5 to 10% in the last 3 weeks on top of the earlier drop of 10-20% in March and April.




Sounds rich but round here almost ZERO houses have sold in june july, and Id say the ones on the market have dropped priced 10% on average with still no interest and need to drop AT LEAST another ten if they want to sell within another month or 2.

Worst still, Im convinced 50% of properties that would be listed and selling now have been taken off the market for re listing in spring summer - if thats the case and things like rate drops and spuikers donk kick things along, we will easily match US and UK falls for the year.

Really seeming like our property bubble may indeed be susceptible to normal market forces and fundamentals afterall.


----------



## gfresh (30 July 2008)

ABS' stats are in contrast with the MBA's estimated 1% gain in approvals.. 

http://www.businessspectator.com.au...-approvals-fall-07-in-June-H23TR?OpenDocument



> Building approvals were much weaker than expected in June, after the construction market was dented by high interest rates, economists say.
> 
> Australian building approvals fell by 0.7 per cent to 12,237 units in June, seasonally adjusted, from a downwardly revised 12,326 units in May, the Australian Bureau of Statistics said on Wednesday.
> 
> ...




Some reality:

http://www.businessspectator.com.au...-sided-by-property-GZ5P7?OpenDocument&src=sph


----------



## pepperoni (31 July 2008)

Im hearing Melb/Geelong are locations of choice for pommy expats driven away from syd by prices ... could explain some of the resilience down there at the bottom of the market.

As for the rest of the market ...


What a difference a year makes in real estate
Chris Vedelago
A well-maintained Victorian in Albert Park should be a million-dollar property - or at least it would have had a shot at hitting that mark if the auction had been held last year.

Instead, this two-bedroom house at 23 Dundas Place attracted just one genuine bid yesterday, delivered as an opening offer at $700,000 that was well below the quoted price of $930,000 plus. Two vendor bids bumped the price up to that level but with no further interest, the property was quickly passed in. The reserve was $955,000.

"We thought we had a couple of genuine buyers before the day, but they just held back," said Cayzer agent Michael Szulc. "It's a strategy that's being employed a lot this year, with buyers hoping the auction won't be successful and they can swoop in.

"But that doesn't mean there's going to be some massive difference (in the sale price), as they're still going to have to negotiate and pay what the vendor wants for this kind of property."

Negotiations are continuing with one party. The Real Estate Institute of Victoria reported that the median house price in Albert Park was $1,065,000 in March, down 0.9% on last December.


----------



## pepperoni (31 July 2008)

More news from today.

The fat lady has sung ... the bears were right and the bulls were wrong ... property prices can and do fall.

http://news.theage.com.au/business/house-prices-fall-in-most-capitals-20080731-3nif.html


----------



## pepperoni (31 July 2008)

I always thought the RE bubble was like that "aircraft" pyramid scheme that was around 5-10 years ago in syd ... i sat out of that for the same reason Im sitting out of property now.

This article has a similarly interesting perspective on things.

http://www.theage.com.au/opinion/ho...le-waiting-to-burst-20080730-3ncu.html?page=2

"According to Keen, the (RE) bubble is based on speculation financed by debt. Keen claims it is effectively a "Ponzi scheme" where dividends are paid out of new rounds of capital injected into the scheme instead of the non-existent profits. The scheme collapses when there are no new investors to pay the dividends."


----------



## Tysonboss1 (31 July 2008)

xoa said:


> Rental vacancies are soaring in every capital city. That's good news.




Where,..... I just re leased one of my IP's for $260 up from $240, There is only one other listed in that price bracket at the RE and it's not available till september.


----------



## Tysonboss1 (31 July 2008)

pepperoni said:


> the (RE) bubble is based on speculation financed by debt. Keen claims it is effectively a "Ponzi scheme" where dividends are paid out of new rounds of capital injected into the scheme instead of the non-existent profits. The scheme collapses when there are no new investors to pay the dividends."





well the dividends actually come from rent, Rent is that money you have to pay each week to live in your house, So no property is not a "Ponzi" scheme.


----------



## wayneL (1 August 2008)

Wow check this one out from the International herald Tribune (International version of The New York Times):

http://www.iht.com/articles/2008/07/31/properties/31reaus-story.php



> Australia facing housing slump
> Bloomberg News
> Published: July 31, 2008
> 
> ...





> "Australia is headed for a once-in-100-year real-estate slump," Edwards said. "I have never seen the convergence of so many negatives."





> "By every metric I can think of, Australian houses are too expensive," Minack said, costing an average of six years' earnings, double what Americans paid before their property market started falling in 2006.
> 
> The Washington-based IMF says Australian house prices were overvalued by almost 25 percent in the decade through 2007 when compared with household income and ability to pay debt.


----------



## Sean K (1 August 2008)

What property related stocks are there left to short that haven't already been decimated?

The bank morgage insurers is also another, but not sure whose holding those nice little steamers.


----------



## bvbfan (1 August 2008)

Chances of interest rates cut up to 298% for Oct 09, which is effectively pricing in 3 cuts by the RBA.

88% for a cut by December.

What with the share market underperforming, smells like just what was happening in 2000-1. Will it happen again? Not a bigger boom but should start to stabilise once cuts start coming in.

http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdf
For the implied rates


----------



## overlap (1 August 2008)

pepperoni said:


> "We thought we had a couple of genuine buyers before the day, but they just held back," said Cayzer agent Michael Szulc. "It's a strategy that's being employed a lot this year, with buyers hoping the auction won't be successful and they can swoop in.
> 
> "But that doesn't mean there's going to be some massive difference (in the sale price), as they're still going to have to negotiate and pay what the vendor wants for this kind of property."




The buyers with the capacity to pay know there's a high risk (even certainty) the properties are overpriced with what's coming.

The vendors can want all they like. The real market - not the market in the REIV's spin - decides what they get.


----------



## wayneL (1 August 2008)

overlap said:


> The buyers with the capacity to pay know there's a high risk (even certainty) the properties are overpriced with what's coming.
> 
> The vendors can want all they like. The real market - not the market in the REIV's spin - decides what they get.




Hence turnover falling off a cliff like it has here. Buyers just won't/can't pay what vendors are asking ==> No sales... until the vendor drops the price.

Mexican stand-off time.


----------



## Tysonboss1 (1 August 2008)

bvbfan said:


> smells like just what was happening in 2000-1. Will it happen again? Not a bigger boom but should start to stabilise once cuts start coming in.
> 
> http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdf
> For the implied rates




I wouldn't bet on it,...

I don't think it's the time to stock up on property purely for cap gains,... Only buy in if you can find a deal that has other things going for it... I think the share market is much better at the moment if your after short term cap gains.


----------



## gfresh (1 August 2008)

UK market looks like it's getting hammered right now in many parts..following the US down the tubes. 

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4432554.ece



> The housing market slump will wipe £50,000 off the value of the average British home and plunge one in seven homeowners into negative equity, influential new research suggests.
> 
> Some 70,000 mortgage-holders already owe more than their homes are worth *after the near-10 per cent falls in house prices over the past year*, Standard & Poor's (S&P), the credit ratings agency, said. *It forecasts that prices will fall by a further 17 per cent, or £30,000, by next April, putting 1.7 million borrowers into negative equity.* A 17 per cent fall in prices would take the value of the average house to about £150,000, down from £199,600 in August last year, according to Halifax figures. S&P said that for every further percentage point decline in house prices, between 60,000 and 180,000 extra homeowners could fall into negative equity.


----------



## pepperoni (1 August 2008)

More doom and gloom ... comments on glut of properties Im seeing here.

http://www.theage.com.au/national/h...e-in-capital-cities-20080731-3o02.html?page=2


----------



## pepperoni (1 August 2008)

Tysonboss1 said:


> well the dividends actually come from rent, Rent is that money you have to pay each week to live in your house, So no property is not a "Ponzi" scheme.




His point is that capital gains are a ponzi scheme ... and he is right.


----------



## Tysonboss1 (1 August 2008)

pepperoni said:


> His point is that capital gains are a ponzi scheme ... and he is right.




Not if the capital gains are backed up by increasing cashflow returns.

When I first started investing in property the returns were between 4 and 5% pa, Today properties are still maintaining returns of about 4 and 5% pa.


----------



## wayneL (1 August 2008)

FWIW



> Pon·zi     Audio Help   /ˈpɒnzi/ Pronunciation Key - Show Spelled Pronunciation[pon-zee] Pronunciation Key - Show IPA Pronunciation
> –noun
> a swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks.
> Also called Ponzi game, Ponzi scheme.




Hmmmmmmmm


----------



## xoa (1 August 2008)

Tysonboss1 said:


> Where,..... I just re leased one of my IP's for $260 up from $240, There is only one other listed in that price bracket at the RE and it's not available till september.




http://www.theaustralian.news.com.au/story/0,25197,24079562-2702,00.html

The vacancy rate for inner-city Sydney is now 6.3%. Melbourne isn't far behind.

In recent years, capital gains have probably represented 80% of a property investor's windfall. Some haven't even bothered to rent their properties. Why stress out with tenants for a measly 2% net rental yield, if you expect 20% YOY capital appreciation? 

This might account for the fact that there were 800,000+ vacant residential properties at the last census. As speculators realise that the capital gains bonanza is over, more rental properties will appear on the market. The government will also subsidise the construction of 100,000 affordable rental properties over the next 5 years, which will also help things along.


----------



## Tysonboss1 (1 August 2008)

xoa said:


> In recent years, capital gains ha...al appreciation?
> 
> .[/QUOTE]
> 
> rubbish,...


----------



## wayneL (1 August 2008)

Tysonboss1 said:


> rubbish,...




't ain't!!

Quite common over here, no reason it's not over there.


----------



## Doris (2 August 2008)

Tysonboss1 said:


> rubbish,...






wayneL said:


> 't ain't!!
> 
> Quite common over here, no reason it's not over there.




Friends of mine in Calgary bought a condo off the plan four years ago for $130k and decided to keep it tenant-free as an investment.  Friends and relatives from inter-province used it when they visited... and of course took care using it. This spacious 2 bed-2bath condo is now worth $600k and is in pristine condition should they decide to sell.  

Good timing when world housing prices boomed on the back of 1-2% mortgages in the US!

Considering I had to replace $6k of carpet, wall oven, hotplates and a  dishwasher in my IP when I rented it out for a few years, this was good management!


----------



## Tysonboss1 (2 August 2008)

Doris said:


> Friends of mine in Calgary bought a condo off the plan four years ago for $130k and decided to keep it tenant-free as an investment.  Friends and relatives from inter-province used it when they visited... and of course took care using it. This spacious 2 bed-2bath condo is now worth $600k and is in pristine condition should they decide to sell.
> 
> Good timing when world housing prices boomed on the back of 1-2% mortgages in the US!
> 
> Considering I had to replace $6k of carpet, wall oven, hotplates and a  dishwasher in my IP when I rented it out for a few years, this was good management!




There is no way that this is good management, missing out on four years rent is crazy, I would dare say that even if they had tenanted it for 4 years they would still get pretty close to the current sale price,.... any way 4 years rent would more than cover a repaint and floor coverings, not that you would have to re carpet after four years.

Any how if they had the cashflow from the rent, they proberly could have bought 3 of the same properties and made over a $1m in the 4 years.... leaving a property vacant is probally the dumbest thing I have ever heard,... you may as well just buy a large block of vacant land.

Not to mention that I don't think you would legally be able to claim the interest as a tax deduction if you are not generating income from the property.


----------



## Tysonboss1 (2 August 2008)

Doris said:


> Considering I had to replace $6k of carpet, wall oven, hotplates and a  dishwasher in my IP when I rented it out for a few years, this was good management!




I think I would rather collect $80,000 in rent over 4 years and pay the $6,000 in maintence.


----------



## Doris (2 August 2008)

Tysonboss1 said:


> Not to mention that I don't think you would legally be able to claim the interest as a tax deduction if you are not generating income from the property.




This idea was the biggest mistake I ever made!


Three times I almost bought a block of land but decided not to as I could not claim interest and rates off my current tax.  
A dwelling would be better.

But only recently I realized that when I sold the block I could have added these to my total costs for the land!  

And of course the capital appreciation was not considered at the time.  
If only...


----------



## Spanning Tree (2 August 2008)

In Melbourne, premier Brumby is now going to put the brakes on migration. This will mean a reduction in demand for houses. Natural fertility rate in Australia is 1.8 babies per woman, which is below the amount needed for population increase (2.1 babies per woman) which means that assuming zero immigration, natural death will outnumber natural birth and we will thus have population reduction. In other news, farmland around Melbourne will be converted into houses by the State Government, which increases the supply of houses. Higher supply and lower demand means prices must come down.

High interest rates and high property prices have been slowing demand for years, but immigration has been keeping prices high. With immigration to be cut, I can't think of any logical reason why house prices would go up.


----------



## Tysonboss1 (2 August 2008)

Doris said:


> This idea was the biggest mistake I ever made!
> 
> 
> Three times I almost bought a block of land but decided not to as I could not claim interest and rates off my current tax.
> ...




I don't think a vacant block of land makes a good investment, It sucks tomuch cashflow from your portfolio and relies solely on capital gains which at best are unpredictable short term.

I wouldn't buy a vacant lot unless I had a detailed plan of what I was going to do with it, I wouldn't want to be holding a vacant lot for to long and to buy with the hope of selling it for a profit in the shorterm carries far to much speculative risk for me.


----------



## Mofra (2 August 2008)

Spanning Tree said:


> farmland around Melbourne will be converted into houses by the State Government, which increases the supply of houses. Higher supply and lower demand means prices must come down.
> 
> High interest rates and high property prices have been slowing demand for years, but immigration has been keeping prices high. With immigration to be cut, I can't think of any logical reason why house prices would go up.



Houses in outer-suburban areas have been underperforming the market for years, I doubt newer developments in areas with pitiful infrastructure will come even close to tracking inner-city, established suburbs. Given a stagnation in prices in most (not all) suburbs over the next 12 months, even continuing immigration wouldn't help many of the outlying areas.
Governments by nature can't think beyond their next term, hence a nation-wide infrastructure shortage in both transit & industrial clases. Makes suburb-selection for investment much easier though


----------



## CamKawa (2 August 2008)

What are "auctions with no result"? Are these auctions that passed in but the REA has failed to report them to REIV?

*Weekly Auction Results*

*Why wait until tomorrow? Get the latest auction and private sale results first from the REIV every Saturday and Sunday evening.*

*Saturday 2nd August 2008*


Enzo Raimondo, REIV CEO said The number of homes sold at auction passed the 10,000 barrier today with 271 homes sold resulting in a clearance rate of 63 per cent, slightly below the year to date clearance rate of 66 per cent. There were 428 auctions held today with 271 sold, 157 passed in, 107 of those on a vendors bid.

TOTAL AUCTIONS
This week: 428
Last weekend: 445
This time last year: 491
S Sold at Auction: 211
SB Sold before Auction: 56
SA Sold after Auction: 4
Passed in: 157
Passed in on vendor's bid: 107
Clearance rate: 63%
Postponed: 0
Withdrawn: 2
*Auctions with no result: 54*

Source: http://www.reiv.com.au/home/inside.asp?ID=142&pnav=141


----------



## CamKawa (3 August 2008)

Looks like I'm not the only one questioning the ethicalness of the RIEV.

Split threatens real estate body

A MAJOR split has developed within the Real Estate Institute of Victoria, with its biggest member threatening to withdraw over ethical concerns that the industry group allegedly underquoted one of its own properties - potentially breaking the law.

The threat by Ray White Real Estate - the largest agency in Australia - comes days after a respected board member, David O'Callaghan, resigned, saying he had lost confidence in the REIV's top executive, Enzo Raimondo, and president, Neil Laws.

Andrea McNaughton, chief executive of Ray White in Victoria, told _The Sunday Age_ the REIV's role in underquoting its Camberwell property "sends a curious message".

"As a large group that does not rely on the REIV for its training and support, but rather for its portrayal and leadership of the industry, (we believe) this incident does little to support that notion of value for its fees," she said.

"We believe it is the role of the REIV to challenge the long-held negative stereotypes of agents doing wrong things by the public. We expect the REIV to typify the principles of ethical conduct at all times."


----------



## explod (3 August 2008)

CamKawa said:


> Looks like I'm not the only one questioning the ethicalness of the RIEV.
> 
> ."




Could not agree more.  Silence is assent.

The REIV have been a disgrace here in Victoria for years.

The value of a property is of little interest, turnover is.   Lincensed thieves.


----------



## wayneL (3 August 2008)

explod said:


> Could not agree more.  Silence is assent.
> 
> The REIV have been a disgrace here in Victoria for years.
> 
> The value of a property is of little interest, turnover is.   Lincensed thieves.



Enzo is a villain from way back. Silence is not necessarily assent, silence can be the ignoring of BS.

Enzo is just not worth commenting about.


----------



## robots (3 August 2008)

hello,

i guess you have to dig and dig when there's not much to hang your hat on,

gee, the Q2 showed massive drops didnt it, the world was going to end, people are going to pick up front row blocks for 50k,

it all got smashed after march etc, hahahahahahahaha

thankyou

robots


----------



## Smurf1976 (3 August 2008)

Tysonboss1 said:


> leaving a property vacant is probally the dumbest thing I have ever heard,... you may as well just buy a large block of vacant land.



I noticed plenty of empty houses during the boom. Apparently they were mostly owned by interstate "investors" who had never seen the house, or for that matter anything else in the entire state. They just totally trusted the real estate agent that it was in a decent suburb etc - it could have been in the middle of nowhere for all the buyer knew.


----------



## explod (3 August 2008)

robots said:


> hello,
> 
> i guess you have to dig and dig when there's not much to hang your hat on,
> 
> ...




The bottom line is a long way off.   Younger people do not believe what isa happening.   The problems we see now with higher costs across the board will not be in the stats for 12 months yet.

Those of us who have been watching the business for 50 years can see ahead, and it is going to hurt.


----------



## wallyt99 (3 August 2008)

About me: 

26 Year old Australian. 
Masters Educated.  
Engaged.
Combined Stable income: 100k.

Me and my Fiance are considering buying....although everyone advises against it. Perhaps I can get some advice in my situation?


We are looking at a potential property which is within walking distance of my Mum. (free childcare) The block has a delapidated 3BR weatherboard on it ATM, and plans and permits for a 2BR unit at the back.  It is selling at 260+.  House prices in the area range from 270 to 360.

Purchase 265k.
Develop Site.  100k.

There are then many options....Whether we sell, rent ect. is irrelavent.

2 properties each @ 200k+

I feel that now is a good time to buy, as the uncertainty in the market means we can squeeze a potential seller for a good price.

I consider this to be a long term investment, and the long term trend of an economy is up....so should I really wait on it?


Any advice greatly appreciated.





Oh.....and having been looking for 3-4 months now, I can say good value (position, price, layout) houses are still selling. However the ones which don't offer alot sit on the market for a long time.


----------



## Macquack (3 August 2008)

wallyt99 said:


> About me:
> 
> 26 Year old Australian.
> *Masters Educated*.
> ...





Should it be "My Fiance and I...."

Sorry to be picky, but you left yourself wide open.


----------



## wallyt99 (3 August 2008)

Macquack said:


> Should it be "My Fiance and I...."
> 
> Sorry to be picky, but you left yourself wide open.






LOOKOUT!!!! It's the Sunday 10pm Grammar Police.



I have a weighted average mark of 80.....so whatever.


----------



## wayneL (3 August 2008)

wallyt99 said:


> I have a weighted average mark of 80.....so whatever.




So we can conclude that that doesn't include Engrish?


----------



## Temjin (3 August 2008)

wallyt99 said:


> Me and my Fiance are considering buying....although everyone advises against it. Perhaps I can get some advice in my situation?




Now that kinda surprised me. Didn't expect the sentiment to change so quickly.  Who are the people that you called "everyone"? Friends of similar age or baby boomers who have been in the business for many many years? (and have seen the cycles) 



> I consider this to be a long term investment, and the long term trend of an economy is up....so should I really wait on it?




Yes, the REALLY LONG TERM trend of economy is up because well....human society tend to grow. But are you willing to buy at the top of the market? 



> Any advice greatly appreciated.




My advice to you is that be very aware of your recency bias and REAL about the history of economic first. Consider the advises that those "everyone" have been giving you. Try to look at it from an unbiased way. If you find a point that you do not agree, ask yourself why you believe so? Also try to consider where did you get your information from? From the media? From the real estate agents who claim house prices never fall? Or from "similar age" friends who has done this 2-3 years ago and is now better off? (in which you would automatically assume that history will repeat itself forever) 

My observation has been that alot of young people, especially those who are very well educated, are very prone to being too confident of themselves and ignore information and history that they have not personally experienced before. 

To give you my perspective, and a surprise as well, I am ALSO a Master educated 26 years old with a combined income over $100k with my girlfriend (not yet my FiancÃ©e yet hahah). We decided to put off buying house until the whole global credit crisis mess has sort out itself and when the economy has go through it's recession (and hopefully not), a depression. 

Regardless, if you don't really care about the investment aspect of owning your house and that your decision to purchase it is an emotion one where you would like your own home and avoid renting, and that you are VERY CONFIDENT of your ability (and your FiancÃ©e) that you will not be out of jobs over the next several years, then go ahead and purchase it. However, do not expect your house prices do go up as much as what has been observed over the last 7-10 years. This once in a life time global credit boom will not happen for a LONG LONG time again.


----------



## CamKawa (4 August 2008)

A call for Enzo's head.

RAIMONDO MUST RESIGN


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## wallyt99 (4 August 2008)

CamKawa said:


> A call for Enzo's head.
> 
> Exert from article - "In November 2007, Consumer Affairs in Victoria (CAV) introduced new laws which stated that agents could not advertise a "plus" price or use the term "in excess of" to quote a price. "
> 
> RAIMONDO MUST RESIGN





Is this true? I see alot of properties advertised this way, and the vendor does not accept offers of the advertised price.


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## Temjin (4 August 2008)

http://www.bloomberg.com/apps/news?pid=20601206&sid=aBCuyixr8nJE&refer=realestate



> uly 31 (Bloomberg) -- Australia may be headed for a housing recession similar to those roiling the U.S. and U.K.             The cause is a combination of rising default rates, the biggest drop in home prices in five years, the highest borrowing costs in a decade and slowing economic growth.
> 
> Prices in the property market -- described by the International Monetary Fund in April as one of the world's most ``overvalued'' -- will fall 30 percent by 2010, according to Gerard Minack, senior economist at Morgan Stanley in Sydney. *Prices dropped in all of Australia's major cities last month for the first time since just before the Great Depression.     *
> 
> ...




Once in a hundred year event, a typical black swan. No wonder a lot of people ALWAYS BELIEVE that house prices will NEVER FALL.

Of course, I said to be wary of information from the media, and this is no exception. However, I would not look at the comments made by the journalists, rather, I would look at the data presented and find out if what was said is true.


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## ROE (4 August 2008)

wallyt99 said:


> About me:
> 
> 26 Year old Australian.
> Masters Educated.
> ...




My take on this is, you going to need a place to live, whether buying and renting you still need a place.

If you can afford it after you factor in all the down sides then why not.
if you are having kids having your own place is better than renting because you get to do what you want with your place and have a stable home for the kids... with renting you up to the mercy of the landlord and they can sell up the place any time and force you to move when you don't want to.

you obviously got your finance right and buy within your price range..

260K is reasonable and provided you can continue to repay the loan through thick and thin economic condition then I cant see the reason for holding it back. 

I bought mine when I was a little younger than you but back then I wasnt too concern how expensive or how cheap the property was... I was purely concern on if I can buy within my price range and If I can afford to pay it if interest was to go to 12% and I repay my repayment based on 18% ..
I remember 25 years for me was $700 a fortnight ... I pay $1400 a fortnight

done deal  7 years later my own place ... about to upgrade in the next few years and calculate at 20% interest repayment 

I do think current house price is over value and I'm prepare to wait a little to see how things pan out.. I have plenty of cash and I can pound anytime I want so no need for me to rush.


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## wayneL (4 August 2008)

Roger Bootle is another finance journo worth reading. Good article here with applications to the Oz market IMO.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/04/ccom104.xml 



> The faster house prices fall, the better off we'll all be
> 
> By Roger Bootle
> Last Updated: 10:38am BST 04/08/2008
> ...






> SNIP:
> 
> But don't prop up* house prices. They have got wildly out of line with the economic fundamentals. They can only get back into line by falling or by the fundamentals adjusting to those prices. The latter would mean higher wages and salaries and that would entail much higher inflation for several years. That is a route we should want to avoid at almost all costs. *Accordingly, it is house prices that have to do the adjusting. The faster that they fall, the sooner that they can get back to a reasonable level and normal conditions can resume.
> 
> The Government has banged on ad nauseam about the need for "affordable housing" and has introduced various ill-conceived measures to promote it. In fact, the best way to make houses more affordable is for *prices to carry on falling. Like it or not, that is what is going to happen.*


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## wayneL (5 August 2008)

In other news in The UK market:


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## pepperoni (6 August 2008)

On the recent housing bubble ... "the bigger they are the harder the fall" ..


http://business.smh.com.au/business/housings-downhill-run-has-upside-20080805-3qig.html


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## theasxgorilla (6 August 2008)

wayneL said:


> In other news in The UK market:




Love the headline about the French trader.


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## gfresh (6 August 2008)

Housing finance continuing their steep falls last month. Financing for owner-occupier taking the biggest hit, down 3.7%. Largest falls in NSW (-6%), and QLD (-5.8%) also starting to show it's not immune.  Uptick (+6.9%) in financing for owner-occupied newly constructed properties. Investors still fairly steady with 0.3% fall in financing. 

http://www.abs.gov.au/ausstats/abs@...mmary&prodno=5609.0&issue=Jun 2008&num=&view=


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## Mofra (6 August 2008)

CamKawa said:


> What are "auctions with no result"? Are these auctions that passed in but the REA has failed to report them to REIV?



Cam,

I e-mailed REIV on the weekend, as I couldn't think of any normal circumstance an auction would have "no result" that wasn't either a sale, passed in, or later sold after negotiation with the highest bidder. My reply (just received) was:

"Thank you for your email.

Auctions with no results are not included in any of the above figures.

Kind Regards,"

So basically we have:

TOTAL AUCTIONS
This week: 428
Last weekend: 445
This time last year: 491

S Sold at Auction: 211
SB Sold before Auction: 56
SA Sold after Auction: 4

Passed in: 157
Clearance rate: 63%

Postponed: 0
Withdrawn: 2
*Auctions with no result: 54*

54 "results" not included in the above figures. Have asked for further clarification, because to be honest I'm baffled.


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## wayneL (7 August 2008)

Another update from over here:

http://business.timesonline.co.uk/t.../construction_and_property/article4477236.ece



> From Times Online
> August 7, 2008
> Halifax piles more misery on housing market
> Heath Aston
> ...


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## WaySolid (7 August 2008)

Far out.. Just noticed this thread! Completes the trinity I guess..

House prices to..... nah can't think of another one.

Those comments by John Edwards are pretty worrying, he's a guy that should be on top of the data. Interesting times anyhow.

I'm curious about the RBA, Glenn Stevens strikes me as a smart cookie, and they kept rates on hold even though they have been tracking all of the falling data points.. Are they still inflation nazi's or are they thinking it's not as bad as to need some pretty swift rate cutting?

Will go and have a closer read of Edwards writing now, haven't noticed it before, thanks for the link


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## lusk (8 August 2008)

WaySolid said:


> I'm curious about the RBA, Glenn Stevens strikes me as a smart cookie, and they kept rates on hold even though they have been tracking all of the falling data points.. Are they still inflation nazi's or are they thinking it's not as bad as to need some pretty swift rate cutting?




They want to make sure they have pushed the economy well and truly into the Bust cycle before they take the peddle off and start lower rates. I believe they will keep rates on hold until you start seeing the liquidation process begin and significant falls in house prices, l can't see them lowering rates and letting house prices barrel on upward if they do we are on a road to nowhere.


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## explod (8 August 2008)

This thing of rates, jawboning by Government and the banks.   Interest rates are effected by world monetary policies and the most import, MONEY SUPPLY.

Governments have only the ability to deflate its value by printing more.   On the global plain money is in short supply so it is getting expensive.   That means higher rates, which we have witnessed with the actions of our big four over the last few months.    The US are printing like crazy to try and keep rates down but still it is failing and the banking institutions continue to go to the wall.

It has got to the stage here in Aus. where small businesses can no longer get money at all for plant and expansion.

So in my view if anyone really believes that there is any chance of a real drop in local rates they need to have a good think.


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## CamKawa (8 August 2008)

explod said:


> So in my view if anyone really believes that there is any chance of a real drop in local rates they need to have a good think.



I just walked past my local ANZ branch, they have lowered the 6 month term deposit rate from 8.15% to 7.80% . The banks are pretty good at picking which way rates are going to move, they wouldn't be lowering rates if they thought they were going up. It would suit me if they kept going up but I don't think they are going to.

Maybe you should have a good think?


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## gfresh (8 August 2008)

That's because ANZ just dropped their fixed rates across the board, including their mortgage ones 

http://business.theage.com.au/business/anz-cuts-fixed-mortgage-rates-20080808-3s4w.html


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## CamKawa (8 August 2008)

So who's going to rush out and buy this partially built home in Cranbourne?
http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007313626&s_rid=buy:HaveYouConsidered#


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## explod (8 August 2008)

CamKawa said:


> I just walked past my local ANZ branch, they have lowered the 6 month term deposit rate from 8.15% to 7.80% . The banks are pretty good at picking which way rates are going to move, they wouldn't be lowering rates if they thought they were going up. It would suit me if they kept going up but I don't think they are going to.
> 
> Maybe you should have a good think?




I THUNK I was referring the a "real drop" in rates.   Fluctuations up and down continue even when we are going up or down.    The overall issue is that money supply is becoming a problem because even fellow banks no longer trust each other as a result of sub-prime and concern now over prime.

It is the overall money supply that will hit the housing bottom line as it plays out further IMHO


----------



## explod (8 August 2008)

Further to my last it is revealed that the ANZ loan is fixed for 12 months.  A bit like Harvey Norman, buy now and pay nothing for 12 months and you find the final cost is almost double that of cash.

Must be hard to get people to borrow so suck em in with a honeymoon rate.

Who needs to think.


----------



## robots (8 August 2008)

explod said:


> Further to my last it is revealed that the ANZ loan is fixed for 12 months.  A bit like Harvey Norman, buy now and pay nothing for 12 months and you find the final cost is almost double that of cash.
> 
> Must be hard to get people to borrow so suck em in with a honeymoon rate.
> 
> Who needs to think.




hello,

good onya explod,

and the 5yr or 7yr fixed rate terms?

thankyou
robots


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## explod (8 August 2008)

robots said:


> hello,
> 
> good onya explod,
> 
> ...




On you too Robots.

The 5 and 7year are some of the ones running out now in the US and causing all the sub prime problems.   Some coming due for readjustment soon here too.


----------



## motion (8 August 2008)

Temjin said:


> My advice to you is that be very aware of your recency bias and REAL about the history of economic first. Consider the advises that those "everyone" have been giving you. Try to look at it from an unbiased way. If you find a point that you do not agree, ask yourself why you believe so? Also try to consider where did you get your information from? From the media? From the real estate agents who claim house prices never fall? Or from "similar age" friends who has done this 2-3 years ago and is now better off? (in which you would automatically assume that history will repeat itself forever)
> 
> My observation has been that alot of young people, especially those who are very well educated, are very prone to being too confident of themselves and ignore information and history that they have not personally experienced before.
> 
> ...




Very wise words.....


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## theasxgorilla (9 August 2008)

Temjin said:


> Of course, I said to be wary of information from the media, and this is no exception. However, I would not look at the comments made by the journalists, rather, I would look at the data presented and find out if what was said is true.




Wise advice Temjin.


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## WaySolid (9 August 2008)

CamKawa said:


> I just walked past my local ANZ branch, they have lowered the 6 month term deposit rate from 8.15% to 7.80% . The banks are pretty good at picking which way rates are going to move, they wouldn't be lowering rates if they thought they were going up. It would suit me if they kept going up but I don't think they are going to.
> 
> Maybe you should have a good think?



As far as I'm aware no prediction is implied by the bank rates, they simply have a cost of money and add a margin on top of that. So you can't read anything into these movements other than a reaction to what has already happened. I would be interested in why they are any better at predicting rates than the average economist.


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## Tysonboss1 (9 August 2008)

WaySolid said:


> As far as I'm aware no prediction is implied by the bank rates, they simply have a cost of money and add a margin on top of that. So you can't read anything into these movements other than a reaction to what has already happened. I would be interested in why they are any better at predicting rates than the average economist.




generally if the banks are offering fixed rates at lower than the current varible rate then that is a sign that varible rates may be on the way down,... if fixed rates are higher than varible and increase as the term gets longer then that is a sign the banks believe rates will be trending up.

the banks can't predit future interest rate movements but they will form an opinion and set there interest rate stratergy accordingly


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## motion (10 August 2008)

"Rates cut could come too late"

http://www.news.com.au/business/money/story/0,25479,24147797-14327,00.html

This is the first time I have seen news.com.au say something that we have all been saying for a while... 

A good read and while people are still waiting on the site line to see what happens it's food for thought...


----------



## tech/a (10 August 2008)

In the early 80'S I was at the age of many here.
Banks threw money at you much as they did in the late 90s early 2000s

I took it and held 7 figures of commercail property.
Interest went to 18%
Tennents went broke.
Property was vacant and the banks came knocking.
Missed bankruptcy by the skin of my teeth.

Market remained flat till the 1990's

Off it went again.
I went again but with residential.
Was in the position to go harder.
This time took some profit and geared
back from 80% to 38%

So it will go flat again.
It will all happen again.
If you cant gear below 50%
Then wait for the opportunity which will come again in 12-18 yrs.---if your young enough.

Just like trading there are times when you place all your chips and others when you best remove some or even ALL.

Things to look for in 12-18 yrs.
(1) Interest rates lower than seen for 10 yrs or so.In the late 90s this was the case--30 yr lows.
(2) Cheaper to buy an established house than buy new and fit out.(Landscape,Carpet,Curtain etc)
(3) Positive gearing is not only possible but almost impossible NOT TO.
This was the case in the late 90's
(4) get in early it will last 7 yrs.The earlier your on to it the more youll be able to gear for the first 4 yrs---use the last 3 to gear down.
(5) Commercial and Industrial will always follow 3-4 yrs later,so you get a second bite.
(6) (5) Lasts only 4-7yrs so be very quick
(7) Gear down but save the rest---the worm turns.


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## WaySolid (10 August 2008)

Tysonboss1 said:


> generally if the banks are offering fixed rates at lower than the current varible rate then that is a sign that varible rates may be on the way down,... if fixed rates are higher than varible and increase as the term gets longer then that is a sign the banks believe rates will be trending up.
> 
> the banks can't predit future interest rate movements but they will form an opinion and set there interest rate stratergy accordingly



Tyson I'm saying I don't think the banks are making any predictions. Perhaps we both need to find some source material, I haven't researched this past a friend who is an economist and did some research on the subject himself; so I could be partially or completely wrong.

If fixed rates are lower than the SVR then it might well be a sign that rates are going down, just that I don't think the banks are in the prediction game in this instance. I believe they simply add the margin onto their cost of funding to determine rates, both fixed and SVR.


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## WaySolid (10 August 2008)

Tech, what's your view on Sydney in terms of resi property?

They have had a slow down in some areas for several years now, and I'm seeing some deals at the moment that must be very close to +ve cashflow even at present rates, some very 'cheap' prices in W. Sydney in particular.

I guess if you look for the next boom to be a copy of the 00-03 boom then you need a period of extended stagnation and disinterest lasting several years to a decade or so, though who says it has to be a copy? Each cycle is just like the last cyle, except different imo. Was the boom (described as a mini boom at the time) in Brisbane in 07 an echo boom? fakeout boom? Or the real thing?

Questions...... I have plenty more than I have answers anyway..

Interesting times to be guessing about the market, that's all it mostly is I think.. Educated guesses. My guess is for a period of extended stagnation in Brisbane to allow rents to push up in relation to property values, though I don't think they need much time to do that at the rate they are presently moving.


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## WaySolid (10 August 2008)

Credit crunch... where?

Just some small feedback from my own experience about credit at the moment. I'm moving some loans from one of the small fish that got squashed in the crunch to a major and am surprised how liberal credit appears to still be, throw in robust valuations and... it's still peachy, no guarantees how long that will ever last of course. 

The majors appear to be loving all this new business, might well be a chance for their spreads to widen a bit on loans now the smaller players are dropping off, makes you take a closer look a the bank shares anyhow.

So LoDoc and credit are still viable, at least for me at the moment. No prediction about where that game is going.. but thought it might be interesting feedback for some, surprised me a little bit.


----------



## explod (10 August 2008)

WaySolid said:


> Credit crunch... where?
> 
> Just some small feedback from my own experience about credit at the moment. I'm moving some loans from one of the small fish that got squashed in the crunch to a major and am surprised how liberal credit appears to still be, throw in robust valuations and... it's still peachy, no guarantees how long that will ever last of course.
> 
> ...




Nothing surprises.   Looking at Domain dot.com awhile back (3 weeks) and a mob are still offerring 105% finance to approved customers.

And that John Bloke from /Aussie Home Loans has stepped down from CEO to concentrate on pulling small loan brokers together, probably those ones GE are spitting out of Wizard before they sell it off to the banks.   Remember the old catch cry "AUSSIE WILL SAVE YA"


----------



## WaySolid (10 August 2008)

explod said:


> Nothing surprises.   Looking at Domain dot.com awhile back (3 weeks) and a mob are still offerring 105% finance to approved customers.
> 
> And that John Bloke from /Aussie Home Loans has stepped down from CEO to concentrate on pulling small loan brokers together, probably those ones GE are spitting out of Wizard before they sell it off to the banks.   Remember the old catch cry "AUSSIE WILL SAVE YA"




Explod my post was probably misleading. Credit is getting tighter, and more expensive, just that  it seems to me that it's happening in a very orderly fashion at least for the moment. You might still be able to get 105% loans, but I would guess you would be looking at one ugly rate if that was even possible, it's certainly no longer the environment it was even a year ago.

Nodocs appear to be under threat, banks will no doubt pass on less than any rate cut the RBA make allowing their margins to increase, credit is much tighter and any mortgage broker will give you some examples of what is happening.

I'm pretty impressed by how well the markets discount, and by how well some of the majors here are handling themselves now, just that I'm interested to see how things play themselves out. At some point all of the bad news and them some will be priced in and that will be a buy point, wonder where that will be?


----------



## Tysonboss1 (10 August 2008)

WaySolid said:


> If fixed rates are lower than the SVR then it might well be a sign that rates are going down, just that I don't think the banks are in the prediction game in this instance. I believe they simply add the margin onto their cost of funding to determine rates, both fixed and SVR.




When it comes to giving out loans at fixed rates for long period of times they have to form an opinion and make a best guess and add the risk of their interest payments changing to the rate.

For instance if the bank is going to write you a 5 year fixed interest loan and they just add a standard margin of 2 % then over the 5 years the interest rate that the bank borrows moves up by 3% then the bank is losing money.

If they were just adding a standard margin then why are the rates on fixed intrest loans different depending on the term you select. a year ago the longer the term you choose the more expensive the interest rate but that is starting to change where the longer term periods are becoming cheaper than the shorter term periods.

Your last sentence says it all,..." they add a margin to their cost of funding", If they are signing up fixed interest loans for long periods they have to make an assessment of the chances that there costs of funding will rise during that period ( a prediction or forecast) and include this risk into the interest rate.


----------



## theasxgorilla (10 August 2008)

Tysonboss1 said:


> For instance if the bank is going to write you a 5 year fixed interest loan and they just add a standard margin of 2 % then over the 5 years the interest rate that the bank borrows moves up by 3% then the bank is losing money.




Really?  I thought they bought a bond or some such with 5 year maturity and added a margin to it, so they're not exposed at all.


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## numbercruncher (10 August 2008)

> Auckland's largest real estate agency group, Barfoot and Thompson, has reported that its average sale price fell 5.3 per cent to NZ$497,479 in July from NZ$525,316 in June as sellers start to to adjust their price expectations.




http://http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10525627


5% in a Month for the Bros !

We are immune though I remember reading ! 

How are we all doing ?, Ive been awol for a while !

Good to see loads of rational advice and tales of personal experience entering the thread, love it .....


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## Mofra (10 August 2008)

theasxgorilla said:


> Really?  I thought they bought a bond or some such with 5 year maturity and added a margin to it, so they're not exposed at all.



The CDOs written on fixed rate loans can be written for a few years out, however margins aren't fixed (for example, margins are squezed when delinquincy rates are higher). Most loans are written on balance sheet at the moment (can't securitise much in the current market, regardless of asset/tenant quality) so losses on fixe rate loans is not just realistic, it's part of bank SOP. Fixed rates are seen as "loss leaders" to try and leverage profitable business off (insurance, short term consumer finance etc.)


----------



## wayneL (10 August 2008)

tech/a said:


> In the early 80'S I was at the age of many here.
> Banks threw money at you much as they did in the late 90s early 2000s
> 
> I took it and held 7 figures of commercail property.
> ...



The best post for a long time on any RE thread.


----------



## theasxgorilla (10 August 2008)

wayneL said:


> The best post for a long time on any RE thread.




Sobering and a little sad...if this is really the end of this rather long cycle it sounds a bit like, "sorry to all the folk who didn't make anything from this boom, there will be another one along in 1 to 2 decades".


----------



## WaySolid (11 August 2008)

Tysonboss1 said:


> When it comes to giving out loans at fixed rates for long period of times they have to form an opinion and make a best guess and add the risk of their interest payments changing to the rate.
> 
> For instance if the bank is going to write you a 5 year fixed interest loan and they just add a standard margin of 2 % then over the 5 years the interest rate that the bank borrows moves up by 3% then the bank is losing money.



Tyson where on earth are you getting this idea from? I agree with what ASXGorilla said.


----------



## WaySolid (11 August 2008)

theasxgorilla said:


> Sobering and a little sad...if this is really the end of this rather long cycle it sounds a bit like, "sorry to all the folk who didn't make anything from this boom, there will be another one along in 1 to 2 decades".



Definitely sobering if your only trick from property is buy n hope.

Peter Spann is a well known example of a guy who created a small fortune, 0 to a few million or so from buy, renovate and flick in Brisbane during the recession we had to have in the 90's.

If you have some value adding skill then I guess that property will remain an excellent vehicle to create wealth. The only scenario that has me a bit perplexed is a Japanese style multi decade ground out deflation, that's a scenario killer for property that would have you looking to avoid the asset class completely perhaps?

The playbook from the early 00's where you could just lever to your maximum and repeat as quickly as possible might need some tweaking though


----------



## theasxgorilla (11 August 2008)

WaySolid said:


> Peter Spann is a well known example of a guy who created a small fortune, 0 to a few million or so from buy, renovate and flick in Brisbane during the recession we had to have in the 90's.




I hope it still works...it's all I know how to do!


----------



## wayneL (11 August 2008)

theasxgorilla said:


> I hope it still works...it's all I know how to do!



It will always work so long as the spread between unimproved and improved value is sufficient.

In recent years, in most cases, there was not really a great spread, but rather an enforced period of holding while renovations took place. Rampant capital gain was actually the profit driver and any extra was simply paying for your time... sometimes not even that.

In a recession, it probably will mean a greater spread (as was the case in the Peter Scam example). This is already starting to happen here. Fixer uppers are starting to get *a lot* cheaper than up-to-date properties.

Renovators/value adders should really be hoping for housing Armageddon. Those fixer uppers will be cheap as chips.


----------



## gfresh (11 August 2008)

It's funny how soon everybody is reading the last rites already 

tech's view is speaking from good experience,  however I am sure there are many different views out there.  

Will 12-18 years see the next boom or a major bust? To be honest, at that stage we're probably more likely to get the mega-collapse as all the baby-boomers reach their twilight years, and the mass of the younger population isn't enough to support it. We're also likely to see the west becoming minnows against the big fish of the east, and whatever else that brings. 

Housing structures will change - mega retirement villages? easy to maintain retirement units rather than sprawling houses? Who knows, but it may well be quite different what people require in 2020+ 

The way the whole financial system, especially growth in domestically driven economies, has gravitated towards feeding off property over the last few decades, and it's subsequent collapse only perpetuates it's the only way to expansion. Humans don't really learn from history, they go forth and do the same things over and over again, and they shall again. It's seems now that the timing between boom and bust is oscillating quicker, as the world also moves at a much faster pace in everything we do. 

While it seems gloomy now, I am sure those at the top of financial circles will dream up some new and wild new scheme to re-inflate another credit bubble in the next few years, fueling the next boom within the next decade. Often from the largest collapses become the largest gains afterwards. When you get hooked on something, it's hard to give it up so easily, they'll simply look for the next fix.


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## Tysonboss1 (11 August 2008)

WaySolid said:


> Tyson where on earth are you getting this idea from? I agree with what ASXGorilla said.




If you believe that every fixed loan they write is backed by a bond of the same size and term you would be wrong,... equally if you believe that every bond they write is backed by a loan fixed for that same period then you would also be wrong.

There will always be a difference the size and terms between the bonds written and loans at fixed rates. 

What you are saying is that the banks never make any forecasts as to the future of interest rates and adjust the products they are offering this is just plan wrong,


----------



## Tysonboss1 (11 August 2008)

theasxgorilla said:


> Sobering and a little sad...if this is really the end of this rather long cycle it sounds a bit like, "sorry to all the folk who didn't make anything from this boom, there will be another one along in 1 to 2 decades".




Remember thought that techs portofolio was commerial property which has a much higher risk profile than other areas, 

The same thing would have been happening to any body who had margin loans to the limit of there stock portfolio at the beginning of the year, It is more the debt stratergy that you use than the asset class. 

I mean no one good argue that buying a property outright with cash and just using it as an inflation hedged income stream carries a high degree of risk, It one of the safest investments there is,


----------



## pepperoni (11 August 2008)

A few sales in syds north of late ... not doing great but nowhere near disaster yet.


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## CamKawa (11 August 2008)

Found this chart over at bubblepedia, it makes for interesting viewing, looks like demand for housing is dying in the ****.


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## pepperoni (11 August 2008)

There is very little volume .... unless people get forced to sell home owners are the perfect little cartel ... no sales/no listings/no supply/no price falls.


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## CamKawa (11 August 2008)

pepperoni said:


> There is very little volume .... unless people get forced to sell home owners are the perfect little cartel ... no sales/no listings/no supply/no price falls.



I hear what you are saying and it's a good point. You don't happen to have a chart of sales volume handy for a comparison against housing finance commitments?


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## pepperoni (11 August 2008)

ha ha .. no .. wouldnt know one if I saw one ha ha.

32% clearance rate on northern beaches a week or so back ... no giveaways though ... about as telling as robots 60% week in week out clearances.

One thing Ive learnt through this ... property prices are VERY resilient to sharp falls! Human nature really.


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## Beej (11 August 2008)

pepperoni said:


> ha ha .. no .. wouldnt know one if I saw one ha ha.
> 
> 32% clearance rate on northern beaches a week or so back ... no giveaways though ... about as telling as robots 60% week in week out clearances.
> 
> One thing Ive learnt through this ... property prices are VERY resilient to sharp falls! Human nature really.




Yea but that's what happens during an (Aussie) housing market downturn - especially in Sydney. Seen this many times before - in fact the graph posted shows perfectly the slowdowns that occurred in 2000 just after the intro of the GST, and in 2004 when Sydney first came off the boil - this time is no different IMO, and if you look the volume levels are not even that low yet.

Yes prices are high, but they don't tend to crash for the reason you state - instead sale volume falls dramatically as owners only sell if they have to for some reason, prices fall a little, but 5-10% is the norm, then flatten and stagnate for a while (possibly several years even). In the meantime, housing stock renewal/ gentrification/ renovation of older areas will continue, and those not in the market and those looking to move up the ladder will continue to save lot's of cash, the interest rate cycle will turn from upwards to downwards, until the time seems right and the market will start to move again. And therein lies to start of the next cycle.

Of course if we didn't have a supply problem then this wouldn't happen so easily (like in the US where supply is not a problem - in fact they have an over supply), but we do, so this is what happens - (in Sydney at least). Personally I think Brisbane and Perth have more scope for larger value falls in a market like this, as currently their prices are closer to Sydney than they have ever been, but the quality of the housing stock, and the cities in general, have not been improving in line with the price increases in the way those things tend to improve in Sydney.

Cheers,

Beej


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## CamKawa (11 August 2008)

Beej said:


> Yes prices are high, but they don't tend to crash for the reason you state - instead sale volume falls dramatically as owners only sell if they have to for some reason, prices fall a little, but 5-10% is the norm, then flatten and stagnate for a while (possibly several years even).



Could that some reason be unemployment? The RBA said today that it is expecting an increase. If that jumps house prices may fall dramatically.  Stay tuned...


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## white_goodman (11 August 2008)

unskilled developers will be found out in this period of downturn... the major issue with financial success is land price, all other feasibilities mean little if you pay too much for the land


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## Beej (11 August 2008)

CamKawa said:


> Could that some reason be unemployment? The RBA said today that it is expecting an increase. If that jumps house prices may fall dramatically.  Stay tuned...




 Well, we have had unemployment rates as high as 10% before and believe it or not property prices didn't crash! The thing you have to remember is that when employment is in fact contracting, the people who are *primarily* effected (unfortunately) tend to be the younger, plus the less skilled members of the workforce. These are not, as whole, the section of the population that tends to own property (and therefore may be forced to sell), or that tend to own property in the more desirable areas. 

Sure there are exceptions to this (on both sides), but generally speaking skilled workers/professionals are more able to find new jobs, or can more readily re-skill into a new area as required, and are less likely to be over-committed to their mortgage. Also, unemployment tends to cluster around particular geographies, and so might impact a particular suburb, region, or town more severely, but not the city-wide or national property market as a whole in general anywhere as much. In other words, you might see your "bargain" out there at Mt Druitt, but I bet that most of the hopefuls waiting eagerly for a property market crash still won't buy that bargain no matter how cheap. Conversely the areas in which they would want to buy (Sydney Inner West, Lower North Shore, Eastern Suburbs and so on) tend to be the areas least effected by rising unemployment, and are also the area's with lower mortgage commitments on average etc, and therefore the huge price drops just won't be seen in these area's.

Also remember it's LONG term unemployment that might cause you to loose your house. As a result, a slight up-tick in unemployment from low 4.x% to high 4.x or 5.x % is IMO hardly going to be the great trigger for a huge property price crash like some seem to expect.

Cheers,

Beej


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## theasxgorilla (11 August 2008)

pepperoni said:


> There is very little volume .... unless people get forced to sell home owners are the perfect little cartel ... no sales/no listings/no supply/no price falls.




Finally someone who gets it.

So in effect you have a chart where prices "stagnate"...on the x-axis is time, it passes, on the y-axis prices, they don't move much, on a seperate histogram you have volume, it shows a significant decrease, net short term result, house prices don't fall (much in most areas) if people aren't forced to sell, and after enough time has passed and people have figured out how to save more, earn more, spend less (which is the natural order of things) house prices go up again.

Oversimplified, but if you bet on this you'll do better than the majority of Chicken Littles.


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## CamKawa (11 August 2008)

Beej said:


> Well, we have had unemployment rates as high as 10% before and believe it or not property prices didn't crash! The thing you have to remember is that when employment is in fact contracting, the people who are *primarily* effected (unfortunately) tend to be the younger, plus the less skilled members of the workforce. These are not, as whole, the section of the population that tends to own property (and therefore may be forced to sell), or that tend to own property in the more desirable areas.
> 
> Sure there are exceptions to this (on both sides), but generally speaking skilled workers/professionals are more able to find new jobs, or can more readily re-skill into a new area as required, and are less likely to be over-committed to their mortgage. Also, unemployment tends to cluster around particular geographies, and so might impact a particular suburb, region, or town more severely, but not the city-wide or national property market as a whole in general anywhere as much. In other words, you might see your "bargain" out there at Mt Druitt, but I bet that most of the hopefuls waiting eagerly for a property market crash still won't buy that bargain no matter how cheap. Conversely the areas in which they would want to buy (Sydney Inner West, Lower North Shore, Eastern Suburbs and so on) tend to be the areas least effected by rising unemployment, and are also the area's with lower mortgage commitments on average etc, and therefore the huge price drops just won't be seen in these area's.



Interesting Beej, but not everyone agrees with you.

""Blue Chip" (_ie_ rich) areas tend to do very well in terms of capital gains especially during economic boom times, but also can have rather large falls when the economy turns down."

source: http://travismorien.com/invest_FAQ/content/view/90/56/


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## Tysonboss1 (11 August 2008)

pepperoni said:


> One thing Ive learnt through this ... property prices are VERY resilient to sharp falls! Human nature really.




it tends to stagnate rather than fall,... some areas will fall offcoarse but not by the 30% qouted by some people.

a prospect of stagnation or a small fall in prices would normally cause shorterm investors in the stockmarket to rush and sell,... so share markets are subject to small downturns becoming avalanches and the falls get bigger and bigger,....

But it is completely different with property with over 70% of property being held by owner occupiers who are not going to sell because of a small down turn, and most of the rest held by longterm investors who are not phased by periods of stagnation,... for instance a retired couple who own a few houses debt free are only concerned with collecting rent to fund their life style,... they aren't going to rush and sell because the price may stagnate for 3 years.


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## Beej (11 August 2008)

CamKawa said:


> Interesting Beej, but not everyone agrees with you.
> 
> ""Blue Chip" (_ie_ rich) areas tend to do very well in terms of capital gains especially during economic boom times, but also can have rather large falls when the economy turns down."
> 
> source: http://travismorien.com/invest_FAQ/content/view/90/56/




Ah yes - if we are talking multi-million dollar blue chip property sure that is true, but believe me even when those blue chip prices have their "rather large falls" it is still very unlikely that most of us here could afford them! Therefore irrelevant to the general/middle class population. I think more are most interested in what might happen in the sub-$500k range and the $500k-$1M bracket. That's the market I'm talking about here. IMO, don't expect to see much more than a 10% pull back from the peak in those markets, followed by a flat period (in decent area's, especially in Sydney), otherwise you will end up like all my friends who sounded just like some of you guys back in 98/99, when they could have (and should have) bought for prices that now seem like peanuts - but they kept waiting for the inevitable market crash.... 

Cheers,

Beej


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## CamKawa (11 August 2008)

Beej said:


> ... otherwise you will end up like all my friends who sounded just like some of you guys back in 98/99, when they could have (and should have) bought for prices that now seem like peanuts - but they kept waiting for the inevitable market crash....



Call me crazy and I don't know this, but I suspect house prices now could be highest that I'll see in my lifetime. I've attached an old favourite chart of mine just to give some perspective on where we are now.


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## theasxgorilla (11 August 2008)

Tysonboss1 said:


> Remember thought that techs portofolio was commerial property which has a much higher risk profile than other areas,




I thought he held residential...but we can ask him, he's never far away.


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## theasxgorilla (11 August 2008)

CamKawa said:


> Call me crazy and I don't know this, but I suspect house prices now could be highest that I'll see in my lifetime. I've attached an old favourite chart of mine just to give some perspective on where we are now.




Where is the "real median income" index so we understand if Joe Average can now also afford much more?


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## pepperoni (11 August 2008)

Well $2m wont get you even decent house/crap block or crap house/good block anywhere nice and central in syd. Market starts at 2.5 with no views ... and my original cond rental is still 4.5m with no real view. 

And yes with inflation and no 5% rates the wholr thing is mission impossible.

In the 2-2.5m bracket in good north spots i reckon there are 5 houses each year tops ... dont need many buyers to keep it bubbling.

Wont fall much unless there are a few more forced sales ... but if there were even a few things would drop alot more than 20% guaranteed.

Not going to happen now ... economy is a bit sick but not dead.  Will definitely happen in next 10-20 but whatever.


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## Tysonboss1 (11 August 2008)

theasxgorilla said:


> I thought he held residential...but we can ask him, he's never far away.




If you look back at his comment he said that his first property portfolio was commerial,.. But yes now he holds residenstial


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## theasxgorilla (11 August 2008)

pepperoni said:


> Well $2m wont get you even decent house/crap block or crap house/good block anywhere nice and central in syd. Market starts at 2.5 with no views ... and my original cond rental is still 4.5m with no real view.




I can get a renovators delight for $425,000 AUD.  From 1932 on 1367 sqm, with a 66 sqm self contained guest house from 1935 on the back, under 200 metres to beach, less than a kilometer to the smallboat harbour, excellent sea views, less then 20 minutes commute to work, and borrow the money at 5.5%.  And I can claim 30% tax deduction on repayments even though it's a secondary place of residence.

Needs rendering, a new roof, and a rendered fence around the block and some work on the lawn/garden. Could split it and sell the rear property seperate (it has it's own driveway access).

The house over the road is listed for $1 mil AUD.  I think Sweden's property boom has at least another leg left to run...but sssshhhh, please don't tell anyone.


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## theasxgorilla (11 August 2008)

Tysonboss1 said:


> If you look back at his comment he said that his first property portfolio was commerial,.. But yes now he holds residenstial




That was pre-87, right?  I fail to see your point.


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## Tysonboss1 (11 August 2008)

theasxgorilla said:


> That was pre-87, right?  I fail to see your point.




I was just pointing out that commerial property carries much more risk than residential property.

Tech was talking about how he was nearly bankrupted because he had a commerial property portfoilio that was over $1m at 80% LVR and when the economy went sour he nearly went under.

All I was saying was that this type of property portfolio with that much debt is exposed to much more risk than a low LVR resi portfolio


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## wayneL (11 August 2008)

theasxgorilla said:


> I can get a renovators delight for $425,000 AUD.  From 1932 on 1367 sqm, with a 66 sqm self contained guest house from 1935 on the back, under 200 metres to beach, less than a kilometer to the smallboat harbour, excellent sea views, less then 20 minutes commute to work, and borrow the money at 5.5%.  And I can claim 30% tax deduction on repayments even though it's a secondary place of residence.
> 
> Needs rendering, a new roof, and a rendered fence around the block and some work on the lawn/garden. Could split it and sell the rear property seperate (it has it's own driveway access).
> 
> The house over the road is listed for $1 mil AUD.  I think Sweden's property boom has at least another leg left to run...but sssshhhh, please don't tell anyone.




That's what I call a spread. You don't need a boom, just reasonable liquidity.

Finns det utrymme fÃ¶r en andra tvÃ¥ australier dÃ¤r


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## gfresh (11 August 2008)

Ahhh, thank you camkawa for bringing this thread back to reality 

This time it is different! Well at least compared to any small slowdowns in the the last decade... more people are in over their eyeballs in debt than ever before, more massive corporations are losing billions than ever before, and this time there is very very little room for the public to move in case of even minor disruption, and boy there is still a lot of it still to filter through from o/s!

Europe hasn't even entered recession yet, but it's getting damn close.. and how long has it taken for the full effects of the US to kick in after it started, what 12-18 months ago? and soon we'll get the Europe kicker, which will probably be worse for Australia (in terms of where our exports go) than the US one. 

Most it seems couldn't even cope with 9.6% interest rates.. never mind 12-17% like the old days. The goals of where stress occurs have been shifted. 

We've got more other outstanding debt than ever before - credit cards, personal loans, new cars, holiday houses, geared investments, 24 month mobile phone contracts, internet contracts, foxtel contracts, "interest free" finance, the list goes on and on. None of which were so prevalent even 10 years ago. And that is what has stuffed people so much with interest rates and fuel rises - they have so little room to move as these small costs are fixed, but add up to a large amount for many families at the end of each week. 

Unemployment may have been 10% in the past, and people got by, but property values were not 7 times avg. income, but rather 3-4 times. Many have geared themselves into property expecting 7% interest rates forever, 4.5% unemployment forever, and no bad times, with very little buffer. After all, why not when houses have been rising 10-20% a year. It's going to continue forever, endless demand, endless population, rental shortages, everybody needs somewhere to live, endless credit handed out like candy. 

Veda came out the other day and said bankruptcies are higher than the early 1990's.  Surely than indicates something of the magnitude of this thing. Even take a short stroll across to NZ and it's quite a deflated story compared to Australia. Ahh, little old Australia, the island in the middle of nowhere, gently oblivious to the rest of the world until it smacks us in the face!

This is probably the calm which may lull some into a sense of false security, before the worst is felt. Interest rates are going to fall next year, maybe 1%, it's all over the news, will make things easier. House prices haven't really hit anybody too hard, seem fairly stable right now. Unemployment is still low, banks are reporting big profits. Where is the problem? I hear gloom, but I see no doom..  but when it comes down to it, all those charts of real house prices, household price v income, household debt v GDP,  are still saying something that will sort itself out - just as the sharemarket charts 18 months ago said something was up in terms of deviation from the norm, except very few chose to believe it would ever correct.


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## theasxgorilla (12 August 2008)

wayneL said:


> That's what I call a spread. You don't need a boom, just reasonable liquidity.
> 
> Finns det rum fÃ¶r en andra tvÃ¥ australier dÃ¤r?




Jajamensan 

Mindre en 10 procent av landet Ã¤r kultiverad.  Det finns mycket utrymme kvar 

There are also quite a few of these opportunities around.


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## theasxgorilla (12 August 2008)

wayneL said:


> That's what I call a spread. You don't need a boom, just reasonable liquidity.
> 
> Finns det utrymme fÃ¶r en andra tvÃ¥ australier dÃ¤r




I see you corrected your own Swedish, _vad bra_!


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## wayneL (12 August 2008)

theasxgorilla said:


> I see you corrected your own Swedish, _vad bra_!



Naturligtvis fuskade har haft jag med programvara, men att erfara av roliga Ã¶versÃ¤ttningar fÃ¶r med den engelska homonymen. Och jag misstÃ¤nker starkt denna skulle Ã¶versÃ¤ttning roar hÃ¶gt till en infÃ¶dd svensk, om den Ã¤r sannerligen Ã¤ven begriplig.

Grammatiken skitas vanligt.


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## theasxgorilla (12 August 2008)

wayneL said:


> Naturligtvis fuskade har haft jag med programvara, men att erfara av roliga Ã¶versÃ¤ttningar fÃ¶r med den engelska homonymen. Och jag misstÃ¤nker starkt denna skulle Ã¶versÃ¤ttning roar hÃ¶gt till en infÃ¶dd svensk, om den Ã¤r sannerligen Ã¤ven begriplig.
> 
> Grammatiken skitas vanligt.




It's not bad, but as you say the grammar is ordinary...but then again at best so is mine, so I find it perfectly intelligible


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## theasxgorilla (12 August 2008)

gfresh said:


> Veda came out the other day and said bankruptcies are higher than the early 1990's.  Surely than indicates something of the magnitude of this thing. Even take a short stroll across to NZ and it's quite a deflated story compared to Australia. Ahh, little old Australia, the island in the middle of nowhere, *gently oblivious to the rest of the world until it smacks us in the face!*




That would only be fair given the significance, or lack of, that Australian affairs play in other cultural centres of the world.


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## Beej (12 August 2008)

gfresh said:


> Ahhh, thank you camkawa for bringing this thread back to reality




A "reality" that has not ever happened before, one that doesn't make sense to those who have been around for a while, and that looks more like the "fantasy"  of those who think they will be picking up a cheap quality house within 10km's of the Sydney CBD for peanuts soon, rather than having to actually save and work hard for it like all those have before them 



> This time it is different! Well at least compared to any small slowdowns in the the last decade... more people are in over their eyeballs in debt than ever before, more massive corporations are losing billions than ever before, and this time there is very very little room for the public to move in case of even minor disruption, and boy there is still a lot of it still to filter through from o/s!




Well I tell you what - this time it's NOT different from the slowdown (read REAL recessions - not phantom recessions like "this" one) that we had in 1981/82 and 1990/91. As for corporations losing billions - well I don't see it yet. Most corporations (in Australia) are still making bucket loads rights now - mainly the banks have taken a hit, but those are paper losses (asset write-downs, increased provisions) and even then they STILL turn a huge profit! I think you are mistaking FALLING profits for "billions in losses". In a REAL recession you will see real losses.... but it seems that has not yet happened, so people are getting WAY ahead of themselves here....



> Europe hasn't even entered recession yet, but it's getting damn close.. and how long has it taken for the full effects of the US to kick in after it started, what 12-18 months ago? and soon we'll get the Europe kicker, which will probably be worse for Australia (in terms of where our exports go) than the US one.




Well actually NONE of those countries is yet actually in recession. Everyone keeps saying they are or will soon - it's been like that for up to 12 months now! But yet it still hasn't happened. There is a definite slowdown, and the POSSIBILITY of recession yes, but so far (thank goodness) things do not yet seem to have tipped over the brink. The longer this takes to play out, the better prepared individuals will be for it if it happens. It would seem most people in Oz are now focusing on saving/drawing down debt rather than taking on more - the longer that happens for, the more prepared individuals will be if the worse happens. On top of this, the interest rate cycle here is turning and rates are heading down from here on......

Also I think you will find most of our export $$$ come from Asia nowadays....



> Most it seems couldn't even cope with 9.6% interest rates.. never mind 12-17% like the old days. The goals of where stress occurs have been shifted.




Sure - but that's exactly why the RBA hasn't needed to crank up passed 7.25% cash rate in order to get people to pull their belts in. It's also because inflation is far lower now (on average) than in the old days (when 10% was a typical number). There's no magic number with interest rates - during the cycle they go to where they need to to effect the required level of monetary policy tightening.



> We've got more other outstanding debt than ever before - credit cards, personal loans, new cars, holiday houses, geared investments, 24 month mobile phone contracts, internet contracts, foxtel contracts, "interest free" finance, the list goes on and on. None of which were so prevalent even 10 years ago. And that is what has stuffed people so much with interest rates and fuel rises - they have so little room to move as these small costs are fixed, but add up to a large amount for many families at the end of each week.
> 
> Unemployment may have been 10% in the past, and people got by, but property values were not 7 times avg. income, but rather 3-4 times. Many have geared themselves into property expecting 7% interest rates forever, 4.5% unemployment forever, and no bad times, with very little buffer. After all, why not when houses have been rising 10-20% a year. It's going to continue forever, endless demand, endless population, rental shortages, everybody needs somewhere to live, endless credit handed out like candy.




As for personal debt - there has always been debt - it's the bloodstream of capitalism - people have always borrowed large amounts of money to buy their houses in particular - Aussies love their houses and their lifestyle - they love living in and raising their family in the best house in the best area for their lifestyle that they can afford. We have more "stuff" now because we can afford to.

What is different now is real wages are higher by a large margin than they have ever been, and of course money has been cheap. Additionally, incomes of professionals and business owners have in real terms multiplied by even higher factors over the past 20 years than the average wage - there is a LOT more income out there than there ever has been! So people have borrowed a lot more than in the past. This can still correct itself without the sort of housing disaster some are predicting. Sure there are a minority of people who are over-committed, but I think the majority will work things out without inviting personal disaster, just as the majority of people have managed to do in the past when hard times have hit.

Re house price values - That 3-4 times average wage is nation-wide right? But in Sydney that has not been the case since the 50s. In 1992 for example, the median house price was around $180k (I remember because I bought my first home then). At that time the average wage was something like $20-$25k pa. That's gives us a multiple of 7-8x for a median house in Sydney. Gee - it's NOT THAT DIFFERENT from right now is it??? And interest rates then were 10%. Believe me, buying a first home then was just has hard as it is now. Just as it was for my parents when they bought their first home in 1960.

I think what has happened is that prices in the rest of Australia have gone up a lot more than in the past, so that Australia-wide "wage multiple" figure has gone up. Why has that happened? Well in the 80s jobs/ opportunity/ earnings in Sydney were far higher than the rest of the country - but I think that has now changed. Australia has grown up and there are lot's of good paying jobs and business opportunity all over the country now (plus the mining boom). As a result the other major cities like Brizvegas, Perth etc started to play catch-up with Sydney socio-economically speaking, and that includes rising house prices, but also improving housing stock. Remember our average house now is FAR BETTER than the average house even 20 years ago, let alone 50 years ago. 

So personally I think that wage multiple statistic is a reflection of Australia's overall increase in prosperity and living standards/incomes etc rather than some dire indication of an imminent housing market collapse.



> Veda came out the other day and said bankruptcies are higher than the early 1990's.  Surely than indicates something of the magnitude of this thing. Even take a short stroll across to NZ and it's quite a deflated story compared to Australia. Ahh, little old Australia, the island in the middle of nowhere, gently oblivious to the rest of the world until it smacks us in the face!
> 
> This is probably the calm which may lull some into a sense of false security, before the worst is felt. Interest rates are going to fall next year, maybe 1%, it's all over the news, will make things easier. House prices haven't really hit anybody too hard, seem fairly stable right now. Unemployment is still low, banks are reporting big profits. Where is the problem? I hear gloom, but I see no doom..  but when it comes down to it, all those charts of real house prices, household price v income, household debt v GDP,  are still saying something that will sort itself out - just as the sharemarket charts 18 months ago said something was up in terms of deviation from the norm, except very few chose to believe it would ever correct.




Or the current situation may just be things playing out as many people have predicted (and still do). Time will tell, but the question is do you want to "bet your house" on one outcome or the other?  I guess the reality is that wherever you sit you actually have! 

Cheers,

Beej


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## pepperoni (12 August 2008)

I remember the 90s recession, and we currently have an outrageous boom by comparison.

There are not going to be big falls, just stagnation, which in reality we have seen in all markets for almost 3 years now either through actual stagnation or volatility tending back to 3 years ago.  People just get excited about all the false starts and odd strong quarter offset by the next.

Seriously cash has fared way better than an asx index fund or property during this period.

Staganation will continue as any slack, and then some, has been taken up in all asset prices.  But short of another 9/11 we are well and truly at the bottom.

So if bank rates stay at 8% is it a good time to save ... yes ... and much more so than any time in the last 10 years.


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## Beej (12 August 2008)

pepperoni said:


> I remember the 90s recession, and we currently have an outrageous boom by comparison.
> 
> There are not going to be big falls, just stagnation, which in reality we have seen in all markets for almost 3 years now either through actual stagnation or volatility tending back to 3 years ago.  People just get excited about all the false starts and odd strong quarter offset by the next.
> 
> ...




Yes, I agree pretty much with that outlook. 

Cheers,

Beej


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## explod (12 August 2008)

pepperoni said:


> I
> 
> But short of another 9/11 we are well and truly at the bottom.
> 
> .




There are some big issues both here and offshore so would be interested in what is the subject/content of your bottom.  r/e or financial market.


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## numbercruncher (12 August 2008)

Peoples advice tends to nearly always just follow the direction of their bets and screw the evidence ......


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## pepperoni (12 August 2008)

Im betting on falls but expect stagnation.

We are 12 months into credit crunch ... liquidity improving and cost of funds falling.  Becoming a bit of a dead horse and definitely nowhere near crisis now ... 100% past the *bottom* on that one IMO.

Heading for possible recession, but cant see a serious one if any ... not going to crash market.

As for property i speak from 10 years first hand experience ... there are about 2 houses for sale at the bottom end of bellevue hill market now ... it sure as hell wont ever to crash on that volume.

Units and west syd have had their big falls. Dunno about other resi markets in aus though ... maybe have had bigger bubbles.


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## pepperoni (12 August 2008)

One other thing ... lots are doing it hard but most bears are not ... if prices fell by a good 10% demand at those prices would double? Triple?  All the gen ys that have been sitting on the fence can afford a fair bit by tighteneing their belts and they will jump.

Spain is crashing up to 35% with all its building.  I just got back from Dubai and its in oversuppy crash circumstances but the govt is doing with property what they once did with oil to support prices.

But australia has never seen overdevelopment on any scale let alone like those places.  Lots of places at the same price as 2002/2003 .... huge savings in real terms .... really cant go wrong buying now.


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## numbercruncher (12 August 2008)

> One other thing ... lots are doing it hard but most bears are not ... if prices fell by a good 10% demand at those prices would double? Triple?





I realise it varies from Area to area but I would say my suburb has fallen a good 10pc in price yet demand has gone extreme the other direction to nearly zero demand ..... seems lower the price less the demand .... funny old world it is !

I even just read an Advert here in the Gold Coast bulletin for a block of land , " Motivated vendor, If you Find a comparable block for less vender will beat it by 10pc " - That to me shows a race to the bottom has begun ....


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## Beej (12 August 2008)

numbercruncher said:


> I realise it varies from Area to area but I would say my suburb has fallen a good 10pc in price yet demand has gone extreme the other direction to nearly zero demand ..... seems lower the price less the demand .... funny old world it is !
> 
> I even just read an Advert here in the Gold Coast bulletin for a block of land , " Motivated vendor, If you Find a comparable block for less vender will beat it by 10pc " - That to me shows a race to the bottom has begun ....




Ah yes but that's on the Gold Coast! The original land of the Queensland "white shoe brigade" and the place where all faithful real estate spruikers hope to end up in the afterlife...  Where-else could former swamp-land have been turned into paradise on earth??  

Seriously, In my case I think I have said my comments pertain primarily to the Sydney market, (as has Peperroni I think). Brisbane and surrounds may well have got a little further run-up without the prosperity to back it up long term and through tougher economic times, but time will tell....

Beej


----------



## explod (12 August 2008)

Appreciate the depth of your reply Pepper.

I see the sub-prime situation in the US (now in UK) as only the first round.  The full financial effects on those economies will not hit the bottom lines for 12 months.  Not only that, the indications are that the lending authorities in those places are still hiding the big picture.   That contagion will continue to supress our situation going forward.

In Gough Whitlam's era I think early 1970's home loan interest rates hit upwards to 16%.   Given the economic problems, which will also hit on unemployment, a critical money supply problem will arise whereby rates may again hit these levels.   It is to be fair a bit differrent here as there will be plenty well cashed up.  However the middle ground, families under stress, is the area of volume that may very adversly effect property for some time.

In isolation agree with you but if the US economy really falls apart would you see another view.?


----------



## pepperoni (12 August 2008)

numbercruncher said:


> I realise it varies from Area to area but I would say my suburb has fallen a good 10pc in price yet demand has gone extreme the other direction to nearly zero demand ..... seems lower the price less the demand .... funny old world it is !
> 
> I even just read an Advert here in the Gold Coast bulletin for a block of land , " Motivated vendor, If you Find a comparable block for less vender will beat it by 10pc " - That to me shows a race to the bottom has begun ....




We had that here for 3 months or so but people get sick of sitting on the sidelines around then esp when new listings are rare, and sell fairly quickly on less speculative expectations.

We had a 10% or more fall but really there were just a few sales 10% up.  Round here we have more or less been around the peak price of the last boom since it ended in 2003 or whenever.


----------



## theasxgorilla (12 August 2008)

Beej said:


> I think what has happened is that prices in the rest of Australia have gone up a lot more than in the past, so that Australia-wide "wage multiple" figure has gone up. Why has that happened? Well in the 80s jobs/ opportunity/ earnings in Sydney were far higher than the rest of the country - but I think that has now changed. Australia has grown up and there are lot's of good paying jobs and business opportunity all over the country now (plus the mining boom). As a result the other major cities like Brizvegas, Perth etc started to play catch-up with Sydney socio-economically speaking, and that includes rising house prices, but also improving housing stock. Remember our average house now is FAR BETTER than the average house even 20 years ago, let alone 50 years ago.
> 
> So personally I think that wage multiple statistic is a reflection of Australia's overall increase in prosperity and living standards/incomes etc rather than some dire indication of an imminent housing market collapse.




Well bloody done, someone actually had a think about things.  Not being patronising Beej, but one can get bit fed up with all the BS stats we see posted, directly out of the media, no analysis.  

I agree that it's as hard now to buy a first home as it ever was, and I suspect many bears have a vested interest in wishing it was easier, but they're wishing for the wrong thing.


----------



## pepperoni (12 August 2008)

explod said:


> Appreciate the depth of your reply Pepper.
> 
> I see the sub-prime situation in the US (now in UK) as only the first round.  The full financial effects on those economies will not hit the bottom lines for 12 months.  Not only that, the indications are that the lending authorities in those places are still hiding the big picture.   That contagion will continue to supress our situation going forward.
> 
> ...






Many people never sell their PPOR. Those that *want* to can simply choose not to if prices dont fit the valuation they have gotten wedded to and emotional about at some time.  And they will if falls materialise, even if their step up is cheaper than expected !!!!! 

Even in financial hardship people find ways of cutting back $100+ a month on each of fox, broadband, mobiles, eating out, new SUVs.

Heck donald trump held on to most of his properties when $1b underwater!

Ive been happy to buy for months now ... but finding a decent property someone is prepared to sell is MUCh bigger problem than price!


----------



## pepperoni (12 August 2008)

Oh yeah, and no matter how crap market conditions are syd property always gets a huge kick in spring with decent sales even during the last bust.

Darn our perfect summer weather making buyers all giddy!


----------



## gfresh (12 August 2008)

I appreciate your detailed post BeeJ, it's all valid and well thought out. I won't argue most of those points as it's all different perspectives. Sydney is different to Brisbane, is different to goldcoast, is different to Melbourne, etc. Nothing is outwardly changing in the price properties are changing hands for, but it's still too early to see whether this will change as economic conditions change. 

It's still early days as Explod is eluding at..  Maybe some of the shocks are over, the complete collapse idea losing steam, but property in the US is not recovering, which will continue to affect large lending institutions. This is also now effecting Europe heavily and other parts of the world. While dot com was mainly contained to the US, this is much worse than that in terms of billions lost, and the fear factor going around. Although even a trillion in the scheme of things the world can probably handle, it's not going to take it that easily. 

Aggregate lending effects what people can borrow and pay for property, amongst other things - business expansion, consumer spending, and other items flow from this, and demand and supply are established later down the chain. I know these are just general and simplified theories, but they do make sense to me, and this is what has many economists are saying will drive us, as well as many other countries into recession eventually (whenever that may be). This is essential restriction of one of the key sources of growth in the last 10 years. 

If we go back to 1988, it wasn't until about 2-3 years after the stockmarket crash that the recession really kicked in globally. If it's anything similar to that period, and the "crash" was the start of this year, we still have a way to go before we can truly judge any effects. 

As I posted in the recession thread, what about BHP and the fact that resource prices are dropping rapidly, along with surely demand from Europe and Japan, 1/3 of their exports? Can only guess here, but we need to wait 6-12 months to see any effects from this, but it could be a big change to the whole of Australia's economy (if we add RIO, some of our energy co's, etc). A small handful of countries on their own contributes billions to the GDP of the country, and that could well be shrinking. On the aggregate wealth theory, that's less dollars coming into the country to be distributed to the masses, and also leveraged up for borrowing, spending, and the rest. 

Yes, we are all are biased by our own perspective  Mine I will admit is sitting on a fair amount of cash until the payoff for property is better than cash as rates come down to meet rising rental costs. If properties don't come down, doesn't worry me, I'll just pay current prices. 



> Even in financial hardship people find ways of cutting back $100+ a month on each of fox, broadband, mobiles, eating out, new SUVs.




Some of those things are very much contract driven though these days, "minimum spend". Over time people can adjust, but shorter term it's not so easy without shelling out to break a contract.  At the end of the day though, even those that work for Foxtel, the phone companies, car dealerships have to have enough business to sustain their jobs.


----------



## Temjin (12 August 2008)

gfresh said:


> Yes, we are all are biased by our own perspective




That is so true here. Trying to convince otherwise is almost impossible given the egos that all human have.  

I never trust the economists' view from mainstream media because they are almost never right. History has proved it over and over again and the fact that people usually only hear what they LIKE to hear. We all fall in the same bias. 

Just pray that China do not slow down too quickly. Data has already showed their export (for a month period anyway) has went negative for the first time ever since the past few years. 

Australia is definitely not immune to a global recession and one should never assume that this time is different and house prices will never fall and at best, stagnates or rise to eternity.



numbercruncher said:


> Peoples advice tends to nearly always just follow the direction of their bets and screw the evidence ......




Or rather, they always attempt to validate their "own evidences" and ignore others. It's living in ones' own reality.


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## tech/a (13 August 2008)

For what its worth this is what I think will happen in the future.

(1) Volatility will stop.
(2) Banks will tighten their lending policies as they did in the 80s
(3) Housing will remain flat after the volatility stops.
(4) Housing will be purchased by the majority for personal use rather than investment.
(5) Incentive will be offered to keep the Building industry "ticking along".
(6) In 10 or so years as the boomers begin to pass on some of their children will become flush with inheritances which will either boost their capital base or supply them with wealth not seen before by them.
(7) This generation are already known for their spending and this new found wealth will be spent on a new round of consumerism.
(8) Wages over the next ten years will increase making affordability less of an issue.
(9) Rents will continue to rise as demand isn't met.
(10) All property will find its level of "Worth" which will be different in each region/suburb and demand area.

And so it will go on.
In the 80s building societies were falling over.
The exact same cries of doom were heard loud and clear then as they are now.
Yet prices have risen over 300% since then.

Wont happen again?
Well that's what they said then!
It will happen again and again---just be ready for those signs which I posted above---this will place you in the position to take advantage of the swing of the pendulum in the OPPOSITE direction to which its in now.

In the 80s I was one of those who believed we would never see a boom like that which we had then and that was around 300%---charts look much steeper now as we have the Exponential/Compounding effect of more $ value.

Its no different!
Back to work.


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## pepperoni (13 August 2008)

Banks wont tighten much ... inheritances happen every day ... property has and will continue to stagnate.


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## Beej (13 August 2008)

To gfresh - all fair points, and thanks also for your detailed views. I can see where our outlooks/opinions differ (as can everyone else reading I suppose who am sure all have their own views also!), however I still believe that over the next few years the property market (particularly Sydney) will pan out more or less as I have outlined.

Just one point re BHP/RIO etc - long term I can't see anything but growth there - Iron Ore and Coal have locked in huge price increases now, with the falling Aussie dollar only going to help those even more. The China juggernaut will not stop in the next 10+ years I reckon - that's not to say that Chinese growth might not slow (say from 10+% down to 5-9%), however, as long as they are growing they will consuming our resources as fast as we can dig them up. US/Europe - even in recession, still consume those exports as well. In fact often the first response to recession of governments is to crank up infrastructure programs in order to add fiscal stimulus to a stalled economy. The effects of the US housing slowdown (if any) on our exports would already be in the current picture.

Anyway, not a bad time to keep cash and wait the property market out, so good luck with that! Just don't wait too long and miss the good opportunities that will be coming along in the next year or so 

Cheers,

Beej


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## CamKawa (18 August 2008)

Here's one for you Wayne.

U.K. House Prices Decline Most Since at Least 2002

Aug. 18 (Bloomberg) -- U.K. house prices posted the biggest annual decline since at least 2002 as banks choked off mortgage lending, deepening London's property slump, Rightmove Plc said. 

The average asking price for a home fell 4.8 percent in August from a year earlier to 229,816 pounds ($426,929), Britain's most-used property Web site said in a statement today. On the month, home values dropped 2.3 percent, the most since December, led by London. 

``The lack of mortgage finance is central to the problem,'' Miles Shipside, commercial director of Rightmove, said in the statement. ``London, in particular, appears to be having its own special summer sale, with over 21,000 pounds off in a month.''


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## Mofra (18 August 2008)

tech/a said:


> For what its worth this is what I think will happen in the future...



Hard to disagree tech, like any commodity valued by an open market property moves in boom/bust cycles -strage that people expect booms or busts to remain in perpetuity depending on the current state of the market/cycle.

Short memories?


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## xoa (19 August 2008)

Beej said:


> Re house price values - That 3-4 times average wage is nation-wide right? But in Sydney that has not been the case since the 50s. In 1992 for example, the median house price was around $180k (I remember because I bought my first home then). At that time the average wage was something like $20-$25k pa.




The median house price was not $180k in 1992. It was closer to half that level. My dad bought a waterfront house for $129k in that year.


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## Beej (19 August 2008)

xoa said:


> The median house price was not $180k in 1992. It was closer to half that level. My dad bought a waterfront house for $129k in that year.




Median *Sydney* house price in 1992 WAS around $180k (I am talking Sydney median house price, not Australia wide) - 100% certain of this! I bought my first house then and made sure I was well aware of the market (which I had been watching closely for years).

Edit: Can't find an HTML link but check out page 2 on this PDF doc for Sydney median house prices since 1975: http://www.propellvaluers.com/media/docs/pdf_docs/sydney_december.pdf

Perhaps you are thinking of the Australia-wide median?

PS: I don't know where you could by a waterfront house for $129k back then - but certainly no where in Sydney!! I even know of a divorce driven forced sale of a Balmoral slopes federation mansion with pool, harbour views etc etc that sold for $900k the year before (1991). Was a bargain, but $900k was still a LOT of money back then and I was nowhere near able to afford that. That house would be worth $4M++ today.

Again, as I discussed in another post, I think part of what has happened around the country with house price in the last 5-10 years reflects what I think happened already in Sydney a decade or two earlier.

Cheers,

Beej


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## theasxgorilla (19 August 2008)

Beej said:


> Again, as I discussed in another post, I think part of what has happened around the country with house price in the last 5-10 years reflects what I think happened already in Sydney a decade or two earlier.




My thoughts exactly.  Hence why on the large part Sydney has stood still compared with the rest of the country.

It seems the Danes have a similar situation with Copenhagen leading the boom and now experiencing falls.  The country in official recession (as of last quarter if I remember correctly) and house prices in other regions of the country still going up.


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## Wilsta (19 August 2008)

Okay guys here is my theory:

There will be a recession ... then a depression!  World wide household debt as a percentage of household income has more than doubled over the last 5 years (unprecedented).  Property prices have also more than doubled over the past 5 years (unprecedented again).  The cheap credit and record debt has fueled consumer spending to unsustainable levels - demand for consumables will drop sharply as people pay off their loans (buy now pay later?  We’re heading for the pay later part of the equation).  Businesses will have to let go of staff and some will shut down - deepening the credit crunch.  But the real problem is property values.  If they return to their 20-year prior trend then mortgage asset backing will fall and credit rating agencies will lower credit ratings on banks and mortgage funds.  Lower ratings (especially for banks) means greater cost of funds and the perception that a bank may be less safe than another - a possible run on funds may occur and the banking system will start to fall over.  As the remaining banks and finance companies tighten their lending criteria the money multiplier effect of the banking system diminishes resulting in less money in the economy and the process starts over again and spirals out of control.  

For those of you who follow the US markets closely (in particular Fannie Mae & Freddy Mac) - you'll notice that they are a bit ahead of the rest of the world in the property crunch.  This is because their foreclosure laws are different to ours - something I'll get into later if you are interested.  The storm is coming – don’t get me wrong!


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## theasxgorilla (19 August 2008)

Wilsta said:


> For those of you who follow the US markets closely (in particular Fannie Mae & Freddy Mac) - you'll notice that they are a bit ahead of the rest of the world in the property crunch.  This is because their foreclosure laws are different to ours - something I'll get into later if you are interested.  The storm is coming – don’t get me wrong!




Sorry, I think this lead and follow stuff is strawberry fertilizer.  The US was behind on the real estate boom in this case.  They boomed later and they crashed first...who is leading whom?

The UK a sign of things to come in Australia?  It may be the case, but it's not going to be the case because it happened there...it'll be the case for it's own (Australia's own!) set of reasons.  Who remembers when the BoE dropped rates back in 2005?  The RBA found room to wind on .25% during the same year.  The economies were doing different things at different times in response to local and global happenings...the "why" is beyond this post...suffice to say it was happening then and it is happening now.


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## algis (19 August 2008)

I've come across some interesting data on median house prices for one of the hardest hit cities in the American credit crisis: Detroit:

http://www.housingtracker.net/old_housingtracker/location/Michigan/Detroit/

The data reveals the following:

 75th percentile dropped 22% since 05
 50th percentile dropped 32%
 25th percentile *dropped 60%*

Reasons behind the staggering drop for poor:

 Immoral lending practices
 Financially illiterate sorts amongst the low class
 The ability to send jingle mail and just up and leave your house to the bank if you can't repay your loan makes for a highly volatile market - the relatively well off don't do this sort of thing.

Given that we don't have the ability to send jingle mail in Australia, if the conditions where otherwise exactly the same here, we would not see a 60% drop.

So what conditions would we see?  We are starting to see some major layoffs and an overall slowdown, which will have repercussions on a highly leveraged bunch of people in Australia.  If the commodities boom is sustained (which will continue to foster immigration) and the Aussie dollar stays down, we should see further inflation and wage growth.. this would help keep housing prices where they are.  Otherwise, I can only see continued softening of the overall market.


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## explod (19 August 2008)

algis said:


> I've come across some interesting data on median house prices for one of the hardest hit cities in the American credit crisis: Detroit:
> 
> 
> Given that we don't have the ability to send jingle mail in Australia, if the conditions where otherwise exactly the same here, we would not see a 60% drop.
> ...




Not being able to send the keys in makes little difference if mortgage holders default and cannot pay.   The banks will still be stuck in the same way.

I know people now very successful who have been bankrupt more than once.   If things get bad the degrees may be the same.  Agree that we have more going for us here in Aus., but if the US system collapses it will be dire everywhere for some time.


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## Mofra (19 August 2008)

Wilsta said:


> For those of you who follow the US markets closely (in particular Fannie Mae & Freddy Mac) - you'll notice that they are a bit ahead of the rest of the world in the property crunch.  This *is because their foreclosure laws are different to ours* - something I'll get into later if you are interested.  The storm is coming – don’t get me wrong!



Yes - there is no recourse open to a lender once a repossession has taken place. In Australia the mortagee is liable for the full debt, even after the repossession of the property (if a subsequent sales fails to realise the whole debt + costs). 

Mortgage Insurers are even more scrupulous; they pay the bank the difference between realised sale & the debt (if there is a shortfall), then pursue the mortgagee for this difference + costs (effectively two sets of costs - sale costs & LMI recovery costs). They will pursue you until bankrupcy or the grave. If you take the latter option, they will take their final payout out of your estate too (heck, they'll take the flowers off your grave if they think there is value in them).

Happy thoughts.


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## CamKawa (20 August 2008)

Mofra said:


> Yes - there is no recourse open to a lender once a repossession has taken place. In Australia the mortagee is liable for the full debt, even after the repossession of the property (if a subsequent sales fails to realise the whole debt + costs).



Do you know how long it takes on average from a lender defaulting to the bank putting the house on the market?


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## noirua (20 August 2008)

House price in London have been reported to have fallen 5.3% last month alone. Report came as UK house prices fell another 2.3% in August, so far.


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## Temjin (20 August 2008)

Another nice article from CIJ.

http://cij.inspiriting.com/?p=520



> *Fox’s method of solving hen’s housing affordability*
> 
> Recently, we saw this article in the news media: First home buyer affordability still at 24-year low
> “Affordability will only improve if all governments work together to remove the onerous tax burden and regulatory imposts on new residential construction.”​This quote was said by Housing Industry of Australia (HIA) chief economist Harley Dale. Is that a conflict of interest? This is the same problem that we mentioned before in News media contradiction regarding the Australian rental crisis?:
> ...




Like I said in the comments, the Aussie dream is just too unrealistic and uneconomical to maintain. We should learn to live like Singaporeans.


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## gfresh (20 August 2008)

Or UK.. lots of people packed into a small area. You'd think therefore the total supply would be quite limited. Hasn't really stopped major falls in their market though. 

The article above touches on the conflict of interest going on. Developers have no interests to create too much "affordable" property, or to increase the supply of homes, and are already sitting on large areas of land, which one day, when the time is right, will be developed into housing. But there is no reason to go ahead and build on them in a short period of time, or there would soon be ample supply of homes, and eventually they'd have very little work. 

Where would be the benefit in that? Heck, even via my simplistic view, if I owned large areas of land, there is no way would I be silly enough to flood the market with homes in a short period of time, thereby reducing the perceived value of each. Better to do it over years, decades even, maximising every individual estate for top dollar.


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## Surly (20 August 2008)

Mofra said:


> Yes - there is no recourse open to a lender once a repossession has taken place. In Australia the mortagee is liable for the full debt, even after the repossession of the property (if a subsequent sales fails to realise the whole debt + costs).
> 
> Mortgage Insurers are even more scrupulous; they pay the bank the difference between realised sale & the debt (if there is a shortfall), then pursue the mortgagee for this difference + costs (effectively two sets of costs - sale costs & LMI recovery costs). They will pursue you until bankrupcy or the grave. If you take the latter option, they will take their final payout out of your estate too (heck, they'll take the flowers off your grave if they think there is value in them).
> 
> Happy thoughts.




You forgot to mention that they make the borrower pay for this 

cheers
Surly


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## noirua (20 August 2008)

Property markets get caught out when forced sellers arrive, executor sales etc.  They cut the price asked just to get the property sold.  Many who have bought for investment purposes become squeezed, particularly, if they bought a new appartment that was overpriced in the first place.

Some areas have a lot of new appartment blocks which may be rented by those who "get on their bike" travel to get that good job in the city. The downturn comes, many lose their jobs, and appartments become empty, rents drop and sales begin. 

As they say on the investment scene, in all sectors, "NEVER be a forced seller".


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## wayneL (20 August 2008)

The latest from Old Blighty:

http://www.telegraph.co.uk/money/ma...008/08/18/cnland118.xml&CMP=ILC-mostviewedbox

To think that only six months ago the talk was of small island, housing shortage, immigration, new paradigm, new two tiered society, property only ever goes up etc.... sound familiar?



> Savills: Residential building land value drops 20pc
> 
> By Jonathan Russell
> Last Updated: 10:23am BST 18/08/2008
> ...


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## nioka (20 August 2008)

Temjin said:


> Like I said in the comments, the Aussie dream is just too unrealistic and uneconomical to maintain. We should learn to live like Singaporeans.



 Why do you say that. Most australians can afford the aussie dream and have no need, or desire to live in high rise cages.

 Those that can't have gone the wrong way about it. They have spent their earnings on holidays, overpriced cars, unnecessary consumer items, mobile phone bills, partying etc yet still think they deserve a McMansion on no deposit and almost interest free.  

 Those of us that saved for what we have and chose the life we lead are happy with the Aussie way. The only thing to be unhappy with is the way politicians have stuffed up the infrastructure to support it.


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## wayneL (20 August 2008)

Coming to a suburb near you, the reluctant landlord.

http://www.citywire.co.uk/personal/...spx?ID=311910&re=3534&ea=199083&ViewFull=True

Again, it's UK based, but give it another few months and you'll see this over there.


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## Temjin (20 August 2008)

nioka said:


> Why do you say that. Most australians can afford the aussie dream and have no need, or desire to live in high rise cages.
> 
> Those that can't have gone the wrong way about it. They have spent their earnings on holidays, overpriced cars, unnecessary consumer items, mobile phone bills, partying etc yet still think they deserve a McMansion on no deposit and almost interest free.




 The meaning of "afford" can be very subjective.

What do you consider to be affordable anyway? Back 15 years ago, my parents were able to "comfortably" afford an average side home, with an average size family car, take regular holidays, pay for me and my Brother education fee and still have some sort of saving while only earning an average family wage. 

Now? People have to make SACRIFICE in order to do the same thing. Why does it have to come to that? 



			
				nioka said:
			
		

> Those of us that saved for what we have and chose the life we lead are happy with the Aussie way. The only thing to be unhappy with is the way politicians have stuffed up the infrastructure to support it.




While politicans have their fair share of blame, I don't think we should place everything single of it on them. The reality is that there is only so much they can do. When I was saying the average Australian dream being too unrealistic and uneconomical, I meant it from the perspective of the government. 

Where would you find a politician who would mandate all city councils to only release land for HEAVY RESIDENTIAL DEVELOPMENT only? That is, only allow multiple-storey residential apartments, and ban all 800m2 size land with double-storey home with a large backyard.   

The fact remains that if everyone desire to live in an average Aussie dream home, it is going to cost ALOT OF MONEY to build and maintain such a vast network of infrastructure regardless of whether we have unlimited land or not. Just look at Singapore or Hong Kong, their public infrastructure are simply world class. No one is complaining about the government isn't building infrastructure fast enough so more "desireable" houses/apartments can be built. And yes, I understand they are extreme examples. And yes, they have their own share of property bust too. (and alot more extreme too)


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## robots (20 August 2008)

hello,

um, think you forgetting something here wayne, how the prices going here in AUs?

might like to check the ABS website, but things going extremely well considering issues

lot different to the motherland

thankyou
robots


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## Beej (20 August 2008)

Temjin said:


> The meaning of "afford" can be very subjective.
> 
> What do you consider to be affordable anyway? Back 15 years ago, my parents were able to "comfortably" afford an average side home, with an average size family car, take regular holidays, pay for me and my Brother education fee and still have some sort of saving while only earning an average family wage.
> 
> Now? People have to make SACRIFICE in order to do the same thing. Why does it have to come to that?




Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......

The problem with the "youth of today" is that they all think that it should come easy, but it never has.

Cheers,

Beej


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## wayneL (20 August 2008)

Beej said:


> Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......
> 
> The problem with the "youth of today" is that they all think that it should come easy, but it never has.
> 
> ...



Riiiiiiiiiiiggt.

The favourite catch-cry of the forgetful. 

Nonsense.


----------



## gfresh (20 August 2008)

waynel said:
			
		

> Coming to a suburb near you, the reluctant landlord.




Well no wonder, the suburb is named "Upper Slaughter" after all


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## wayneL (20 August 2008)

gfresh said:


> Well no wonder, the suburb is named "Upper Slaughter" after all



Well most forum software is offended by the town of S****horpe.

 See /\


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## explod (20 August 2008)

Beej said:


> Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......
> 
> The problem with the "youth of today" is that they all think that it should come easy, but it never has.
> 
> ...




Yes and that is further rubbish.   As a lad I could walk out of one job, go two doors and walk into another.  No papaer work, just start working.     Brought my first house for $2,000  sold it a few years later for $10,000.  Life was really a walk in the park in the 1960's.    

Can assure you it has been very a very much harder world for my chindren and granchildren.   To thier credit they are doing well.    But it is a much more difficult world than the old days.

And many branches of our society are maginalised due to their upbringing (not their fault) and lack of work and educational opportunities in the area they live.   For the less educated and uninformed it is not so easy to move from a comfort zone and take on a new area to seek opportunities.

Easy to say things from the armchair but that is not where one learns reality.

Remember the old term, "we are all born equal, it is just that some are born more equal than others"

IMVHO of copurse.


----------



## nioka (20 August 2008)

Temjin said:


> The meaning of "afford" can be very subjective.
> 
> What do you consider to be affordable anyway? Back 15 years ago, my parents were able to "comfortably" afford an average side home, with an average size family car, take regular holidays, pay for me and my Brother education fee and still have some sort of saving while only earning an average family wage.
> 
> Now? People have to make SACRIFICE in order to do the same thing. Why does it have to come to that?




Sacrifice, what a word. It's just a word. Is doing without some unnecessary items to have a home a sacrifice. Is settling for a modest home that you can afford a sacrifice because you can't afford a Mansion. Is not trying to keep up with the Joneses a sacrifice?. Your parents, if they were like me, saved hard to get at least a sizeable deposit before they owned a car or a house. I suggest they lived within their means, did without a lot of "things" they would have liked and did not consider it a sacrifice.


----------



## algis (20 August 2008)

explod said:


> Not being able to send the keys in makes little difference if mortgage holders default and cannot pay.   The banks will still be stuck in the same way.




The ability to simply walk away from your asset and leave it with the bank means that you can let the house depreciate and the bank is not going to put the same level of effort to get a good price if they have hundreds on their books.  Leaving the debt of the house with the borrower stems this depreciation.


----------



## algis (20 August 2008)

This guy has some angst about Sydney property...
http://www.2thinknow.com/innovation/index.php/2008/03/18/australian-property-prices-will-fall-sydney-melbourne-property-crash/

But it's got me thinking, how does Sydney compare with London, New York, Paris etc..

It's not straightforward to compare pricing between the cities, as it depends on earning potential in the area, how close it is to major areas of employment and the general appeal of the location.

A brief scan of the web real estate directories suggests that there are a few 180 square metre properties that are located approx 30min from central London going for 800,000 quid.  

Then there are a good number of 200-300 square metre properties in Brooklyn (about 10min from New York) going for 800,000USD.

1.5M AUD will get you about 500 square metres in Bondi, approx 20min from the city.

I have no idea of the areas in London and Brooklyn, they could be a posh as becks or as rough as guts as far as I know... I would be interested in finding out how Sydney compares from an objective point of view.  Perhaps some of the high prices are justified considering the amount of land you get in comparison with distance to a major hub?  Perhaps no?


----------



## CamKawa (21 August 2008)

Beej said:


> Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......
> 
> The problem with the "youth of today" is that they all think that it should come easy, but it never has.
> 
> ...



lol


----------



## Beej (21 August 2008)

explod said:


> Easy to say things from the armchair but that is not where one learns reality.
> 
> Remember the old term, "we are all born equal, it is just that some are born more equal than others"
> 
> IMVHO of copurse.




Sorry, but my comments & views are not "from the armchair" - I've bought and sold several properties etc since the early 90s as well as been involved in various other business enterprises etc. My parents also bought houses in 60s etc and I know what it was like for them - no different to now!

In terms of equality within society, again, that has ALWAYS been a problem, and probably always will be. At least today the middle class is broader and has more real income and wealth than at any other time in Australia's history (in real terms), which goes some way towards ensuring opportunity is provided to the maximum number of people.

Cheers,

Beej


----------



## Temjin (21 August 2008)

Beej said:


> Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......
> 
> The problem with the "youth of today" is that they all think that it should come easy, but it never has.
> 
> ...




Sorry, but I think that is a load of rubbish as well.

Again, I'm going back to the recency bias. Do you even understand it? 

Just because it is the NORM right now for an average person to sacrifice alot of things in order to buy an average size home, it does not automatically mean that it HAS ALWAYS been the same in the past, or will be so in the future. I am not saying that in any point of time in history, there is no need to make any sacrifice in order to buy a home, however, I am more sadden by some of my friends who have totally extended themselve, both financially and emotionally, just to "mortgage" a house in order to avoid being "left out". 

Let me correct your phase.

The problem with "youth of today" is that they NEVER attempt to study and understand the history. Therefore, they have made decisions that are based on only what they see RIGHT NOW and will believe in without hestiation that the future will be what they see as reality today. 



			
				Nioka said:
			
		

> Sacrifice, what a word. It's just a word. Is doing without some unnecessary items to have a home a sacrifice. Is settling for a modest home that you can afford a sacrifice because you can't afford a Mansion. Is not trying to keep up with the Joneses a sacrifice?. Your parents, if they were like me, saved hard to get at least a sizeable deposit before they owned a car or a house. I suggest they lived within their means, did without a lot of "things" they would have liked and did not consider it a sacrifice.




Perhaps you have made a biased judgement on me that I am one of those typical bloke who think he should have a $100,000 graduate job and should easily afford a Mansion first year in their job. 

I understand what is sacrifice, but I am wise enough to know if certain things are WORTH sacrificing now. No one can assume what the future will hold. 

However, the fact that we have had such a run of propersity over the last decade largely thanks to the credit boom, I believe it is totally unreasonable to assume the future will be the same. House prices have way over-extended themselves and no sensible person with a solid understanding of history would think it is worth sacrificing AS MUCH AS YOU CAN right now just to get into the property market.


----------



## pepperoni (21 August 2008)

Sydney property .. a mess of international news proportions!

Seeing some good $2m-$3m sales around mosman ... 5kms down the road (even on the beaches) its a bloodbath.

http://www.iht.com/articles/2008/08/20/business/ozecon.php?page=1


----------



## explod (21 August 2008)

robots said:


> hello,
> 
> blah blah blah, same old same old
> 
> ...




Hello

Without qualification what you are saying is nothing.   At least rubbish is something.

The financial dynamics have changed and apart from those needing to buy a home in which to live, it is a new ball game.

Thank you  (bow scrape and lick)
Explod


----------



## robots (21 August 2008)

explod said:


> Hello
> 
> Without qualification what you are saying is nothing.   At least rubbish is something.
> 
> ...




hello,

thats right, and with around 70% of property housing OO's that indicates a reasonable proportion of the community is in with property,

specciefestors only 30%, not much is it,

are margin loaners specciefestors? or the good guys what about CFD people using "huge" leverage?

thankyou
robots


----------



## trading_rookie (21 August 2008)

Gotta agree with the sacrifice sentiment at least for the property market in the non-mining boom states. 



> The financial dynamics have changed and apart from those needing to buy a home in which to live, it is a new ball game.




How so? In the 90's when I as a Gen-Xer got my first mortgage, guess what I had to pay stamp duty. It was a considerable amount. Let's say a house 
bought today is worth 3 times more than what I paid for mine, yet the duty is half  now than what I paid  And if it's your first home you pay
nothing!

The interest rate I had to pay was a lot higher than it is today. I was on crap money but 'sacrifice' and finding something affordable not where I'd love to live where the key. So too paying fortnightly instead of monthly, that means hardly eating out, video's instead of the cinema's and drinking at home with company instead of splashing out $100-$200 in the city. If this doesn't sound
like you then rent....property investors will be glad that you did? ;-)

It seems ppl have always moaned about the price of property. Wish I'd recall their name, but while watching a repeat of Countdown on Rage there was a group in Oz, in the early 80's named after the expensive cost of property and 'crisis' at that time.


----------



## explod (21 August 2008)

To both previous posters.  In short as an investor there are better investments than property at the moment.    In the last five years I have brought and sold 10 properties, at one stage having 4 on the books at the one time.   I merely say that the trends I follow at the moment provide much greater growth and yield than property.

But dont' worry there will be a time to go back to property for me but that time is not now by a long chalk.


----------



## robots (21 August 2008)

hello,

ok great effort explod, so lets put away all the rubbish associated with property

i think property is a good investment and will continue to go with the flow, currently have 2, cannot see anything on the horizon that will bet it

thankyou
robots


----------



## gfresh (21 August 2008)

No attack trading_rookie - but what was your wage at the time, and how much were your weekly payments at the time? The proportions at least anyhow. They're the key indicators of how much sacrifice people at the time were making. 

At the moment a $400k loan will cost you $812/wk in mortgage repayments. To service that at the "affordable" 30% of weekly earnings, the couple needs to be earning $2700/wk, or ~$140400/year NET (after tax is deducted), or approximately $100k EACH gross. 

For a $300k loan (the bare limits of a unit these days in most places) it's $610/wk, or ~$2000/wk clear for a couple, or approx $104k NET, or $70k each gross. 

Maybe the 30% "affordability" measure is a stupid one, but how many people are earning that sort of money below 25 years old? Most are still at uni until 23-24 these days. Even more so, even at 30 years old those incomes are quite generous for the large majority of people out there.

People can still own property if they really work hard enough for it, but it's certainly not easy. Never mind if you want to have children or anything such as this.

Even 2 years ago the property environment was a very different one to the one that exists today. 20% gains, which have occurred in some areas on say a $350k property is a very big increase at the end of the day. More so in the repayments which rise significantly for every extra $10k borrowed (e.g. $300k = $610, $330 = $670/wk).


----------



## wayneL (21 August 2008)

robots said:


> I think property is a good investment...




It is... at the right price.

BTW, the development where I am living - the design I'm renting (a three story three bedroom townhouse) was being sold for £315,000 when we arrived here, now being advertised for £232,995.

...and nobody wants them at that price even.


----------



## Beej (21 August 2008)

wayneL said:


> It is... at the right price.
> 
> BTW, the development where I am living - the design I'm renting (a three story three bedroom townhouse) was being sold for £315,000 when we arrived here, now being advertised for £232,995.
> 
> ...and nobody wants them at that price even.




Interesting! How much rent do you pay?? (If you don't mind revealing??)?

PS: to gfresh - re the "30% mortgage stress threshold thing" - I think that it is meant to be 30% of *gross* earnings, not net. Even so, I personally have been above that many times in the past, and don't consider that stressed at all! In those times I used to party hard, going out all the time, womanising etc  I traveled o/s many times and did all that on spare cash after paying mortgages etc. Maybe easier when single rather than married/kids etc (as is my case now! but with no mortgage of course....), but still.....

Cheers,

Beej


----------



## wayneL (21 August 2008)

Beej said:


> Interesting! How much rent do you pay?? (If you don't mind revealing??)?
> 
> PS: to gfresh - re the "30% mortgage stress threshold thing" - I think that it is meant to be 30% of *gross* earnings, not net. Even so, I personally have been above that many times in the past, and don't consider that stressed at all! In those times I used to party hard, going out all the time, womanising etc  I traveled o/s many times and did all that on spare cash after paying mortgages etc. Maybe easier when single rather than married/kids etc (as is my case now! but with no mortgage of course....), but still.....
> 
> ...



£775 PCM

And bear in mind that yields here in the UK are traditionally quite high; usually around 8-11% depending on the point in the cycle (that was before this bubble of course).

I have a couple of IPs (substantial 4 bed detached) in the next county I bought some years ago at a whisker under 9% gross yield. 

(and the tenant pays the council tax )

*****

Here's an interesting chart from which to draw your own conclusions:


----------



## xoa (24 August 2008)

Bad news for speculators. Good news for everybody else. 

Vacancy rates are also soaring.


****
Boon for buyers as house prices tumble
Article from: Sunday Herald Sun
Tony Rindfleisch
August 24, 2008 12:00am

HOUSE values are bleeding up to $7500 a week as a downturn in the property market hits home.

Top-end properties are selling for $200,000 less than they achieved late last year, while the average $400,000 home has lost about $40,000.

Falling prices have hit every part of Victoria, with even prestigious suburbs suffering price cuts of up to 10 per cent in the past 12 months.

Agents said "poor quality" houses in outer suburbs could be worth up to 20 per cent less than similar homes last year.

Signs have been pointing to a buyers' market and an interest rate cut next month would swing conditions in their favour. An expected rise in homes for sale in spring has some experts worried prices will not pick up soon.

[...] 
*
http://www.news.com.au/heraldsun/story/0,21985,24230242-2862,00.html


----------



## robots (24 August 2008)

hello,

oh yes, the us vs. them 

thanks for supporting the ultimate reason,

got any evidence from the SRO, otherwise it means diddly squat 

thankyou
robots


----------



## gfresh (24 August 2008)

Plenty of anecdotal evidence out there, depending on the area..

Woman at work just bought a place for $370k in an estate type area on the north GC. On the market 6 months ago for $450k. That's a whopping 17% haircut as desparate sellers. Great deal really for a newish 4br house.

People are still buying, no doubt there, and will continue to buy probably until the recession kicks in -- but they won't be chasing higher and higher prices for a while, fighting amongst buyers in every single suburb like the old days.


----------



## Dowdy (24 August 2008)

The thing that will make house prices collapse will be a recession and one will come around soon


----------



## wayneL (24 August 2008)

Dowdy said:


> The thing that will make house prices collapse will be a recession and one will come around soon



Well, as houses have been used as an ATM in recent years, collapsing house prices may just be the major trigger for a recession.


----------



## pepperoni (25 August 2008)

Alot of withdrawn properties this week and a few auctions pushed back 2-3 weeks one "waiting for the rate drop after which it willl take off again".

One sale in northbridge for $1.1m ... 2002 money.

Trouble is modern "boomenomic management" where govt/reserve panic when we are in anything but boom mode ... interest rate cute will help property short term but I dont think its a good idea.

Let people take medicine for a year or so and realise boom conditions are not the norm nor are they sustainable.


----------



## Dowdy (25 August 2008)

Two houses near me have already been evicted. I'm guessing they were unable to make back payments.

I sign of things to come, i reckon


----------



## gfresh (25 August 2008)

pepperoni said:
			
		

> Alot of withdrawn properties this week and a few auctions pushed back 2-3 weeks one "waiting for the rate drop after which it willl take off again"




Yes, was thinking must be a heck of a lot of properties being held off (or gave up winter, retry in a few months) until late spring with thoughts such as "just until the interest rate drop, sentiment will surely change then". However, I don't think sentiment will so rapidly reverse simply by a 25bps cut. There may be a quick burst of sentiment, but not sure how long it will last. After that has passed, many may be facing some growing reality that it may take quite a while to shift their property at a price suitable to them, which will be a drain on their own steadfast believe that their property is worth $x.  

Interest rate cuts just signal that the problems have already started, they don't work as a quick cure-all, despite what the news ltd papers are trying to tell everybody..


----------



## Gspot (25 August 2008)

Some reading for those in the West. Hard to know what's best, however this is encouraging, even though it comes from the ANZ.
View attachment 2008 July ANZ presentation The mother of all housing booms.pdf


----------



## YChromozome (25 August 2008)

Gspot said:


> Some reading for those in the West. Hard to know what's best, however this is encouraging, even though it comes from the ANZ.
> View attachment 23372




I love it - "It’s supply stupid!"

Pg 16 is great - Total returns ("Risk adjusted"?) for residential property is through the roof. 

Everyone bail in. Quick, before it's too late.

What do you think, Robots?


----------



## robots (25 August 2008)

hello,

just taking it all in brother, i wouldnt have a clue what happens in the future

walkin' the streets enjoying life

if you after a home its a great time to be buying

thankyou
robots


----------



## CamKawa (25 August 2008)

Gspot said:


> Some reading for those in the West. Hard to know what's best, however this is encouraging, even though it comes from the ANZ.
> View attachment 23372



Oh my god what a laugh, page 36 is a classic. It's funny how it doesn't mention when house prices crash here so will the banks.


----------



## CamKawa (25 August 2008)

CamKawa said:


> Oh my god what a laugh, page 36 is a classic. It's funny how it doesn't mention when house prices crash here so will the banks.



Actually, come to think of it, page 35 might be funnier. Check out the line they have drawn to the moon. lol


----------



## xoa (25 August 2008)

gfresh said:


> Yes, was thinking must be a heck of a lot of properties being held off (or gave up winter, retry in a few months) until late spring with thoughts such as "just until the interest rate drop, sentiment will surely change then". However, I don't think sentiment will so rapidly reverse simply by a 25bps cut. There may be a quick burst of sentiment, but not sure how long it will last.




If the international experience is any guide, it won't make any difference. It doesn't matter whether interest rates are 10% or 1%. An overpriced asset is an overpriced asset.


----------



## KIWIKARLOS (25 August 2008)

There are big differences between oz and the US / England / ireland / spain etc.

Firstly our banks are still highly profitable sure ANZ took a hit but overall the four pillars are very sound. Secondly we have quite large surpluses.
Then there is record company profits from BHP etc. Real unemloyment and inflation figures in the US are massive compared to the US.

Reasons why our house prices will remain as is if not grow in the next 5 years. We have massive amounts of immigration and are boosting temp working visa's etc, rates likely to drop,huge investments in infrastructure in all capital cities. Take Sydney for example Port botany is doubling in size with intergrated rail link to enfield, North west metro link (some say this is gov garbage but it will go ahead). the cost of transport will decrease as people simple shift from large to smaller vehicles, petrol prices are decreasing and if the world wide recession continues it could go much lower.

Inflation is at 4% but so is wage growth and in many sectors its much higher than that. Consumer spending is still high.

Sure there is signs of stress and weakness but realistically in Australia the downturn is no where near as bad as the rest of the globe. When a global recovery begins we will prosper even more.

Of particular benefit is the "education revolution" the benefits to the entire economy from this policy will be massive. Give it 3-5 years and we will reap the rewards.


----------



## KIWIKARLOS (25 August 2008)

PS we haven't baioled out anybody yet and I doubt we will.

Many prices in the outer burbs have taken big hits but in the 20km radius of the big cities they are still fundamentally looking good. Where living expenses are high the biggest falls will follow.


----------



## dhukka (25 August 2008)

KIWIKARLOS said:


> There are big differences between oz and the US / England / ireland / spain etc.
> 
> Firstly our banks are still highly profitable sure ANZ took a hit but overall the four pillars are very sound. Secondly we have quite large surpluses.
> Then there is record company profits from BHP etc. Real unemloyment and inflation figures in the US are massive compared to the US.
> ...




Ahh yes of course, we're differrent down under aren't we.


----------



## robots (25 August 2008)

dhukka said:


> Ahh yes of course, we're differrent down under aren't we.




hello,

yes, and which bank has been bailed out or had loss dhukka?

thankyou
robots


----------



## dhukka (25 August 2008)

robots said:


> hello,
> 
> yes, and which bank has been bailed out or had loss dhukka?
> 
> ...




None that I know of, and since I didn't make the assertion that they had, I don't know why you are asking me.


----------



## xoa (25 August 2008)

Don't panic, permabulls. I'm sure the recent price falls are just a blip on the radar. The bottom has been reached. Australia is different and we live in an economic vacuum, thanks to immigrants and stuff. Talk of a looming recession is nonsense. Buy up a dozen more properties with 100% leverage, because 20% YOY gains will continue for the next century at least!


----------



## robots (25 August 2008)

xoa said:


> Don't panic, permabulls. I'm sure the recent price falls are just a blip on the radar. The bottom has been reached. Australia is different and we live in an economic vacuum, thanks to immigrants and stuff. Talk of a looming recession is nonsense. Buy up a dozen more properties with 100% leverage, because 20% YOY gains will continue for the next century at least!




hello,

please dont feed the troll, please dont

if you want to communictae then send pm

thankyou
robots


----------



## dhukka (25 August 2008)

Gspot said:


> Some reading for those in the West. Hard to know what's best, however this is encouraging, even though it comes from the ANZ.
> View attachment 23372






CamKawa said:


> Oh my god what a laugh, page 36 is a classic. It's funny how it doesn't mention when house prices crash here so will the banks.




I got hold of a similar presentation from Suncorp at a recent CPA conference my brother attended. It basically came to the exact same conclusions as the ANZ presentation attached above. 

It's always fascinating to see how much import people attach to the so-called 'experts' opinion. It's worth remembering that these are the same experts that did not see a credit crunch or a bear market in stocks coming. Why do we think they have it right this time?


----------



## wayneL (25 August 2008)

KIWIKARLOS said:


> There are big differences between oz and the US / England / ireland / spain etc.
> 
> Firstly our banks are still highly profitable sure ANZ took a hit but overall the four pillars are very sound. Secondly we have quite large surpluses.
> Then there is record company profits from BHP etc. Real unemloyment and inflation figures in the US are massive compared to the US.
> ...



:sleeping:

Heard all that and more over here.

However in the unlikely event that Oz housing is immune and indeed grows as per your scenario, the sociological effects will be extremely negative, as discussed elsewhere.

What sort of Australia do you want?

1/ An egalitarian country where all can participate in the "white picket fence" dream.

2/ A two tier "Victorian Britain" society where there is the landed gentry and the_ ipso facto_ serfs.

I know which I'd prefer.


----------



## KIWIKARLOS (25 August 2008)

Yeah we are different "down here"

We actually have government surpluses and look to be increasing them

But a major factor in the US is that many of these people who have negative equity can mail their keys back to the bank and say to bad so sad cop this loss. 

US unemployment rate is actualy around 14% if you count people who have given up looking for work.

Sure some places have taken big drops but that is because they weren't worth it in the first place. What do nyou expectif you buy a massive Mc mansion 50km away from work with no real public transport  its not that the house repayments kill you its just that your fundamentally a burden on society. Services such as water, electricty, phone service and public transport are just not as economical on the suburban fringes and they are been subsidised by everyone else.

I work in the electrical industry we have some electrical feeders that service maybe 1000 - 3000 customers and cost 10-20 Million dollars to install. Where as in a inner city suburb a feeder with 10000+ might be 5-10 mill. Thats just an example but urban sprawl doesn't help anyone and it should be discouraged and it is by market fundamentals. We are moving toward a future where we will have very high density housing and business with large open public spaces (and hopefully some good public transport) 

The one saving grace for North western sydney house prices is the NW metro link that will turn the area around very quickly. The first stage routes from the city are already gearing up with big development.


----------



## xoa (25 August 2008)

KIWIKARLOS said:


> We actually have government surpluses and look to be increasing them



That's great.. unfortunately it has nothing to do with house prices.


----------



## KIWIKARLOS (25 August 2008)

Wayne mate i think the change is way more widespread and fundamental.

Its not just housing, housing is just an indicator of the underlying forces. The world is changing rapidy firstly the western world has realise that buying other countries oil and indebting ourselves only serves to move our prosperity off shore. Global warming may or may not be true (i think its BS) and everyone should relise that land clearing, water pollution and habitate destruction pose a much greater risk than Co2. We move away from oil save a lot of money and drastically reduce the incomes of countries such as venezula, russia, saudi arabi etc. All the growth in these countries will quickly move when the oil revenues drop. 

We have so much going for us plentiful coal, uranium, iron, gas and reasonable land for crops we just ned new irrigation techniques and new crops. The US is still strong IMHO and they my be going throgh a rough patch but lets remeber these guys ownthe fiat currency if they do go down big time forget your house price and make your way down to king street wharf to join the hungry mile. :

I see this as a rebalancing in the world economy,it does have alot of benefits to the US as well. Every time oil goes up the US taxes the world through oil dollars and inflation. Chinas trade surplus is shrinking by the day as their useless US peso's buy less and less.


----------



## KIWIKARLOS (25 August 2008)

xoa said:


> That's great.. unfortunately it has nothing to do with house prices.




Really so its just a coincidence that the biggest losses so far have been taken by countries with the biggest deficiets?

They may not be directly linked but as an indicator of overall economic health surely you can't say you think massive deficiet can breed good house prices?


----------



## Dowdy (25 August 2008)

robots said:


> hello,
> 
> just taking it all in brother, i wouldnt have a clue what happens in the future
> 
> ...





You don't buy went prices are still at all time highs.


On another note, i reckon the biggest mistake to the housing market was to introduce the first home buyers grant. All it did was inflate the price and made people broke - people were using the grant as their deposit and had no money to pay off the house anyways.


----------



## xoa (25 August 2008)

KIWIKARLOS said:


> Really so its just a coincidence that the biggest losses so far have been taken by countries with the biggest deficiets?




New Zealand has a budget surplus and many sheep, and its house prices have fallen sharply. Coincidence?

Ergo, budget surpluses and sheep are bad for house prices.


----------



## Beej (25 August 2008)

To KiwiCarlos - good posts mate! And there are many here who share much of your point of view. Don't let the property perma-bears bother you - I know guys like that who have been saying the same old stuff since the late 90s.... well they missed out big time! People who hold off buying property now may still do Ok as prices may stay flatish for a while, but I think the people expecting sustained big falls in good areas are simply dreaming!

All the arguments have been hashed out various times through this thread already I think, so I won't rehash my already stated point of view and the arguments to back them up 

Cheers,

Beej


----------



## pepperoni (25 August 2008)

Bah ... i made a good chunk of my money in property but its been getting harder for the last 5 years if not impossible. Sold my last property 2 yrs back and have since seen some much better properies go for less money.

Lots of new listings starting today ... spring plus rate cut hope plus maybe backlog from about 3 weak years. Could get interesting this summer.


----------



## pepperoni (25 August 2008)

Dowdy said:


> You don't buy went prices are still at all time highs.
> 
> 
> On another note, i reckon the biggest mistake to the housing market was to introduce the first home buyers grant. All it did was inflate the price and made people broke - people were using the grant as their deposit and had no money to pay off the house anyways.




Was one big mistake for sure but capital gains exemption was worse ... dead head tax avoiders punting on tax free gains  with otherwise negative returns.


----------



## wayneL (25 August 2008)

Beej said:


> To KiwiCarlos - good posts mate! And there are many here who share much of your point of view. Don't let the property perma-bears bother you - I know guys like that who have been saying the same old stuff since the late 90s.... well they missed out big time! People who hold off buying property now may still do Ok as prices may stay flatish for a while, but I think the people expecting sustained big falls in good areas are simply dreaming!
> 
> All the arguments have been hashed out various times through this thread already I think, so I won't rehash my already stated point of view and the arguments to back them up
> 
> ...



Beej,

What an asinine post. What makes you think property bears are perma-bears?

Read up before turning yourself into a goose.


----------



## pepperoni (25 August 2008)

hear hear

Im tired of property bull bs ... people who have decided to borrow and buy instead of rent with their imaginary profits ... fudged to look acceptable ... come back and talk to us when you have realised your gains and paid your absurd transaction costs.

ALL property companies are getting hammered for a reason. Im negotiating a $300m deal with mirvac and they are as bearish as us on this thread short term.  

Nobody has made any decent NET returns on property for years and thats the fact.


----------



## pepperoni (25 August 2008)

Oh yeah ... had a meeting with a very senior person from nsw vg this week over valuing a few mil worth of easements ... he says property is sick and his recent valuations are lower to reflect it.

We know all the fairy tale arguments for ever increasing prices ... really we do ... no more bull posts til you have something new and concrete guys.

Right now prices are falling as per most recent figures.


----------



## Beej (26 August 2008)

Here's a report from the US on their housing market: 
http://news.yahoo.com/s/nm/20080825/bs_nm/usa_economy_housing_dc_3

Interesting to note the reported 7.1% decline in median prices in the past 12 months there (ie since August when the sub-prime crisis and credit crunch really got going), plus a bit of an uptick in sales volume in the latest quarter. 

My comment: A 7.1% decline with sales volume now upticking? The impression given here and elsewhere from all the alarmist reports focusing on isolated incidents and similar anecdotal stories, was that the situation in the US was FAR worse than that! 

And whatever the situation over in the US is, for reasons often stated in this thread, I still see it as being highly unlikely we will see anything near as bad as the US here (economy in better shape, scope for interest rate cuts, high employment, no "walk away" option for mortgage holders, limited supply, high immigration, increasing rental yields etc etc). I still think Sydney prices in good area's are just about done with any price adjustment. Median prices nationally may fall about 5%, (with the possibility of larger falls in Perth and Brisbane), but then that will about it - prices will then remain flat for a couple of years (just like they did during the 1990/91 recession) and then they will start creeping up again. That's still my view anyway (and PS - I have never said prices will keep rising through the current environment, I just don't think they will drop all that much, especially in Sydney from where we are now).

Cheers,

Beej


----------



## xoa (26 August 2008)

Beej said:


> Here's a report from the US on their housing market:
> http://news.yahoo.com/s/nm/20080825/bs_nm/usa_economy_housing_dc_3
> 
> Interesting to note the reported 7.1% decline in median prices in the past 12 months there (ie since August when the sub-prime crisis and credit crunch really got going), plus a bit of an uptick in sales volume in the latest quarter.
> ...




It is far worse than that. You're desperate if you're trying to put a positive spin on the American situation. Across the nation, nominal prices have fallen 19% from their peak 3 years ago. Accounting for inflation, the real fall has been almost 30%. The biggest cities have registered even steeper falls. Most analysts think prices will continue to fall for another year at least.


----------



## pepperoni (26 August 2008)

xoa said:


> Accounting for inflation, the real fall has been almost 30%. The biggest cities have registered even steeper falls.




Then account for the fact that many owners are paying huge interest on a depreciating asset.  Then account for holding costs. Then buying and selling costs.  

Many would have been better off copping the depreciation on a ferrari and renting.

All property figures are fudged to some degree ... even in a boom, after transaction and holding costs profits are modest.  

Of course you need to buy and sell and be standing there with your small but actual profit IN YOUR HAND to be in a position to understand the real returns.


----------



## kingbrown (26 August 2008)

I found this article from an American columnist on Australia 
all sounds a bit depressing ? 

A massive wave of debt-induced economic problems is about to break on Australian shores. 
And Australia is about to pay the consequences of years of too much “easy money.” 
As investment bank bnp Paribas currency chief Hans Redeker says, referring to Australia’s currency:
*“The Aussie is going down, big time.” *

*“The escalation in leverage over the past 20 years is completely off the scale. 
It is bigger than the 1890s property boom and bigger than the 1920s. It is bigger than anything we’ve ever seen, and I think we’ve reached the limit of how far these trends can go. 
The unraveling will be extremely painful.” *
Why are financial conditions tightening? Just as in America, Australians have spent too much, and their debt is backed by grossly inflated assets. The difference is that the Aussie crisis could be much worse. 

*Australians may be the most indebted people in the world. *

Australians have been compounding their debt at an average rate of 15 percent for the past 20 years.
In 1988, the average household had debts totaling 32 percent of its income. Now the average is a massive 160 percent of household income. *As a percent of gross domestic product, household debt has reached 177 percent,* almost a world record. Meanwhile, wages have grown at less than a third that rate. 

*The resource boom won’t save the economy either.* 
As a percentage of gdp, the mining and related resource industries originate approximately 8 percent of the total economy. Consumer and government spending account for 74.6 percent of Australia’s economic activity (as of 2006) and absolutely dwarf the real wealth-producing parts of the economy. 

Sydney research company Fujitsu Consulting estimates that 923,000 households will face “mortgage stress” by September. That is up from last year’s survey that found only 171,000 that were having trouble repaying loans. 
Since there are 6.9 million Australian households with mortgages, an astounding 13 percent of the total market could be in serious trouble. 
Any guesses what those kinds of default rates could do to Australia’s leading banks? They could quickly resemble the Bear Stearns and Northern Rocks of America and Britain. The share prices of Australia’s biggest banks are already plummeting. 

“I panicked” upon seeing the data, said John Edwards, chief executive of Residex Ltd., a company that tracks property prices. “We’ve been doing this for 20 years and have data that goes as far back as 1865, and it’s really abnormal.” 
*“Australia is headed for a once-in-100-year real-estate slump,” he says. “I have never seen the convergence of so many negatives.”*

http://www.thetrumpet.com/index.php?q=5404.3710.0.0


----------



## pepperoni (26 August 2008)

Good post.



kingbrown said:


> Australians have been compounding their debt at an average rate of 15 percent for the past 20 years.




This is the only thing sustaining property prices.


----------



## dhukka (26 August 2008)

Beej said:


> Here's a report from the US on their housing market:
> http://news.yahoo.com/s/nm/20080825/bs_nm/usa_economy_housing_dc_3
> 
> Interesting to note the reported 7.1% decline in median prices in the past 12 months there (ie since August when the sub-prime crisis and credit crunch really got going), plus a bit of an uptick in sales volume in the latest quarter.
> ...




It should be added that at least one third of US existing home sales are actually distressed sales (banks selling foreclosed properties) and also the months of supply of existing homes on the market hit an all time high. (chart courtesy of calculatedrisk.blogspot.com

The Case-Shiller home price index released tonight will show that US home prices are off close to *20%* from their peak with most expecting at least another *10%+* to go.


----------



## CamKawa (26 August 2008)

kingbrown said:


> The difference is that the Aussie crisis could be much worse.



That's what I've been saying. Don't think many people believe me though.


----------



## gfresh (26 August 2008)

Nice article.. It is I think silly to be too optimistic right now. Even if things don't get as bad as the d&g'ers believe, it's better to be cautious for a while longer than over-optimistic.

3rd quarter US financials due in a couple of weeks will show this is nowhere near over, with losses as large, if not larger than ever before. They'll be scrabbling for capital, and the capital tap is running very dry. The result if they can't manage to is frightening, and that point may well be reached within the next 12 months. Some areas in the US are stabilising, this is true, however prices in many key areas still are falling.

UK not stabilising either.. and the full results of that haven't been fully factored in either. Took  up to 18 months of falls in the US market before they really started effecting the big banks bottom line. Wait until the European banks get whacked via their own shores.. they've already copped enough from their US exposure. This icon is appropriate


----------



## pepperoni (26 August 2008)

Mirvac copping a small kicking today after earlier ones ... down over 50% in 12 months like stockland etc ...

"Mirvac’s statutory net profit after tax of $171.8 million was impacted by the previously announced asset impairments totalling $400.1 million. Due to the sustained deterioration in market conditions Mirvac prudently reassessed the value of its residential and non-residential developments ..."

Very prudent of them.


----------



## wayneL (26 August 2008)

gfresh said:


> UK not stabilising either..



There are signs here of the beginnings of a freefall. Asking prices are noticeably down and most vendors are now accepting that they will have to be open to "cheeky" offers to get a sale. Stay tuned.

On the economic front, it is much worse than gu'mint figures say (no surprises there). My town is much more prosperous than average, yet businesses are falling over left, right and center.

The High Street looks like it's in the midst of a full blown recession already, with whitewashed windows all over the place.


----------



## YChromozome (26 August 2008)

pepperoni said:


> Due to the sustained deterioration in market conditions Mirvac prudently reassessed the value of its residential and non-residential developments ..."
> 
> Very prudent of them.




LOL. I put this together last year 
http://www.whocrashedtheeconomy.com/RhodesWaterside/

I need to update it - Adina on corner of Mary St & Rider Blvd is finished with some apartments occupied. The commercial space (5 River Blv) is finished, but no tenants - Now leasing if anyone is interested.

"And Rush in, but don't panic. We are building more." When I was down there a couple weeks ago, they are building 'Tandara' (Cnr Shoreline Dr & Sevier Av) and digging the foundations for Amarco (other Cnr of Shoreline Dr & Sevier Av)

I showed my brother the photos last year, but when he was in Sydney a few weeks back, took him on a tour. He said you really have to walk up and down the streets to grasp the scale of it. 

And they are still building. . . Hopefully it will keep the food on the table for some tradies for a while yet.


----------



## pepperoni (26 August 2008)

YChromozome said:


> LOL. I put this together last year
> http://www.whocrashedtheeconomy.com/RhodesWaterside/
> 
> I need to update it - Adina on corner of Mary St & Rider Blvd is finished with some apartments occupied. The commercial space (5 River Blv) is finished, but no tenants - Now leasing if anyone is interested.
> ...





Classic page - nice pics too.

Nobody beleives the undersupply of housing BS .. what IS lacking is affordable housing.  One 4 unit reno in cremorne had to pay 60k to council for the loss of affordable housing.

There is tonnes of crap property in syd that should be affordable but cheap money and no tax leads to ridiculous prices.

Yet we keep cutting rates when there is any threat to the credit bubble and silly property prices.


----------



## robots (26 August 2008)

Dowdy said:


> You don't buy went prices are still at all time highs.
> 
> 
> On another note, i reckon the biggest mistake to the housing market was to introduce the first home buyers grant. All it did was inflate the price and made people broke - people were using the grant as their deposit and had no money to pay off the house anyways.




hello,

people have been calling decreases, highs, lows, crashs, all sorts

its all still going fine i believe otherwise plenty of graphs would be appearing, nothing has been presented,

all the best man

thankyou
robots


----------



## gfresh (26 August 2008)

ABS Charts.. for June quarter..  1) Weighted average of eight capital cities – Quarterly % change 
2) Established House Prices, Quarterly % change – June quarter 2008

Hardly rising in Perth, Melbourne, Canberra?

APM Report: http://www.homepriceguide.com.au/media_release/APM_HousePriceSeries_JuneQ08.pdf

Residex reports also showing percentage falls in certain segments, in certain states. I am sure you have access to them robots. 

These are your former bullish property reporters the property 'moguls' were  using as a guide to see how much money they had made. 

Not yet a "crashing" property market, but one were falls are definitely occurring in some areas, and certainly scope for them falling further.


----------



## robots (26 August 2008)

hello,

what do you care for?

now if you want to look at investment performance maybe all classes should be included in your review

all the best man, i wont be disappearing like other perma-bear compatriates that have come and gone form ASF (numbercruncher, kimosabi, realist) because things dont go a certain way

even the ghpc crew are retiring, its tuff out there

i'm down for the long run with the crew

thankyou
robots


----------



## dhukka (26 August 2008)

Robot's, the source of your optimism seems to be that because it hasn't happened yet it won't happen. I can't predict the future better than anyone else but I llike to weigh the evidence and have a go anyway. The graph below comes from the same abs data gfresh referred to. It may look good to you but just out of interests sake I'll tell you what I see. 

Perth, Hobart and Canberra have rolled over. Sydney and Melbourne have flatlined. Brisbane, Adelaide and Darwin all pointing slightly upwards. Now given what we have seen play out in the US, what is currently happening in Europe coupled with tightening lending standards, the sharp contaction in housing finance, record low affordability and declining auction clearance rates domestically, what is the likely course of these prices over the next 12 - 18 months?


----------



## CamKawa (26 August 2008)

dhukka said:


> Robot's, the source of your optimism seems to be that because it hasn't happened yet it won't happen.



Or the source of his optimism is that he works in the construction industry and is ramping.


----------



## Lucky_Country (26 August 2008)

Housing shortage and strong employment should somewhat insulate AUS from a big housing downturn.
That being said if joblosses come quickly and interest rates stay at these highs it could get messy.


----------



## kotim (27 August 2008)

History says at the very least we can expect a 25% fall accross the board on average, like at least most other downturns, now of course some will suffer 40% downfals and others only a few percent, which ultimately will make up the average.

Why do people expect any different than what has happened continually in the past.  What happens is people go out and invest in a 400 grand property with very little thought, Ask those same people to go and buy a business for 400 grand and watch the difference, yet in reality there is no difference.  People get conned that property is the way to go, and like all things if your in early in the right place then no worries, however if you come along a little late in the game then bang, suddenly you realise your in a property market pyramid scheme.

What happens is very few people will really put in the work required to make a go of something that costs a lot of money.

History shows that renting and investing the left over money that one would normally pay in house loans into the share market will give greater returns, yet despite this knowledge hardly anyone does it, they get attracted to the need to OWN the property. 

Those very same people are the ones who get their buts burnt when the downtimes come.

We are facing a real humdinger of a recession.  We have ful employment as far as generally one accepts, husband and wives are both working to full time in most cases to pay the mortgage, not for the "better" life. 

In 1998 on the sunshine coast I paid 150 grand for a house that in the mid 2000s had gone up to 450 grand give or take a bit.  My repayments were a grand a month.  on the same 430 grand loan repayments are about 3500 a month.  my wages were 55 grand a year in early 2000's and now are at 75 grand gross.  in other words my net pay has gone up 15 odd grand give or take yet the same new loan of 430 grand requries an extra 15-20 grand net.

I am an optimist at heart, yet I know we are in the beginning stages of a late 80's early 90s type recession whereby we went down and sideways for many years.

In the current house prices for the last couple of years my wife would have had to work full time to afford the 450 grand house., for what, nothing in reality other than inflated ego of some belief that I have to be financially succesful by doing what most others are doing.  

How we have been sucked into the latest mcmansions these days.  I grew up in a butter box type house in the 70's yet you tell a builder you want something like that these days and they laugh at you.


----------



## robots (27 August 2008)

kotim said:


> History says at the very least we can expect a 25% fall accross the board on average, like at least most other downturns, now of course some will suffer 40% downfals and others only a few percent, which ultimately will make up the average.
> 
> *History shows that renting and investing the left over money that one would normally pay in house loans into the share market will give greater returns, yet despite this knowledge hardly anyone does it,* they get attracted to the need to OWN the property.
> 
> ...




hello,

spot on kotim,

and one thing for sure, plenty of pensioners would love to be living in their own home at the moment, 

paid it down, out of the asset test, thankyou very much

it has so many "features" as an investment just owning your home,

everybody has an interest in RE and mine is just as valid as any others CamKawa, 

thankyou

robots


----------



## Beej (27 August 2008)

kotim said:


> History shows that renting and investing the left over money that one would normally pay in house loans into the share market will give greater returns, yet despite this knowledge hardly anyone does it, they get attracted to the need to OWN the property.




Great in theory - but not so great practically. When you are raising a family, have kids in school etc etc, you don't want to have to be moving all the time whenever your landlord decides that your house is not for rent anymore. Also, many places don't allow pets, and you can't even redecorate or hang a few pictures on the wall. There is a certain intangible value in owning your own home that is not reflected in a spreadsheet.... That's why everyone wants their own home. 

Also, *most* people (maybe not here!) would lack the financial discipline to invest the rent/mortgage difference consistently over 20-30 years into the stock market, and so would end up worse off. Add to this the fact that your family home is tax free, and the majority of people end up far better off financially as they go into retirement for having bought and paid off their own house.



> In 1998 on the sunshine coast I paid 150 grand for a house that in the mid 2000s had gone up to 450 grand give or take a bit.  My repayments were a grand a month.  on the same 430 grand loan repayments are about 3500 a month.  my wages were 55 grand a year in early 2000's and now are at 75 grand gross.  in other words my net pay has gone up 15 odd grand give or take yet the same new loan of 430 grand requries an extra 15-20 grand net.




There's the problem - a 3x increase in less than 10 years in an area without the socio-economic "back bone" to really sustain that rate of increase. That's what happened in Sydney in the late 80s, and so prices pulled back about 25% after that late 80s boom yes. The rest of the country has in the last 10 years gone through the property cycle Sydney already did 10 years earlier.

In Sydney in the last 10 years on average prices have "only" roughly doubled, which represents roughly 7% pa growth - which is IMO much more sustainable. So while areas like SE Queensland and Perth could well see declines like you suggest, I don't think Sydney will. The west of SYdney is about done with it's declines now, and the better located area's have been essentially flat since 2004, plus there is little "mortgage stress" in those areas to boot, so they will pretty much stay where they are.



> I am an optimist at heart, yet I know we are in the beginning stages of a late 80's early 90s type recession whereby we went down and sideways for many years.




Like I said, I think maybe some parts of Australia will see that cycle. I think Sydney won't see much more decline, but is likely to go sideways for a while yet. A lot hinges on the "the recession we haven't got yet but have convinced ourselves we have to have" panning out....

Cheers,

Beej


----------



## robots (27 August 2008)

Beej said:


> Great in theory - but not so great practically. When you are raising a family, have kids in school etc etc, you don't want to have to be moving all the time whenever your landlord decides that your house is not for rent anymore. Also, many places don't allow pets, and you can't even redecorate or hang a few pictures on the wall. There is a certain intangible value in owning your own home that is not reflected in a spreadsheet.... That's why everyone wants their own home.
> 
> Also, *most* people (maybe not here!) would lack the financial discipline to invest the rent/mortgage difference consistently over 20-30 years into the stock market, and so would end up worse off. Add to this the fact that your family home is tax free, and the majority of people end up far better off financially as they go into retirement for having bought and paid off their own house.
> 
> ...




hello,

spot on Beej, you're a legend homes

lets all go and walk with hands in pockets, head down, the world is going to end the first words coming from our mouths,

life has never been better for all of us and why many would wish upon us a nasty situation is a surprise, is it really? tall poppy syndrome

thankyou

robots


----------



## nioka (27 August 2008)

kotim said:


> History says at the very least we can expect a 25% fall accross the board on average, like at least most other downturns, now of course some will suffer 40% downfals and others only a few percent, which ultimately will make up the average.
> 
> Why do people expect any different than what has happened continually in the past.  What happens is people go out and invest in a 400 grand property with very little thought, Ask those same people to go and buy a business for 400 grand and watch the difference, yet in reality there is no difference.  People get conned that property is the way to go, and like all things if your in early in the right place then no worries, however if you come along a little late in the game then bang, suddenly you realise your in a property market pyramid scheme.
> 
> ...



 What you also have to take into account is the fact that share prices are falling/have fallen just as fast as house prices. There has been a lot of margin calls on shares but only a few margin calls/ mortgage sales on homes. As many people are being "kicked out" of their shareholding as are being "kicked out" of their homes.


----------



## dhukka (28 August 2008)

UK home prices in August recorded their biggest year over year declines since 1990 according to Nationwide. Home prices are off *-11.5%* from their peak in October 2007.


----------



## numbercruncher (29 August 2008)

So minus 11.5pc combined with purchase costs such as Stampduty, holding costs such as Interest, and selling costs such as RE fees , would have the average flipper down about 30pc in under a year ? Impressive ........


----------



## Temjin (29 August 2008)

numbercruncher said:


> So minus 11.5pc combined with purchase costs such as Stampduty, holding costs such as Interest, and selling costs such as RE fees , would have the average flipper down about 30pc in under a year ? Impressive ........




No, it wouldn't and never will happen in Australia. We are unique because we have China and lots of resources. House prices will double every 10 years with the 7.2% p.a. rule. Even if wage growth is only 4% per year, the average person will find some way to afford an average property that will eventually cost more than 100% of their income. They will find better jobs, a second job, cut expenses, and keep up the housing boom forever and ever.


----------



## Temjin (29 August 2008)

An interesting article on China.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/26/ccchina126.xml



> *Beijing swells dollar reserves through stealth*
> 
> 
> 
> ...




Now I wonder how we should be immune from all this?


----------



## xoa (29 August 2008)

dhukka said:


> UK home prices in August recorded their biggest year over year declines since 1990 according to Nationwide. Home prices are off *-11.5%* from their peak in October 2007.




If you factor in inflation, the real fall has been 15%. There's probably another 2 or so years of falls to come.

I wonder whatever happened to the UK's "housing shortage" and formerly low rental vacancy rates.


----------



## dhukka (29 August 2008)

xoa said:


> If you factor in inflation, the real fall has been 15%. There's probably another 2 or so years of falls to come.
> 
> I wonder whatever happened to the UK's "housing shortage" and formerly low rental vacancy rates.




Good points xoa. The HIA released it's New Home Sales report today showing a 7.2% drop in new homes sales. 



> HIA Chief Economist, Harley Dale said new home sales dropped by 7.2 per cent in July 2008 , reinforcing industry evidence that home building conditions hit the wall in early July.
> 
> 
> “Budgeted sales levels are well down on expectations and that runs the clear risk of the next step being a shedding of labour in the industry,” said Mr Dale.
> ...


----------



## KIWIKARLOS (29 August 2008)

i dont think we will see massive drops like US, UK, Spain etc. 
We are still very attractive to foriegn investment and relatively our interest rates are fairly high and we never had rates down to 1%. Our loans even the dodgy ones are as dodgy as the US sub prime loans. 

Sure we may see - 10% in some areas hell some areas have already dropped more than that but many other areas have remained level. I think we will see more of the same, maybe for a year or two. That said when ever there are large drops there are normally large recoveries following and you only loose if you sell. Many familys now that can't afford their repayments overstreched in the beginning and they sell the house and look for a house to rent. We have a cronic housing shortage that will in some respects provide some base support for inner metro housing prices. People who are feeling the pinch won't just sell their house they will downgrade their car, try to move closer to work and spend less. 

I think NSW is in a very dicey position at the moment a lot of our revenue is from stamp duties which if decreases could spell tough times for us and other revenue making ventures or cut backs.

Realistically we pay for any infrastructure be it private or government, If its private we fund cmpany profits as well but state owned companies can be inefficent. Water prices will increase as will electricty and transport, as a community we can't afford to fund large suburban expansion.

We need to reduce stamp duty and build some new medium to high density housing. 

If we have two years of 0 or slightly negative house prices plus 4% inflation and moderate wage increases we could return to more affodable housing in the next few years. 

One point for discussion, since houses are now treated as a commodity shuldn't supply and demand dictate prices? Demand may be slowing but we just need 2-3% rates cuts before rents  = repayments. There are very few rental properties and there is a shortage of housing, demand surely must increase with pop growth.

I dont think there will ever be enough over supply to facilitate a 30% drop?


----------



## numbercruncher (29 August 2008)

> One point for discussion, since houses are now treated as a commodity shuldn't supply and demand dictate prices?




No Credit price and availability combined with peoples ability to pay does - why dont you people understand that ?


----------



## Beej (29 August 2008)

numbercruncher said:


> No Credit price and availability combined with peoples ability to pay does - why dont you people understand that ?




Of course we understand that! But why don't you people understand that if what you propose was correct then the housing market should have collapsed years ago and would never have got to where it currently is?? Ie supply demand is an equally important factor.

Case in point - in the "olden" days, most families consisted of a married couple, single income earner, couple of kids. Nowadays most families have 2 incomes, and those incomes are considerably higher in real terms than they ever have been. In addition, the cost of many other goods have decreased compared to the "olden days", in real terms, eg, cars, whitegoods, and luxuries such as TVs, stereos and other consumer electronic goods.

Ergo, people can AFFORD to service higher debt in order to get the things they desire - like the best house they can afford for their family. That is why the market is where it is, and why currently it is basically staying there. Credit is a little tighter and more expensive than in *recent* times, but go back 10 years or so and the conditions now are not that different.

Cheers,

Beej


----------



## theasxgorilla (29 August 2008)

Beej said:


> Of course we understand that! But why don't you people understand that if what you propose was correct then the housing market should have collapsed years ago and would never have got to where it currently is?? Ie supply demand is an equally important factor.
> 
> Case in point - in the "olden" days, most families consisted of a married couple, single income earner, couple of kids. Nowadays most families have 2 incomes, and those incomes are considerably higher in real terms than they ever have been. In addition, the cost of many other goods have decreased compared to the "olden days", in real terms, eg, cars, whitegoods, and luxuries such as TVs, stereos and other consumer electronic goods.
> 
> ...





I love reading your posts Beej.  You say everything I've tried to only better.

With words like "surge" and "soar" and "plummet" and "drop" and "fall" and "stress" and "hike" the media create so many realities.  The modern day news addicts think that if they read more news, or source it from the fringe that they're getting better informed...and yet, as you point out, reality defies them, year after year after year after...


----------



## numbercruncher (29 August 2008)

Global House Price crash and you guys think well be Immune, prices are falling and you stick your heads in the sand chanting this is Oztraaaaalia mate, its different here .....

Well it isnt going to save you Im afraid ....

Large inflation cycle might ...

Just look at that the building figures for the last Quarter, nose dived .... minus 25pc for WA - that is not a healthy RE market , people can cram 10 to a house if need be ! Prices at 7x Incomes are completely unsustainable bubble levels ...

Anyway Im not here to debate this subject anymore, its happening as Ive been warning for 18 months , I see proof in the pudding nearly everyday.

Cheers.


----------



## pepperoni (29 August 2008)

Beej said:


> Of course we understand that! But why don't you people understand that if what you propose was correct then the housing market should have collapsed years ago and would never have got to where it currently is?? Ie supply demand is an equally important factor.
> 
> Case in point - in the "olden" days, most families consisted of a married couple, single income earner, couple of kids. Nowadays most families have 2 incomes, and those incomes are considerably higher in real terms than they ever have been. In addition, the cost of many other goods have decreased compared to the "olden days", in real terms, eg, cars, whitegoods, and luxuries such as TVs, stereos and other consumer electronic goods.
> 
> ...




This decade brought with it a combination of low rates and property fan boys/fanatics the likes of which has never been seen in modern history hence the spike in price and debt.

You are spot on about dual income households. 100% right, but this has over the last 20 years alsonbeen overcomitted to property. It shows in the household income to debt numbers.

You are right that some costs have fallen, but there are many increased and new costs of living today which outweigh the falls.

Today prices are falling. A waterfront reserve house in cremorne just had its 3rd failed auction in 6 months and is listed for under 1.7m. 

PPORs are not an investment unless you plan to downgrade one day.  They certainly dont provide an income.  

The indoctinated "property investors" are TODAY too mortgage stressed to buy more or are folding (2 of my wealthier friends this year).  Gen Yers realise the wont get ahead doing the same thing as everyone else with their $$.

Borrowing for property is at 20 years lows THIS MONTH.  Its over people. In the best parts of sydney prices are back to almost 4 years ago and anyone that bought in that period would have done better in term deposits.

PPOR buying was never a way to get rich and today, once again, is a lifestyle decision.  

Those looking to get rich are looking elsewhere.  The sheeple chasing the dream wont bring about another spike for many years.

And i dont care if some paper shows gains ... on these volumes one or 2 $10m buys by old money bargain hunters will give wacky nos but like for like prices are shocking.


----------



## pepperoni (29 August 2008)

dhukka said:


> Good points xoa. The HIA released it's New Home Sales report today showing a 7.2% drop in new homes sales.




There are plenty of new homes/units for sale (see the rhodes/meriton post above) just no demand.

IE we are increasingly in oversupply ... people looking to offload their IPs at rhodes or in some other unit city to buy in mosman will find they cant pay as much as they expect a few years back.

No part of the market will be immune just like aus has proven not to be immune to US and UK falls.


----------



## Temjin (30 August 2008)

Beej said:


> Of course we understand that! But why don't you people understand that if what you propose was correct then the housing market should have collapsed years ago and would never have got to where it currently is?? Ie supply demand is an equally important factor.
> 
> Case in point - in the "olden" days, most families consisted of a married couple, single income earner, couple of kids. Nowadays most families have 2 incomes, and those incomes are considerably higher in real terms than they ever have been. In addition, the cost of many other goods have decreased compared to the "olden days", in real terms, eg, cars, whitegoods, and luxuries such as TVs, stereos and other consumer electronic goods.
> 
> ...




The recency bias AGAIN and again! It's really simply amazing how one can be so affected by the media. I really doubt you have look at evidences beside those posted by the mainstream media. 

It's a simple fact that housings were a LOT more affordable in just about ANY WAYS back 20 years ago, even when the interest rate was at 17%+. Right now, the credit to GDP ratio has SHOOT straight up to the roof, and it is totally unsustainable.

The 7.2% p.a. growth rule is only applicable for a relatively short time in our property history. And why is this figure so popular amount the general and mostly "ignorant" public? Because they hear about it from the MEDIA and from real estate agents! 

THE FACTS



> *The facts*
> 
> 
> The following chart shows nominal average dwelling prices from 1880 to 2007. Highlighted in red are two periods when house prices most certainly did not double over _any_ period. In fact, following the booms of the 1880s, prices fell sharply from 1890 and did not regain their previous highs until 1914, twenty-four years later. A similar situation occurred between 1929 and 1942. So we have two long periods where prices failed to appreciate _at all_, let alone double.
> ...



Regardless anyway, time will eventually reveal everything. It's long due that we all need to face the consequences of living beyond our means and end this credit boom. Country can only increase its wealth through production and saving, not spending and borrowing, which is what we have been doing mostly for the past 20 years.


----------



## Shane Baker (30 August 2008)

Temjin

Nigel's study has some serious methodological flaws so I'd be careful trying to extrapolate too much from history over the long term. Simple questions raised are;

1.What was the average life expectancy in early 20th century? Has this changed and made long term assets such as property more desirable?
2. How many "average" people were able to purchase their home pre WW2? How many now have that option via easier access to credit?
3. What deposit criteria were required over time to fund the loan? Has this changed and made access to the property market easier?
4. Has household "income" changed ie working mothers? Where does the extra income go?
5. Has there been an increase in disposable income over time and where have people chosen to put that income?
6. Inflationary periods related to house price growth by?? Perhaps rising commodity costs affect cost of new stock making older stock more attarctive and maintaining prices in real terms?

So many more questions related to Nigel's study. Only time will tell us what lays  ahead regardless of what the perma bulls or D&G crowd have to say.

Cheers

Shane


----------



## robots (30 August 2008)

pepperoni said:


> This decade brought with it a combination of low rates and property fan boys/fanatics the likes of which has never been seen in modern history hence the spike in price and debt.
> 
> You are spot on about dual income households. 100% right, but this has over the last 20 years alsonbeen overcomitted to property. It shows in the household income to debt numbers.
> 
> ...




hello,

now this is an interesting one from pepperoni, something which happens day in day out

in will be great in 20 or 30yrs time with the research being conducted here on ASF to get some results regarding buying vs. renting,

even more important will be the ABS stats on owners vs. renters in 20-30yrs  to see if anything has really changed

no worries number, will touch base again at Q3

thankyou

robots


----------



## Beej (30 August 2008)

pepperoni said:


> This decade brought with it a combination of low rates and property fan boys/fanatics the likes of which has never been seen in modern history hence the spike in price and debt.
> 
> You are spot on about dual income households. 100% right, but this has over the last 20 years alsonbeen overcomitted to property. It shows in the household income to debt numbers.
> 
> ...




I don't disagree with much of what you say. My main contention is I don't believe there will be a massive, long term "crash" in property prices - instead there will be a period of flat prices followed by a slower uptick. I also agree that the recent 7-10%pa capital value returns were unique, but I think going forward prices will still increase at least in line with inflation (after this adjustment period). That's still a nice tax free return for PPOR owners, and if you add 5% rental returns (which will only go up during this period) still provides something approaching a 10%pa return for property investors.

PS - thanks for the tip re that Cremorne place - I'm going to go and have a look at that today is it seems like a real "opportunity"!!  Although I do wonder if there is something wrong with the house as it seems to be way below the rest of the current market for the area....

Also to Shane Baker - great comments, you saved me having to point all those flaws out in the studt posted by Temjin  One other point I would add is that use of linear rather than log price graphs always makes the situation look far more "bubble-esque" than it actually is.

Cheers,

Beej


----------



## wayneL (30 August 2008)

Beej said:


> My main contention is I don't believe there will be a massive, long term "crash" in property prices - instead there will be a period of flat prices followed by a slower uptick.




If that proves true (and I doubt it), I would save every freaking penny to pump into the UK market in 3-5 years time, 'cause there will be bargains WITH YIELD!

You heard it hear first folks, mark my words.


----------



## Mofra (30 August 2008)

Beej said:


> I don't disagree with much of what you say. My main contention is I don't believe there will be a massive, long term "crash" in property prices - instead there will be a period of flat prices followed by a slower uptick. I also agree that the recent 7-10%pa capital value returns were unique, but I think going forward prices will still increase at least in line with inflation (after this adjustment period). That's still a nice tax free return for PPOR owners, and if you add 5% rental returns (which will only go up during this period) still provides something approaching a 10%pa return for property investors.



Beej,

I hold similar sentiments for middle-priced property that is well-serviced by solid infrastructure & required amenities for families (public transport, schools, shopping centres, roads that can handle the required traffic during peak hours etc). I don't think most of the macro figures published will show this growth  (without filtering out anomolies) as the cost of living impacts hardest on suburbs with the least amount of infrastructure (the outer suburb mortgage belt communities). I know people who have bought out in these areas and most say they intend to upgrade within 5 years. I can't understand how prices in these areas are even going to track inflation if they are only ever seen as (in a long term sence) a temporary buy, especially as domestic policy combines with global demand to push up energy prices in the areas most suceptable to price sensitivity, and the NBLs share of the credit market has been savaged.


----------



## Temjin (30 August 2008)

Shane Baker said:


> Temjin
> 
> Nigel's study has some serious methodological flaws so I'd be careful trying to extrapolate too much from history over the long term. Simple questions raised are;
> 
> ...




While I admit that I have not personally "peer-checked" his PHD study, I am not in any position to verify his methodologies anyway. So to check whether his methodology is wrong will require a fair amount of probing and not to mention a sufficient academic qualified person to do so.

However, I don't see some of your questions is related to the main message that house prices have historically tracked inflation/wage growth rate (i.e. 3-4%) over the last 100+ years. (except for the last 20-30 years) No one has ever disputed that fact, because they are based on real historic data. 

The problem lies on how do people interpret the data. 

I personally value common sense than ANY information reported by the mainstream media, regardless if the message of the article is bullish or bearish. 

Though if you wish, you should consider asking Nigel these questions personally. I would love to know some of them as well. 



			
				Beej said:
			
		

> I don't disagree with much of what you say. My main contention is I don't believe there will be a massive, long term "crash" in property prices - instead there will be a period of flat prices followed by a slower uptick.




I don't think any of us can predict the future. However, I don't think we should be optimistic to the point that Australia will be THE ONLY COUNTRY in the world to avoid a property crash, which has already happened in the US and starting in the UK. Not to mention in certain cities of China. 

I don't think we are THAT unique. The fact remains that an average Australian own a lot more debt than American and can we continue to live like this forever and forever?


----------



## pepperoni (30 August 2008)

Temjin speaks the truth as does the phd study ... some correction in trend is a matter of when not if.



Beej said:


> PS - thanks for the tip re that Cremorne place - I'm going to go and have a look at that today is it seems like a real "opportunity"!!  Although I do wonder if there is something wrong with the house as it seems to be way below the rest of the current market for the area....




Did you go .. I was going to but ended up in Bellevue hill as a house on beresford st with great harbour view potential from 2nd story went for $2m on tues!!!!!!  550 sq m.  Should have grabbed that one ... how can you lose there???????????  Places with no view were going for mid 2s 6 months ago!!!???

There are amazing bargains out there here and there... dont see any need to rush to buy now.

Cremorne place has 2 car lock up garage and no lights to sydney cbd .. hows that for amenity. Not much land but near primrose park etc.

There is also a block of 4 units with strata approval going for auction soon talking 1.6m.

Last few weeks have not been pretty round here ... if there are many more listings should be good buying in spring summer.


----------



## pepperoni (30 August 2008)

robots said:


> hello,
> 
> in will be great in 20 or 30yrs time with the research being conducted here on ASF to get some results regarding buying vs. renting,
> 
> even more important will be the ABS stats on owners vs. renters in 20-30yrs  to see if anything has really changed




Ive been in an out of property from 20 years ... out more than in.  I have also more money having predominantly rented.

I sold a property 10 years ago that would sell for the exact same price today ... much better to have the equity compounding somewhere.

Quote statistics all day but the proof is in the puddin.



robots said:


> hello,
> 
> no worries number, will touch base again at Q3




Average price of sales is more about the types of properties being sold ... about as useless as auction clearance rates. Esp av sales in only 3 months

You yourself said the only way to find out was to get out there ... speaking of which, what happened to the weekly clearance rate as gospel report.  Are they that bad down there ... or did you realise they were pretty pointless.

Speaking of silly numbers ... we had 36% house clearance rate on syd north shore a week back.   :


----------



## gfresh (30 August 2008)

Clearance rates pretty iffy, but will chuck a fairly recent one up anyhow (RP Data)

I reckon she (I have a suspicion robots is a she by the amount of reality tv it watches ) keeps quoting them as Melbourne is the only one doing ok. 

Brisbane, Adelaide, Perth are especially bad in terms of clearance. Withdrawn on Sydney is an interesting one.. 15% : Maybe they realise they're wasting their time with an auction sale


----------



## Macquack (30 August 2008)

pepperoni said:


> Quote:
> Originally Posted by robots
> hello,
> 
> ...




Could have fooled me.

I thought Robots was referring to "numbercruncher".


----------



## pepperoni (30 August 2008)

gfresh said:


> Brisbane, Adelaide, Perth are especially bad in terms of clearance. Withdrawn on Sydney is an interesting one.. 15% : Maybe they realise they're wasting their time with an auction sale




Nice chart.

Def many more private treaty of prestige houses.  And every second auction is pushed back two weeks or withdrawn and restarted.

If you go out a bit like seaforth and clontarf the buyers party has started ... i could quote examples but it wont matter ... you either know its happening or you dont.  And if you dont then clearly "reality" means a show involving kyle sandilands ;-) ).


----------



## singlefished (30 August 2008)

pepperoni said:


> ... you either know its happening or you dont.  And if you dont then clearly "reality" means a show involving kyle sandilands ;-) ).


----------



## CamKawa (31 August 2008)

I'm surprised to read such a bearish article from the Property Spruikers Times.

House sales tumble as slump bites


----------



## explod (31 August 2008)

Yep, absolute front page of the Melbourne Age, "Property sales down 44%

Cuuummmooorrrnnn..   Robots,     out of bed, its getting a bit one sided here.


----------



## wayneL (31 August 2008)

Well, the poo is really hitting the propeller over here as Crash Gordon wants to put all his last remaining chips on zero... the treasury know it's ****ing insanity.

This PM is a madman and a ****ing idiot!!!!!!

http://www.dailymail.co.uk/news/art...ng-rages-Browns-40bn-State-mortgage-plan.html


----------



## xoa (31 August 2008)

The situation is desperate, if they need to use taxpayer money to prop up property prices.

Why should the taxes of working class people be used to prop up the property portfolios of buy-to-let slum lords and greedy speculators? It's like reverse socialism.


----------



## wayneL (31 August 2008)

xoa said:


> The situation is desperate, if they need to use taxpayer money to prop up property prices.
> 
> Why should the taxes of working class people be used to prop up the property portfolios of buy-to-let slum lords and greedy speculators? It's like reverse socialism.



Exactly  ===>>> Grade AAA MORAL HAZARD!

Totally insane; I'm ****ing absolutely livid and furious and ripping my hair out.


----------



## Macquack (31 August 2008)

wayneL said:


> Exactly  ===>>> Grade AAA MORAL HAZARD!
> 
> Totally insane; I'm ****ing absolutely livid and furious and ripping my hair out.




Wayne, where does the money actual go.

If the public money is repaid with interest, what is the problem. Or, is this just pouring money into a black hole?


----------



## wayneL (31 August 2008)

Macquack said:


> Wayne, where does the money actual go.
> 
> If the public money is repaid with interest, what is the problem. Or, is this just pouring money into a black hole?




The risk is transfered (and these are all the crap loans that will probably default) from the banks who entered into the risk, onto the taxpayer, who had no part in assuming any such risk.

The government is buying the bank's defaulters.

MORAL HAZARD. 

The thinking is that if all the totally crap loans are taken off the bank's books, they'll open the lending spigots and prop up a dysfunctional and malodorous property market.


----------



## xoa (31 August 2008)

Macquack said:


> Wayne, where does the money actual go.
> 
> If the public money is repaid with interest, what is the problem. Or, is this just pouring money into a black hole?




Repaid with interest? The market is a falling knife, and will be for years - which is why no intelligent investor wants to be in it. Brown is eager to pump taxpayer money into this sick market, while he's selling his own portfolio.


----------



## pepperoni (31 August 2008)

Yes they are happy to overcook the hell out of the economy to feather their own beds ... like company directors overstating results to hit their bonus hurdles ... or HIH directors.

With all the US bank failures Im actually wondering if this will ever push the US Govt down .. I mean fannie may and freddie mac arent that far removed from US govt anyway.

And yes if the money was repaid with interest there would be no such mess ... its a little thing called the sub prime crisis.  The losses are just being socialised.


----------



## wayneL (31 August 2008)

Holy Hell!

Even the BTL laden journos at The Mail can see the folly of this:

http://www.dailymail.co.uk/news/art...-want-fool-pen-agreeing-Browns-loan-plan.html


----------



## Shane Baker (31 August 2008)

Temjin said:


> While I admit that I have not personally "peer-checked" his PHD study, I am not in any position to verify his methodologies anyway. So to check whether his methodology is wrong will require a fair amount of probing and not to mention a sufficient academic qualified person to do so.
> 
> However, I don't see some of your questions is related to the main message that house prices have historically tracked inflation/wage growth rate (i.e. 3-4%) over the last 100+ years. (except for the last 20-30 years) No one has ever disputed that fact, because they are based on real historic data.
> 
> The problem lies on how do people interpret the data.




Hi Temjin

I probably phrased that poorly. The value of a study is limited to the methodology used  to manipulate the data and reach the conclusions. This study is widely quoted and extrapolated without questioning the basic methodology of the study, such as the questions I raised previously. As you have said there has been a fundamental change in the relationship of house prices to wage/inflation growth. That is the useful aspect of the study. I feel the question to ask is why and what does it portend for the future?

As an aside, I do have a couple of research Master's degrees in different disciplines and have worked with students designing their research projects. I  feel that I am at least qualified to understand the basics of a study and question whether the conclusions are able to be extrapolated further than the basic thesis conclusions. There have been other studies by the RBA and ABS examining some of these questions and the data is interesting.

Cheers and good luck

Shane


----------



## pepperoni (31 August 2008)

Shane Baker said:


> Hi Temjin
> 
> I probably phrased that poorly.




Ironic way to start 10 lines of waffle!!!!



Shane Baker said:


> I feel the question to ask is why and what does it portend for the future?




I feel we are about 3 threads and 300 pages into the "why" being credit bubble and the "portend" being flat or falling prices in the short to medium term.

Again the study is a good one and stands up well to nitpicking ... if anyone has any others feel free to post.


----------



## Temjin (1 September 2008)

Shane Baker said:


> Hi Temjin
> 
> I probably phrased that poorly. The value of a study is limited to the methodology used  to manipulate the data and reach the conclusions. This study is widely quoted and extrapolated without questioning the basic methodology of the study, such as the questions I raised previously. As you have said there has been a fundamental change in the relationship of house prices to wage/inflation growth. That is the useful aspect of the study. I feel the question to ask is why and what does it portend for the future?
> 
> ...




Hi Shane,

Please excuse me but I still do not have a clear understanding of your "main" point. What are you trying to illustrate here? This is beside your view that we should not extrapolate the future based only on the results produced by this report in which you say its methodologies "may" be flawed. 

I do not recall myself making an opinion on the future direction of the Australia property market based on this report ALONE. I considered myself as a big picture thinker and thus, I tend to place less value on any particular piece of information when I make my view. As pepperoni was saying, there are far more to it than the report alone. 

I would like to know your views on the local property market (and in the US and UK) BESIDE this report alone. 

Cheers,

Temjin


----------



## Shane Baker (1 September 2008)

Hi Temjin

My point is that you headed your post 329 with THE FACTS just above posting swathes of Nigel's study. They are one set of facts looking at the market with a particular viewpoint. You have now clarified your own statements regarding the value of the report with the fact that you are a big picture thinker who assimilates lots of varied information. There is lots of varied info and studies out there. I find the RBA publications site quite interesting and there are some recent papers regarding Australian housing below.

http://www.rba.gov.au/Speeches/2008/sp_so_270308.html

http://www.rba.gov.au/Speeches/2008/sp_so_270308.html

http://www.rba.gov.au/Speeches/2008/sp_ag_160508.html

http://www.aph.gov.au/SEnate/committee/hsaf_ctte/report/index.htm

My "big picture" thoughts are that Australia has a different set of issues facing it than the US. We have a housing supply shortage and a growing population through immigration and local growth. This places demand side pressures on the housing market.

The supply side of the markets also has pressures with expensive limited land release on the suburban fringe and expensive redevelopment of inner city sites both limiting the supply side.

Supply is also limited due to the holding costs of interest which has risen significantly recently.

The securitisation of credit markets contributed to some of the boom in the last decade but have not contributed to it over the last twenty to thirty years as it is a recent development particularly here in Australia. So clearly there were other factors some of which I raised in those questions relating to Nigel's article and his use of particular metrics such as income/housing debt ratios etc. As the recent crisis in credit markets subsides (and there is some freeing up of credit markets starting here) access to money will be easier than in the past year and spreads will reduce. 


Pepperoni

I agree that housing markets in Australia will probably be flat or falling (depending on markets and subsegment) in the short to medium term. I disagree that the credit bubble (as you put it) was the sole reason for the house price boom in Australia. It is clearly more complex than that although the easier supply of credit was a contributor. 

Cheers

Shane


----------



## CamKawa (1 September 2008)

Shane Baker said:


> My "big picture" thoughts are that Australia has a different set of issues facing it than the US. We have a housing supply shortage and a growing population through immigration and local growth. This places demand side pressures on the housing market.



Shane,

How do you see our housing market in comparison to the UK market?


----------



## numbercruncher (1 September 2008)

Shane ,


What percentage of your wealth is dedicated to realestate ?


----------



## robots (1 September 2008)

hello,

anymore info out from ABS number? or now everybody has to accept your surveillance work

its good fun out cruising the street as apparently you are now doing seeing all those signs

thankyou
robots


----------



## Shane Baker (1 September 2008)

CamKawa said:


> Shane,
> 
> How do you see our housing market in comparison to the UK market?




Hi CamKawa

Personally I am less familiar with the UK market although I am aware from the media reports of the housing market situation there. I feel that Australia is more resilient due to the commodities boom and that the demand from China and India (and others) will not decrease anytime soon. The great unknown is peak oil but Australia as a net food and energy exporter should be better placed than most countries to weather any storms.

Cheers

Shane


----------



## Shane Baker (1 September 2008)

numbercruncher said:


> Shane ,
> 
> 
> What percentage of your wealth is dedicated to realestate ?




Hi NC

I am not of the relevance of this question as that would depend how I leverage using my assets and cashflow. The mix of my assets is variable dependent upon market conditions and my view of the markets at that moment.

Cheers

Shane


----------



## wayneL (1 September 2008)

FYI, from a country with serious shortage of housing and LAND, very high immigration etc etc and a big hand in the commodities till (but no mines):


----------



## Shane Baker (1 September 2008)

Hi Wayne

A big difference economically between being paid for shares of an asset (financial industry) and for the ore being dug out of the ground (mining industry) wouldn't you think?

Cheers

Shane


----------



## wayneL (1 September 2008)

Shane Baker said:


> Hi Wayne
> 
> A big difference economically between being paid for shares of an asset (financial industry) and for the ore being dug out of the ground (mining industry) wouldn't you think?
> 
> ...



Sure, but that is only one factor. How many Australians as a percentage of the whole actually are employed digging dirt?

Then understand that UK has it's own allegorical "gold mines" in many different forms that are immune to the finance industry doomage.


----------



## Beej (1 September 2008)

wayneL said:


> FYI, from a country with serious shortage of housing and LAND, very high immigration etc etc and a big hand in the commodities till (but no mines):




So? All that graph tells me is prices rocketed up in 2007 and have now given back a proportion of those gains in 2008. Who is to say what might happen from here? My prediction - even the UK will stabalise over the next 12 months and then plateau for while before the next growth cycle begins. Time will tell......

Additionally, the UK property market does this sort of thing regularly, and most of the time the AU market does NOT follow suit (same goes for the US). The markets are completely different. 

In the early/mid 90s for example when our market was quite stable and beginning to grow, after the late 80s pull back (which was in turn preceded by an unprecedented boom), the UK market was in yet another periodic massive slump. I remember several people I knew/worked with etc who had moved over here from the UK at that time and they all waited out the UK slump for a few years before finally selling up back home and buying in Sydney.

And I don't buy the global credit crunch theory re it's impact on every housing market in the western world. There is no problem at all for people who want to borrow money in AU for houses at this very instant. The main current issue is confidence in the market (and the future economically etc) as opposed to any massive drying up of housing credit.

PS: Pepporoni - I did look at that house on the W/E quickly- currently quite out dated and set up as 2 seperate flats. Would need some significant $$$ spent to bring it up to the "executive residence" status typical for the area! I think in a soft market there is no doubt places like that are harder to move and have to be discounted more than the good ones. Still, if you have a lazy $1.7M it probably represents a good opportunity, both lifestyle-wise and financially.

Cheers,

Beej


----------



## wayneL (1 September 2008)

Beej said:


> So?



Wanna job as a Nu Labour politician? :casanova:

Ed Balls would be impressed.


----------



## wayneL (1 September 2008)

BTW Beej

The early 90's weren't so hot in Australia. Anyone who thinks there was merely a "plateau" is deluded, there were real and serious declines, especially in the top end.

One example in Broadbeach right across the road from my folk - Single story canal property bought for $300, big reno job with second story added... eventually sold in high 200's.

And I've got lots of specific examples from the time.


----------



## dhukka (1 September 2008)

Beej said:


> Additionally, *the UK property market does this sort of thing regularly*, and most of the time the AU market does NOT follow suit (same goes for the US). The markets are completely different.




Would you like to define regularly? According to data from Nationwide going back to 1952, apart from the current home price declines in the UK and the first half of the 1990's, the only other time UK home prices registered quarter over quarter declines on a national basis was in 1954. The 1954 declines being very modest (no more than -1.5%). ON a year over year basis, the current home price declines in the UK already outstrip the biggest year over year decline in 1992 by a considerable margin. To suggest that this is a run of the mill correction in UK home prices is just nonsense.


----------



## theasxgorilla (1 September 2008)

wayneL said:


> The early 90's weren't so hot in Australia. Anyone who thinks there was merely a "plateau" is deluded, there were real and serious declines, especially in the top end.
> 
> One example in Broadbeach right across the road from my folk - Single story canal property bought for $300, big reno job with second story added... eventually sold in high 200's.
> 
> And I've got lots of specific examples from the time.




So do we draw the conclusion that because it has happened that it can happen again, or that it will happen again?  If the latter, why now?


----------



## wayneL (2 September 2008)

theasxgorilla said:


> So do we draw the conclusion that because it has happened that it can happen again, or that it will happen again?  If the latter, why now?




Well that discussion has been going on throughout the whole thread, and the evidence is mounting up that it is starting to happen in Oz.

The only unknowns are how far will it go. Will the commodities bubble insulate Oz from further falls, or will it indeed be responsible for further falls.

Nobody knows.

I do know that means are invariably returned to in real terms - somehow. That is happening right now in all western markets that are coupled with the US/UK financial system, but at differing speeds and at differing stages. I do know that it is nowhere near being "over". 

Values in all anglo economies are still historically very stretched, even with falls. 

It can happen. It is happenning. And it will happen again so long as there is a capitalist system and fractional reserve banking.


----------



## theasxgorilla (2 September 2008)

wayneL said:


> The only unknowns are how far will it go. Will the commodities bubble insulate Oz from further falls, or will it indeed be responsible for further falls.




Indeed it has.  I think it's only reasonable to expect soft patches.  It's the language of the media and the bear camp that I'm opposed to really.  It doesn't take a professional psychoanalyst to detect that there exist those who are itching for a catastrophy to come along and teach the morons that 1 + 1 doesnt equal 3.

I'm about to sign a lucrative employment contract with one of the largest and richest organisations in the world, so what do I care what it does?  My only vested interest is that it doesn't go up faster than I can accumulate savings toward my next piece of it (in Aust or Sweden...or maybe, Spain?)...and the bears would have to be the wrong-est for that to happen.

So I'm only hoping that it's soft enough for long enough for me to buy in again at my desired level.  And when that time arrives hopefully the ECB have managed to keep rates low enough so I have a nice delta between financing in EUR and holding in Aust.

If it stays really soft for really long then I'll be the next Robert Kiyosaki and you can all read about it in my book. :


----------



## dhukka (2 September 2008)

theasxgorilla said:


> If it stays really soft for really long then I'll be the next Robert Kiyosaki and you can all read about it in my book. :




But with one key difference, your accomplishments will have been real as opposed to Kiyosaki's which are largely imaginary.


----------



## wayneL (2 September 2008)

dhukka said:


> But with one key difference, your accomplishments will have been real as opposed to Kiyosaki's which are largely imaginary.


----------



## theasxgorilla (2 September 2008)

dhukka said:


> But with one key difference, your accomplishments will have been real as opposed to Kiyosaki's which are largely imaginary.





Hehe, except the part about selling a lot of books!


----------



## Sean K (2 September 2008)

Still no value in the UK Wayne?

I'm looking forward to picking up something on the Mornigton Peninsula overlooking the Bay, in the low $200s.... 

Go halves in a holiday shack Gorilla? Somewhere between Portsea and the Koonunga Pub will do...


----------



## wayneL (2 September 2008)

kennas said:


> Still no value in the UK Wayne?



Check out these two identical properties.

That's ~$500k AUD for a 3 bed terrace (Cheltenham is pricey though)

At £825 PCM, that's 4.4% gross yield.

No value there.

At repo auctions you can "nearly" get value, but only on mixed commercial/residential (Read dingy shop with a crappy flat on top... no thanks)


----------



## theasxgorilla (2 September 2008)

kennas said:


> Still no value in the UK Wayne?
> 
> I'm looking forward to picking up something on the Mornigton Peninsula overlooking the Bay, in the low $200s....
> 
> *Go halves in a holiday shack Gorilla?* Somewhere between Portsea and the Koonunga Pub will do...




Anytime!

It's either that or an art deco apartment in Elwood for me.  So long as I can sit in the sand with some flake, calamari, chips, a chilled rheisling and watch the sun set over the bay I'm really not fussy on exactly where.   Hey, be sure to bring your guitar 

You an get views of the bay in McCrae for low $300s last time I checked...but for low $200s to happen I think I'll defer to WayneL to arrange real four-horsemen treatment for the Melb housing market. :


----------



## Shane Baker (2 September 2008)

Hi Wayne

Interested in your definition of value ?

Cheers

Shane


----------



## pepperoni (2 September 2008)

Beej said:


> PS: Pepporoni - I did look at that house on the W/E quickly- currently quite out dated and set up as 2 seperate flats. Would need some significant $$$ spent to bring it up to the "executive residence" status typical for the area! I think in a soft market there is no doubt places like that are harder to move and have to be discounted more than the good ones. Still, if you have a lazy $1.7M it probably represents a good opportunity, both lifestyle-wise and financially.
> 
> Cheers,
> 
> Beej




Cool ... wish I had of known I would have got off my bum and looked at it.  Doesnt seem to have much of a view .. even though someone poisoned the trees accross the road resulting in those metal "tree poisoning" signs!

As for the next growth cycle ... its eons off ... unless rates go back to 5% and credit availiability (eg no deposit loans) come back soon.  Debt fanboys are already up to their necks in debt (if not over their heads) and thats where 90% of recent growth has come from.  Ill guarantee no REAL growth til early-mid next decade.

Its all been .. "the great thing about property is I can borrow at 5% and make 10% .. Im so clever ... Ill borrow as much as possible (at the time about double what you will get now)".  Now they are paying 10% and making 5% or less ... not so clever after all.

Ask yourself how many time you have heard that mantra.  Now ask yourself how many times you have heard it in the last 2 years.

Its not as complicated as people try to make it ... growth will only come with the ability to pay higher prices arises (ie wages/decent investment returns/lower rates).  

Just a question of whether we stagnate or fall.


----------



## pepperoni (2 September 2008)

And enough with the commodity BS ... yes the UK and US dont have them but they dont get 9.5% rates that go with it either.  

And with all building over the last 10 years we have better supply than most markets other than spain and dubai! **** I remember years when I never saw a crane and we went from no chinese to 10000000s ... and prices were flat the whole time.


----------



## dhukka (2 September 2008)

Maybe someone can offer an informed opinion on this because I am certainly in no position to make one. I keep hearing in the media and from property bulls that there is a shortage of housing in Australia. I came across this page that looks at census data from the abs. The period from 2000 - 2006 shows;

Aust Population growth  *5.8%* 
Growth in Total dwellings *8.2%*
Growth in Occupied dwellings *7.4%*
Growth in Unoccupied dwellings *15.67%*

The rest of the page is well worth reading. Another interesting read here at Contrarian Investors Journal.


----------



## gfresh (2 September 2008)

Building approvals out today. -0.6% month-to-month (-2.3% seasonally adjusted). -3.1%/-3.7% respectively on same time last year

Generally seen as a leading indicator of prices. And approvals still falling so... 

http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0?OpenDocument

Personally I think rates should be kept 8%+ for several years, and let the market sort itself, but unfortunately everybody wants to play the pander game with keeping rates low. Then no doubt 3-4 years back to the speculation game 

Although it should be noted approvals have been falling well before the credit crisis.. something has been going wrong out there for a while. Could well be red tape and the states and councils mucking with the approval process, doesn't help new properties being built. 

1. Private sector houses approved 12 months
2. Private sector houses approved trend


----------



## pepperoni (2 September 2008)

gfresh said:


> Personally I think rates should be kept 8%+ for several years




Amen, but the powers that be arent happy unless they are sucking the next 30 years growth out of borrowers today.


----------



## pepperoni (2 September 2008)

dhukka said:


> Maybe someone can offer an informed opinion on this because I am certainly in no position to make one. I keep hearing in the media and from property bulls that there is a shortage of housing in Australia. I came across this page that looks at census data from the abs. The period from 2000 - 2006 shows;
> 
> Aust Population growth  *5.8%*
> Growth in Total dwellings *8.2%*
> ...




Good find - confirms what I think to be pretty obvious but goes contrary to the nonsense you hear from the property bulls.


----------



## xoa (2 September 2008)

dhukka said:


> Maybe someone can offer an informed opinion on this because I am certainly in no position to make one. I keep hearing in the media and from property bulls that there is a shortage of housing in Australia. I came across this page that looks at census data from the abs. The period from 2000 - 2006 shows;
> 
> Australian Population growth  *5.8%*
> Growth in Total dwellings *8.2%*
> ...




I'd love to see the permabulls spin those statistics in their favour.

But immigrants and China will save us, they say. :


----------



## dhukka (2 September 2008)

gfresh said:


> Building approvals out today. -0.6% month-to-month (-2.3% seasonally adjusted). -3.1%/-3.7% respectively on last year
> 
> Generally seen as a leading indicator of prices. And approvals still falling so...
> 
> ...




A couple of points about approval numbers. Firstly as can be seen on the graph the month to month swings are extremely volatile. Secondly, there are major revisions to prior months. In July the vast majority of those revisions were upward. May approvals were revised up by *2.6*% whilst June was revised up by *5.5%*.


----------



## pepperoni (2 September 2008)

Id bet my bottom dollar the number of approvals obtained without intention of building is skyrocketing - every second rpoperty sold with some nonsense DA nobody would build, but people invest 20-30k on these things as in property bull la la land DAs add 20% to the price. 

The RBA should be shot if they drop rates today ... I can hear it all coming back "sure you should borrow more than you can afford ... you will get regular pay rises wont you."

God help us if we have a real recession in the next 30 years.


----------



## WaySolid (2 September 2008)

pepperoni said:


> Good find - confirms what I think to be pretty obvious but goes contrary to the nonsense you hear from the property bulls.



It's an interesting subject, I would like to see some unbiased information, the linked page doesn't qualify in that regard in my opinion.

If you have a 5% increase on 20M then that is potentially more significant than a % increase twice as big on a much lower number, a strange interpretation of statistics on that bublepedia page.

I guess you can obfuscate to support any opinion, but the market might be a pretty good reference point to seek the truth, not perfect.. but not bad either. Rents would be my pick for a guide as to what is really going on with supply v demand. In my areas of interest they having been growing at a rate around 10% or so for a few years now, pretty robust demand still, vacancies are low for Brisbane (around 2%) but I haven't noted any rental auctions or   things like that.


----------



## xoa (2 September 2008)

WaySolid said:


> It's an interesting subject, I would like to see some unbiased information, the linked page doesn't qualify in that regard in my opinion.




How can those statistics (provided by the unbiased Australian Bureau of Statistics) be consistent with a housing shortage? If there's a shortage, why has house construction outpaced every index of population or household growth?


----------



## dhukka (2 September 2008)

WaySolid said:


> It's an interesting subject, I would like to see some unbiased information, the linked page doesn't qualify in that regard in my opinion.
> 
> If you have a 5% increase on 20M then that is potentially more significant than a % increase twice as big on a much lower number, a strange interpretation of statistics on that bublepedia page.
> 
> I guess you can obfuscate to support any opinion, but the market might be a pretty good reference point to seek the truth, not perfect.. but not bad either. Rents would be my pick for a guide as to what is really going on with supply v demand. In my areas of interest they having been growing at a rate around 10% or so for a few years now, pretty robust demand still, vacancies are low for Brisbane (around 2%) but I haven't noted any rental auctions or   things like that.




That stats are taken directly from the abs, so unless you think the abs has an axe to grind there is nothing biased in the numbers but point taken that the percentage changes can be misleading. If you read on however you will see that the number of dwellings constructed over the same period has outstripped household formation.


----------



## explod (2 September 2008)

WaySolid said:


> It's an interesting subject, I would like to see some unbiased information, the linked page doesn't qualify in that regard in my opinion.
> 
> If you have a 5% increase on 20M then that is potentially more significant than a % increase twice as big on a much lower number, a strange interpretation of statistics on that bublepedia page.
> 
> I guess you can obfuscate to support any opinion, but the market might be a pretty good reference point to seek the truth, not perfect.. but not bad either. Rents would be my pick for a guide as to what is really going on with supply v demand. In my areas of interest they having been growing at a rate around 10% or so for a few years now, pretty robust demand still, vacancies are low for Brisbane (around 2%) but I haven't noted any rental auctions or   things like that.




It is near to work places (ie. city centres) where rents have taken off.  Outer areas, such as where I live they are static or falling and this trend is very much following the rise in oil (transport).

Having had experience with ABS figures in the past (professionally), they are spot on but as of the day of issue they reflect the past by some degree, not what is happening now.   Earlier this year a lot of property was still on the rise which is mixed with figures now on the decline.

As you say, interesting subject


----------



## pepperoni (2 September 2008)

More interesting is how much faster than rent property holding costs have increased ... not just interest costs but things like property maintenance/renovation, rates, mgmt fees etc. 

Alot of people that bought to let 5 years ago are still finding they are not remotely approaching positive gearing after having swallowed six figures in interest alone.  And in alot of cases (eg castle hill etc) they are waking up to their folly but are too scared to sell for fear they wont get what they paid!

Nobody wants to admit their mistake on such a huge scale so they hold on ... at the expense of their net worth.  This is a big factor supporting property prices.

These people are struggling to stay above water ... its only our banks that are creaming it!

Leave rates high and let them go bankrupt for their own good ... most will be better off for it in 3 years then they come out debt free.  Instead of supporting bank profits, the economy and ridiculous property prices with their blood sweat and tears ... and ending up with not much many years down the track.

Better to take the medicine sooner rather than later.

In fact I think the US non recourse home loans may have helped recent falls but are probably healthier in the medium term.


----------



## pepperoni (2 September 2008)

explod said:


> It is near to work places (ie. city centres) where rents have taken off.




IE demand for *amenity* is outpacing supply.  This is recognised and is intended to be addressed with metro style rail, bus lanes, decentralised business parks etc.

Medium term any amenity gains can diminish or be reversed.


----------



## robots (2 September 2008)

hello,

another great day,

so we have 2 big four inchs nails driven into the coffin now:

mass unemployment - hasnt turned up

huge increases in IR - just been cut 

man how good is it, pedalled all day long

thankyou
robots


----------



## Pommiegranite (2 September 2008)

robots said:


> hello,
> 
> another great day,
> 
> ...




I expect even less home sales now as the few who were willing to buy will probably hold off on borrowing to purchase. Sad to say that it is a lose lose situation for the RE market.


----------



## robots (2 September 2008)

hello,

i hope everyone enjoys seeing the interest rates on those online savings accounts decrease,

the websites would all be updating with new rates as we speak, ING, Bankwest who? 

the cash rate fanatics will be getting cold sweats

thankyou
robots


----------



## BSD (2 September 2008)

Dunno Robots

7.75% risk free looks better than the 5% GROSS yield I could get on my inner city apartment

Particularly when after body corps and rates it gets closer to 3%.

Long way to go yet buddy.

Keep pedalling!


----------



## robots (2 September 2008)

BSD said:


> Dunno Robots
> 
> 7.75% risk free looks better than the 5% GROSS yield I could get on my inner city apartment
> 
> ...




hello,

no worries BSD, have a great day

thankyou
robots


----------



## pepperoni (2 September 2008)

BSD said:


> Dunno Robots
> 
> 7.75% risk free looks better than the 5% GROSS yield I could get on my inner city apartment
> 
> ...




Haha ... spot on about apartments ... pedalling hard and going nowhere!

Bankwest just advertised 8.5% AT CALL ... Im only getting 7.4 at CBA (market rates were falling long before the RBA announcement) and frankly Id be happy with 5% while everything else if flat, going backwards, or too volatile to be worth the headache!

Personal banker calls with 1 month rate, I say ok, and money goes back in until the right property pops up.


----------



## robots (2 September 2008)

robots said:


> hello,
> 
> another great day,
> 
> ...




hello,

just in case some ASF members missed it, as a lot of traffic just recently

now only if number can post up some ABS stats

thankyou

have a great day

robots


----------



## WaySolid (2 September 2008)

xoa said:


> How can those statistics (provided by the unbiased Australian Bureau of Statistics) be consistent with a housing shortage? If there's a shortage, why has house construction outpaced every index of population or household growth?



You would hope the statistics are indeed unbiased. Conclusions made from statistics can point in many different directions however.


----------



## CamKawa (2 September 2008)

pepperoni said:


> Bankwest just advertised 8.5% AT CALL



Thanks for pointing that out I hadn't noticed.
http://www.bankwest.com.au/Personal/Savings_and_Investment/TeleNet_Saver/index.aspx


----------



## robots (2 September 2008)

CamKawa said:


> Thanks for pointing that out I hadn't noticed.
> http://www.bankwest.com.au/Personal/Savings_and_Investment/TeleNet_Saver/index.aspx




hello,

glad you mentioned it,

"paid only on the excess above 30th April 2008 account balances" and last til end of year

la di da, la di da, la di da

since people dont save, great one, should always read the fine print

thankyou
robots


----------



## xoa (2 September 2008)

Responsible savers may lose a bit of interest, but at least they won't suffer 40% losses, which is what highly leveraged property "investors" are setting themselves up for.


----------



## pepperoni (2 September 2008)

CamKawa said:


> Thanks for pointing that out I hadn't noticed.
> http://www.bankwest.com.au/Personal/Savings_and_Investment/TeleNet_Saver/index.aspx




The offer is essentially for new deposits ... much like the ANZ one that dropped to 7.8% month back.

Probably wont get that 8.5% much longer though ... and is 8.5% set and forget at call money all its cracked up to be.  Why not just blow it on suvs and electricals, or put it all in loss making investments ;-)


----------



## WaySolid (2 September 2008)

dhukka said:


> That stats are taken directly from the abs, so unless you think the abs has an axe to grind there is nothing biased in the numbers but point taken that the percentage changes can be misleading. If you read on however you will see that the number of dwellings constructed over the same period has outstripped household formation.



I should have made that clearer that I wasn't questioning the data sourced.. just potentially the conclusions, ABS and government data generally should be pretty high quality you would hope.

I really dislike the idea that you have people who use the term 'specufestor' as an insult who regularly seem to quote that site, that's my bias! Also I probably switched off when I read such things as 95 years of overproduction of housing, we all feed our views at some level I find and need to struggle against that, perhaps I'm missing something good?

Government data for QLD June quarter 08 (OESR department) state wide has vacancy rates for resi property at 2.8% and 1.9% for Brisbane, so that's just a number you can interpret somehow, to me it seems like there isn't huge oversupply in stock available. Some areas no doubt will have plenty of vacancies and others will be under pressure (inner Brisbane), you don't buy the median or the average you buy a property and that's a way you can add value to your investment by purchasing wisely.

Rental moves for the last 3 years for a property I own that I estimate is a reasonable proxy for the suburb... 250-330 = 32% growth of 9.70% CAGR over 3 years, longer term growth rates are only around 4% so... that's a bubble potentially. 

Does someone agree/disagree with the view that asking the market for an opinion about supply via rents is a pretty good idea compared to charts at 20 paces?


----------



## WaySolid (2 September 2008)

explod said:


> It is near to work places (ie. city centres) where rents have taken off.  Outer areas, such as where I live they are static or falling and this trend is very much following the rise in oil (transport).
> 
> Having had experience with ABS figures in the past (professionally), they are spot on but as of the day of issue they reflect the past by some degree, not what is happening now.   Earlier this year a lot of property was still on the rise which is mixed with figures now on the decline.
> 
> As you say, interesting subject



Agreed, the variance over different areas is not small. Also Brisbane is quite different to Western Sydney and so on.

I like both the RBA and ABS sites and visit regularly to refresh my spreadsheets.

Not all stocks did badly in the 1930's either!


----------



## pepperoni (2 September 2008)

WaySolid said:


> Does someone agree/disagree with the view that asking the market for an opinion about supply via rents is a pretty good idea compared to charts at 20 paces?




Yes - as amenity has a huge premium made possible by expensive fuel and other costs of living ... renders the numbers nonsensical as relates to general supply.

Brisbane is releasing and selling land hand over fist on the outskirts. People paying $200k for blocks in warner and another $200k to build a 1 story spec home.  Tonnes of new properties all around ... far more than necessary.

Gotta say the PPOR build and build to let types are way up the evolutionary chain from the recent buy to let types and speculators.

Now if only we could get kyle sandilands and jamie dury to do "the block 3" where people face reality, sell their loss making properties and rent we could be over this sad chapter by year end.


----------



## dhukka (2 September 2008)

WaySolid said:


> I really dislike the idea that you have people who use the term 'specufestor' as an insult who regularly seem to quote that site, that's my bias! Also I probably switched off when I read such things as 95 years of overproduction of housing, we all feed our views at some level I find and need to struggle against that, perhaps I'm missing something good?




Can't say I've seen that phrase specufestor before, I do like it though. I agree that phrases like the one you quoted above are overly alarmist.  



WaySolid said:


> Government data for QLD June quarter 08 (OESR department) state wide has vacancy rates for resi property at 2.8% and 1.9% for Brisbane, so that's just a number you can interpret somehow, to me it seems like there isn't huge oversupply in stock available. Some areas no doubt will have plenty of vacancies and others will be under pressure (inner Brisbane), you don't buy the median or the average you buy a property and that's a way you can add value to your investment by purchasing wisely.




Well as they say all real estate is local, this is one cliche I happen to agree with. A few weeks back I went out to Northlakes to look at the next stage of development. Unbelieveable the amount of land they're developing out there, I wonder if it will go as fast as the first stage did?  



WaySolid said:


> Rental moves for the last 3 years for a property I own that I estimate is a reasonable proxy for the suburb... 250-330 = 32% growth of 9.70% CAGR over 3 years, longer term growth rates are only around 4% so... that's a bubble potentially.
> 
> Does someone agree/disagree with the view that asking the market for an opinion about supply via rents is a pretty good idea compared to charts at 20 paces?




I think it would be tought to disagree with that.


----------



## WaySolid (2 September 2008)

pepperoni said:


> Yes - as amenity has a huge premium made possible by expensive fuel and other costs of living ... renders the numbers nonsensical as relates to general supply.



Can you explain this further? I understand you are saying that desirable property renting well will not indicate a general oversupply of property in total? I could have misunderstood that however, I would agree if that's the case. My properties are doing great so I'm happy but I'm sure other people with IP's could have different experiences at the moment. Median rents must be some form of decent feedback however even if they mask lots of individual variability between areas.



pepperoni said:


> Brisbane is releasing and selling land hand over fist on the outskirts. People paying $200k for blocks in warner and another $200k to build a 1 story spec home.  Tonnes of new properties all around ... far more than necessary.



I have a bit of experience of the infill development market in my area (12k CBD), it's ridiculously expensive to build houses at the moment compared to sale price, and hence they aren't being built. Multi dwelling might be more viable and I'm seeing a lot of units being built in Chermside at the moment, really don't know much about the subject and would like to see some data about all of these new properties, the only thing I know is that development roadblocks and costs for the development process from council through to the builders are just huge at the moment from what I hear from developers.



pepperoni said:


> Gotta say the PPOR build and build to let types are way up the evolutionary chain from the recent buy to let types and speculators.
> 
> Now if only we could get kyle sandilands and jamie dury to do "the block 3" where people face reality, sell their loss making properties and rent we could be over this sad chapter by year end.



Personally disagree with the sentiment about evolutionary development, though am interested in this thread just in market feedback and not what I view as a philosophical and moral debate about some areas of capitalism. Though... it's worthy of some discussion potentially.


----------



## WaySolid (2 September 2008)

dhukka said:


> Can't say I've seen that phrase specufestor before, I do like it though. I agree that phrases like the one you quoted above are overly alarmist.
> 
> 
> 
> ...



Re: Northlakes.. I know that Stocklands and other big developers do have massive land bank supplies, so for all I know on the subject (not much) there might be suburbs of houses with nobody inside out there in Brisbane at the moment, just that I'm wondering why this isn't feeding through to my suburbs? Rents for me are very strong and they are still growing well, though I only track a few suburbs closely and might be missing something.

** edit... Actually all I know is their land banks are massive.. not sure how it relates to demand as that is potentially no small thing from QLD's population either. I do remember viewing a big chunk of land snapped up by one of the big dev companies around Kallangur (20k CBD) in 2005 for 80M or so and being told it was the last such parcel of it's type that close to the CBD by the person showing me it, but it's all about developable at a reasonable cost land as if there's one thing in this country we don't really lack it's open space!


----------



## BSD (2 September 2008)

WaySolid said:


> Rental moves for the last 3 years for a property I own that I estimate is a reasonable proxy for the suburb... 250-330 = 32% growth of 9.70% CAGR over 3 years, longer term growth rates are only around 4% so... that's a bubble potentially.




GDay Waysolid

I don't agree with the doomsdayers or the property bulls. 

For what it is worth, I think quality Brisbane property will do little for 5-10 years (while wages/affordability catches up) and poor Brisbane property will sink a bit until it reaches the quickly falling ability of owners/tenants to pay. 

Brisbane property in general did nothing in absolute (fell in real) terms between 1990 and 1998. Why cannot this repeat after an unprecedented bull market?

Anyway, in reference to your quote above which is very valid, I would like to point out that in my context the potential rent on my place (owner occupy on river apartment with city views) has gone up from $450 to $650 in five years -  a 45% increase. 

However, five years ago a portion of my mortgage was locked in at 6% and has now rolled to 9% - a 50% increase. 

So the crummy gross yield is still lucky to be 5% - but the holding cost has gone up 50% - *new buyers *at these levels would have to be rare and I think my place is over priced. 

Borrowing at 6% is marginal with rental yields at 5% (gross - setting aside the silly rates and body corp) but stupid with rates at 9%. 

This is why I believe property goes nowhere in my patch until wages catch up and why I locked in a valuation with my banker and got pre-approval to the MAX while I could. 

Plenty of other CHEAP assets to buy with the expanded credit line


----------



## pepperoni (2 September 2008)

WaySolid said:


> Can you explain this further? I understand you are saying that desirable property renting well will not indicate a general oversupply of property in total?




Amenity is worth money - I pay $150 a week in fuel, parking and tolls ... If I could move somewhere I could walk to work Id happily put that towards rent.  Amenity is worth money.  For social people spending $100 a week in cabs going out they can put that towards renting centrally.  Cost of getting around has gone through the roof so the premium people pay to rent amenity properties is growing healthily ... they actually end up saving money even with the 10%+ rent increase (modest and a bargain IMO) vs the poor sod chained to a property for 30 years while his workplace and lifestyle changes.

As for the oversupply, building around brisbane (eg warner) has to a large degree been locked in by off the plan type purchases BEFORE SUBDIVISION.  Subdivision is done, settlement has occured, and those properties are getting approved and built.  There is a pipeline of this stuff coming through from the heady days of ... blah Im sick of typing this stuff but hopefully you get the picture.


----------



## WaySolid (2 September 2008)

BSD said:


> GDay Waysolid
> 
> I don't agree with the doomsdayers or the property bulls.
> 
> ...



I like reading what capital is doing and where it's going, it's easy to mouth bet well but harder to do it with real money.

Your guess about the future is similar to the prediction I have had for over a year regarding Brisbane, my guess has been a 1990's repeat potentially. With this opinion in mind I sold a property late 07 to reduce debt and place some capital elsewhere (PPOR sale so tax free), I'm longingly looking at property in my areas at the moment still as I like it's long term prospects but the prices don't make any sense to me just right now..... so at some point in the future perhaps.



BSD said:


> Anyway, in reference to your quote above which is very valid, I would like to point out that in my context the potential rent on my place (owner occupy on river apartment with city views) has gone up from $450 to $650 in five years -  a 45% increase.
> 
> However, five years ago a portion of my mortgage was locked in at 6% and has now rolled to 9% - a 50% increase.
> 
> ...



Agreed about buying resi property now, just in my areas I'm in pause mode for an indefinite time.. Buying might make little sense but selling and hoping to overcome transaction costs via timing is also not clear to me, my yields are still increasing and very healthy compared to purchase price, and my basic investing philosophy is to be bullish long term Australia .... so... hold! not accumulate or sell or incur brokerage costs 

Having said that I have no value add skills with property apart from purchasing cheaply and simple cosmetic reno's, I believe property is still this fantastic vehicle to create wealth pretty much at all times, just with buy n hold you have to be aware that capital gains never comes in smoothly served portions.


----------



## pepperoni (2 September 2008)

Not exactly fertile grounds for property prices to increase ...


Record mortgage stress ahead of rate cut

By Stuart Fagg, ninemsn Money
September 1, 2008

Homeowners in NSW and Queensland are spending more than 40 percent of their income to meet mortgage repayments as housing affordability hits record lows.

According to Real Estate Institute of Australia (REIA) figures released today, higher interest rates and economic uncertainty have pushed housing affordability to its lowest level in the 22 years the REIA has been collecting data on the issue.

On average, families across Australia are paying 38.9 percent of their income in mortgage repayments. Those paying more than 30 percent of their income are considered to be in mortgage stress. However, according to Noel Dyett, REIA president, the situation is at its worst in NSW and Queensland.

"The situation is most severe in New South Wales and Queensland, where the proportion of income required to meet loan repayments increased to 42.6 percent and 41.0 percent respectively," he said. The average monthly home loan repayment in NSW hit $2301 in the June quarter.

What you will save from the rate cut:

Rate cut of 0.25 percent:

    * $200,000: $35 per month
    * $350,000: $61 per month
    * $500,000: $87 per month
    * $750,000 :$131 per month


----------



## wayneL (2 September 2008)

WaySolid said:


> I really dislike the idea that you have people who use the term 'specufestor' as an insult who regularly seem to quote that site, that's my bias!



The term is actually specuvestor. A combination of *specu*lator and in*vestor*.

* I don't use the term, but it does describe many in the property market (and indeed many "traders"). I wouldn't have thought it derogatory unless spat out with invective.

* You might just have to wear it, because as a group, "specuvestors" have had the most atrocious things to say to those who have chosen not to participate in property; very much more hurtful than specuvestor (which I repeat is not really derogatory if accurate). 

* What's wrong with being a specuvestor anyway? It's not my bag with property, but if you can make some dough, why not.

* The villains in this bubble are the banks and government... and nasty Rachman type landlords.


----------



## gfresh (2 September 2008)

wayne solid said:
			
		

> I know that Stocklands and other big developers do have massive land bank supplies, so for all I know on the subject (not much) there might be suburbs of houses with nobody inside out there in Brisbane at the moment, just that I'm wondering why this isn't feeding through to my suburbs?




Not sure about Brisbane at the moment, however on the goldcoast bucket loads of freshly built properties, and empty ones around Upper Coomera for sale.. 100's in fact. Areas such as Arundel and Parkwood many also. Nearly all are $400k+ -  quite out of reach from the average first home buyer, or average wage here. Going to take a while to clear the supply, or for affordability to catch up. I think these areas are very vulnerable right now. 

Plenty of supply here on the goldcoast for those who wish to live in those areas...or can afford it.


----------



## WaySolid (2 September 2008)

Just a thought to throw out there because I haven't seen it mentioned before.

I see the US and England and to a lesser extent Ireland mentioned frequently on the bulletin boards I frequent, and as they have gone indeed we might go as well, I just don't know. 

My question is why isn't anyone interested in what the Canadian real estate market is doing? I have been watching that market with a lot more interest than I have property in England.

Having spent several hours on this thread, time for me to go and do some work! Thanks for the civil discussion on the subject and keep it going


----------



## Pommiegranite (3 September 2008)

WaySolid said:


> Just a thought to throw out there because I haven't seen it mentioned before.
> 
> I see the US and England and to a lesser extent Ireland mentioned frequently on the bulletin boards I frequent, and as they have gone indeed we might go as well, I just don't know.
> 
> ...




I am!! Its uncanny that you posted this, as I have just come online to post the same!!

I've just had cousins over from Toronto and we have been discussing the relative AUS and CAD property markets. 

Canada seem to be in a very similar position to us here i.e a resoruce rich country with high immigration, 1 province being very resource rich and the rest hanging onto it's coattails etc etc. 

Yet (besides Vancouver) Canadian cities have some of the most affordable real estate in the western world. Ontario is the most populous province, yet has some of the most affordable real estate (even within 25ks of Toronto CBD) in any developed Canadian city.

Its almost as though they had only a small RE boom and are therefore sheltered from a major bust. I expect that the relatively open border with the US (which on the whole always has had cheaper housing than Canada) has had a major influence on their RE market. 

Canada has tradionallly had low interest rates, but even this didn't lead to an outright buying frenzy which we have had in Australia.


----------



## Beej (3 September 2008)

ANZ Chief Economist says current housing slowdown "not a crisis", and tips no wide-spread housing price value falls for AU like in US or the UK. Backed up by some interesting data and analysis of housing approval figures etc as well:

http://www.news.com.au/business/money/story/0,25479,24286433-5013951,00.html

Cheers,

Beej


----------



## CamKawa (3 September 2008)

Beej said:


> ANZ Chief Economist says current housing slowdown "not a crisis", and tips no wide-spread housing price value falls for AU like in US or the UK. Backed up by some interesting data and analysis of housing approval figures etc as well:
> 
> http://www.news.com.au/business/money/story/0,25479,24286433-5013951,00.html
> 
> ...



Wow, how about that. A banks economist doesn't think house prices will crash. Is that news?


----------



## pepperoni (3 September 2008)

WOW .. GREAT NEWS!


THE dilapidated housing industry will continue its slow demise despite yesterday's cut in interest rates, leading economists believe.

"These latest figures point to continuing softness in the housing sector, but it is not the same sort of downturn that has occurred during previous periods of high interest rates," he said.

"Housing has been slowing, but not collapsing and these figures are just consistent with that trend.


TOPPED OFF WITH A LIE! 

"Even in the worst affected areas, places like western Sydney, house prices are not falling like they are in the US or Britain and we won't see that unless there is a big rise in unemployment," he said.


The worst affected areas are down 20% alread ... 40% in some parts of west penant hills etc.


----------



## Happy (3 September 2008)

pepperoni said:


> WOW .. GREAT NEWS!
> 
> "Even in the worst affected areas, places like western Sydney, house prices are not falling like they are in the US or Britain and we won't see that unless there is a big rise in unemployment," he said.
> 
> The worst affected areas are down 20% alread ... 40% in some parts of west penant hills etc.





I think that Xmas or what some call now Festive Season will bring retrenchments.

Is it going to tip the scales don't know, but as soon as people will try to sell property quickly is when brown matter will hit the fan.


----------



## xoa (3 September 2008)

Beej said:


> ANZ Chief Economist says current housing slowdown "not a crisis", and tips no wide-spread housing price value falls for AU like in US or the UK. Backed up by some interesting data and analysis of housing approval figures etc as well:
> 
> http://www.news.com.au/business/money/story/0,25479,24286433-5013951,00.html
> 
> ...




Permabulls spin building approval data any way they want. When approvals are high, they use it as evidence of a "strong and robust" market. When approvals are low, they claim it's setting us up for a "housing shortage'. Either way, their self-serving conclusion is that the bubble will last forever.


----------



## KIWIKARLOS (3 September 2008)

it wll take economic mismanagement to turn this into a housing crash. If house prices tank there will be high unemployment and low interest rates. We still have positive growth when most of the OECD has been negative for at least 2 quarters. I still think it will get worse globally and sure we may have a mild recession but when the act balances out and we enter the next up cycle people buying up now and in the next 12 months will be laughing.


----------



## KIWIKARLOS (3 September 2008)

CamKawa said:


> Wow, how about that. A banks economist doesn't think house prices will crash. Is that news?




to be fair there are plenty of economists and politicians saying things are bad as well. In england the central bank says worst in 60 years, warren buffet and many analyists saying fannie and freddie cactus. 

There are two sides to every coin and sure there are downsides, big ones but we have many more positives than those countries currently having problems. Our terms of trade are skyrocketing and they have only just begun the contracts RIO BHP etc etc just signed last for 1-3 years a decrease in commoditiy prices wont effect them as much and the huge volumes of long term contracts acts to buoy the commodity prices anyway


----------



## dhukka (3 September 2008)

KIWIKARLOS said:


> We still have positive growth when most of the OECD has been negative for at least 2 quarters.



Actually I don't thnk that's correct, could you point out the OECD countries that have had 2 consecutive negative quarters of growth?


----------



## dhukka (3 September 2008)

KIWIKARLOS said:


> *Our terms of trade are skyrocketing *and they have only just begun the contracts RIO BHP etc etc just signed last for 1-3 years a decrease in commoditiy prices wont effect them as much and the huge volumes of long term contracts acts to buoy the commodity prices anyway




Actually from the latest GDP report, trade was a real fizzer. 



> Trade continued to be a drag on growth even with soaring coal and iron-ore prices propelling the terms of trade 13.1% higher. (The terms of trade measure relative prices for exports versus imports).
> 
> Imports knocked off 0.6 percentage points of growth, while exports only added half a percentage point, leaving net-exports in negative territory for the quarter.


----------



## pepperoni (3 September 2008)

And while we are at it ...



KIWIKARLOS said:


> We still have positive growth




Id hardly see .3% growth as the basis for great news to come ... being .4% off recession levels of growth and all.


----------



## Beej (3 September 2008)

pepperoni said:


> And while we are at it ...
> 
> 
> 
> Id hardly see .3% growth as the basis for great news to come ... being .4% off recession levels of growth and all.




Well I think the fact the economy actually grew when many here have been predicting doomsday is actually EXCELLENT and POSITIVE news.  Of course if the figure had been + another .4%, we would be shouting boom times! So really the figure we got puts us about halfway between booming and stagnating, which under the current global circumstances is not so bad at all.

If things pan out well from here (primarily dependent on ongoing Chinese resources demand), Australia *could* well avoid recession altogether, which will mean no massive increase in unemployment (even 100,000 job losses = "only" a 1% increase in unemployment, which would therefore remain at historically low levels). That will in turn mean the property market, particularly in well located sought after areas, should remain robust and certainly may avoid any prolonged downturn or crash in prices as being predicted here, IMO. 

Additionally the fact that interest rates are now coming down means predictions of mass mortage defaults etc are looking less and less likely as well, when coupled with a possible positive (or should I say not doomsday) ongoing economic growth outcome.

Cheers,

Beej


----------



## dhukka (3 September 2008)

Beej said:


> Well I think the fact the economy actually grew when many here have been predicting doomsday is actually EXCELLENT and POSITIVE news.  Of course if the figure had been + another .4%, we would be shouting boom times! So really the figure we got puts us about halfway between booming and stagnating, which under the current global circumstances is not so bad at all.
> 
> If things pan out well from here (primarily dependent on ongoing Chinese resources demand), Australia *could* well avoid recession altogether, which will mean no massive increase in unemployment (even 100,000 job losses = "only" a 1% increase in unemployment, which would therefore remain at historically low levels). That will in turn mean the property market, particularly in well located sought after areas, should remain robust and certainly may avoid any prolonged downturn or crash in prices as being predicted here, IMO.
> 
> ...




Building straw man arguments does not bolster your case. Where were these doomsday forecasts for second quarter GDP? Can you quote one?  

Personally I'm quite surprised at the speed of the slowdown here. It needs to be acknowledged that the mining sector is powering along but that is not enough to keep the economy from slowing significantly. 

The real eye opener in today's GDP report was that Household Consumption Expenditures showed negative growth for the first time since 1993.


----------



## pepperoni (3 September 2008)

Absolutely.

And in any event it not like a big job loss switch gets hit exactly -.1% growth ... there is potential for job losses in any slowdown, and IMO the job losses announced (eg in the correction thread) are worse than I expected.


----------



## Beej (3 September 2008)

dhukka said:


> Building straw man arguments does not bolster your case. Where were these doomsday forecasts for second quarter GDP? Can you quote one?




Now who is building the straw man! How about the whole "The Recession has started" thread?? Full of doom and gloom views claiming that we are/were already in the midst of recession. For things to be as bad as suggested there you would have had to have seen a worse Q2 GDP number than we did. There are lenty of other examples of everyone proclaiming that we are in recession, or the US is in recession and we will follow etc etc.

Anyway - you believe what you want to believe. I personally am more optomistic in the ability of Australia as it currently stands to avoid the worst, but having people running around talking everything down is certainly not going to help....it's all glass half full/glass half empty stuff.

PS - re household consumption growth, while yes those numbers are bad in terms of potential GDP figures, isn't that also exactly what you would expect given the recent monetary tightening plus the level of mortgage stress etc? Our interest rate cycle has just peaked remember....

Anyway I'm getting bored with this thread, the same old arguments keep coming up and we go around in circles - I think if anyone could be bothered to read the whole thread they would get all the different perspectives and the arguments in each case.

Cheers,

Beej


----------



## wayneL (3 September 2008)

Beej said:


> ...the same old arguments keep coming up and we go around in circles



That's because we're all pissed when we start writing in here.


----------



## pepperoni (3 September 2008)

Beej said:


> Anyway - you believe what you want to believe. I personally am more optomistic in the ability of Australia as it currently stands to avoid the worst, but having people running around talking everything down is certainly not going to help....it's all glass half full/glass half empty stuff.




People are trying to spin the half glass when in fact the glass is empty

How much upside can you find in the medium term when "Homeowners in NSW and Queensland are spending more than 40 percent of their income to meet mortgage repayments as housing affordability hits record lows."

Especially with low and slowing growth.

Do the math the average aussie is locked in to 10-30 years of making a pensioner look like lifestyles of the rich and famous.

Our wallets are empty and we are getting by with stop gap financial engineering. 

The cupboard is bare.


----------



## pepperoni (3 September 2008)

Forgot to mention the sky is falling too.


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## Beej (3 September 2008)

pepperoni said:


> How much upside can you find in the medium term when "Homeowners in NSW and Queensland are spending more than 40 percent of their income to meet mortgage repayments as housing affordability hits record lows."




SOME are paying 40% of their income, at this point right now! How many home owners are in this position? It is NOT the majority. How many will still be in that position in a few years with much lower interest rates? 50% of homeowners in NSW pay 0% of their income towards mortgage payments anyway as they dont have a mortgage! In the long distant past I did commit over 40% of my income to a mortgage - but then over time my income went up and interest rates came down - just like will happen from this point in the cycle. That first mortgage was paid off in 6 years. Gonski.

The glass is far from empty.... but whatever - those who want to rent, rent. no one is going to force anyone to buy a house, either to live in or for investment.

Beej


----------



## Beej (3 September 2008)

wayneL said:


> That's because we're all pissed when we start writing in here.




That might well true!!


----------



## pepperoni (3 September 2008)

Beej said:


> SOME are paying 40% of their income, at this point right now! How many home owners are in this position? It is NOT the majority.




Its the average!!!! 

IE the bears on this thread are paying 0%,  and the property hype victims are living on rice bought in 20kg bags ... and cant afford the bandwidth to out argue us on this thread .


----------



## dhukka (3 September 2008)

Beej said:


> Now who is building the straw man! How about the whole "The Recession has started" thread?? Full of doom and gloom views claiming that we are/were already in the midst of recession. For things to be as bad as suggested there you would have had to have seen a worse Q2 GDP number than we did. There are lenty of other examples of everyone proclaiming that we are in recession, or the US is in recession and we will follow etc etc.




You must have a big haystack Beej. Maybe that was a slip of the fingers on your last post there Beej? The thread you refer to was actually titled "The Recession has Started?" You see, by adding the question mark it takes on a whole different tone. Reading through that entire thread there is only one person in seven pages actually said they thought the economy was now in recession. Most said things like 'knocking on the door of' others (including myself) said 'just a slowdown'. Quite a few offered opinions as to why they thought Australia would avoid one. There was not one forecast of 2Q08 GDP so it is simply false to say that the tone of the thread implied a worse result than we got.  



Beej said:


> Anyway - you believe what you want to believe. I personally am more optomistic in the ability of Australia as it currently stands to avoid the worst, but having people running around talking everything down is certainly not going to help....it's all glass half full/glass half empty stuff.
> 
> PS - re household consumption growth, while yes those numbers are bad in terms of potential GDP figures, isn't that also exactly what you would expect given the recent monetary tightening plus the level of mortgage stress etc? Our interest rate cycle has just peaked remember....




Yes it is what you would expect, but it's interesting that it hasn't happened for 15 years. It certainly didn't happen during the last interest rate cycle peak.


----------



## Beej (3 September 2008)

pepperoni said:


> Its the average!!!!
> 
> IE the bears on this thread are paying 0%,  and the property hype victims are living on rice bought in 20kg bags ... and cant afford the bandwidth to out argue us on this thread .




It is NOT the average mortgage payment cost for all NSW home owners! The figure you are quoting is the percentage of an average income required to service the AVERAGE FIRST HOME BUYER MORTGAGE right now at this point in time.

So IN FACT, as a percentage of total home owners in NSW, a minority of people are actually paying the 40% figure.

Nice try though! 

PS I'm obviously not a bear here but I pay 0% of my income to into mortgage payments as well! So, no 20kg rice bags needed in my house thanks! Now, where did I put down that single malt I was enjoying?? 

Cheers,

Beej


----------



## kitehigh (4 September 2008)

Pommiegranite said:


> I am!! Its uncanny that you posted this, as I have just come online to post the same!!
> 
> I've just had cousins over from Toronto and we have been discussing the relative AUS and CAD property markets.
> 
> ...




I was just talking to a Canadian guy the other week and we got talking about realestate.  He happened to own over a 100 acreas with a 4 bedroom house, sheds, 2 fresh water creeks and only an hours drive to Ontario.  I was shocked when he told me he paid 135k for this place 2 years ago.   I thought he must be living along way from amenties etc than, but he said the local school was only a 10 min drive away along with the local shops.  So afterwards I had a look at property in the Ontario region and it does seem that they enjoy very reasonable priced property.


----------



## Temjin (4 September 2008)

Beej said:


> SOME are paying 40% of their income, at this point right now! How many home owners are in this position? It is NOT the majority. How many will still be in that position in a few years with much lower interest rates? 50% of homeowners in NSW pay 0% of their income towards mortgage payments anyway as they dont have a mortgage! In the long distant past I did commit over 40% of my income to a mortgage - but then over time my income went up and interest rates came down - just like will happen from this point in the cycle. That first mortgage was paid off in 6 years. Gonski.
> 
> The glass is far from empty.... but whatever - those who want to rent, rent. no one is going to force anyone to buy a house, either to live in or for investment.
> 
> Beej




wooo, you have made a lot of assumptions here. I would love statistical data to back this up. 

And how certain are you that the interest rate will continue to go down? If you are so 100% sure of the trend, you should be playing futures.  

All of us are basically ignoring the possibility of a blackswan event and the implication of it. What happens if the US really tanks hard? What if China has finally take a huge breath and stop growing for a few years? (Note: Even Jim Rogers, a lover of China, suggest such a possibility, nothing go straight up without coming back down a bit) 

However, the fact remains that over the last decade or more, there has been an increase in the portion of people who are paying more and more of their income to cover their mortgage repayment. Houses were ALOT more affordable back in the high interest rate environment in the 1980s and I doubt you would find anyone who is sane enough to disagree with that.

It's funny eh? An average house supposed to worth 3 times the average wage more than 2 decades ago, now it is close to 10 times. I thought with technological advances and increased construction facilities, you would see prices to GO DOWN. Just like computers and/or food prices (before the recent rise) when we got more efficient at it. And we still have plenty of land left!


----------



## JackC (4 September 2008)

pepperoni said:


> Its the average!!!!
> 
> IE the bears on this thread are paying 0%,  and the property hype victims are living on rice bought in 20kg bags ... and cant afford the bandwidth to out argue us on this thread .


----------



## Beej (4 September 2008)

Temjin said:


> It's funny eh? An average house supposed to worth 3 times the average wage more than 2 decades ago, now it is close to 10 times.




Lol! House prices 3 x average wages!! Tell him he's dreaming! That has certainly not been the case in Sydney at least during my lifetime! Even in 1987, JUST before the 88 boom (a convenient time statically to pick if you want to make houses look like they were as cheap as possible) , Sydney average price (~$100k) was STILL 5+ times the average wage (~$20k). By 1990 the multiple was 8 times, as house prices nearly doubled while average earnings went up to around mid $20ks.

Of course compared to the 80s there is a lot more money around in Sydney in real terms, and the existing housing stock has been considerably improved, and so surprise, asset values have increased?? Maybe that's what's happened in the rest of the country in the last 10 years as well??? 

Here is a link showing historical Sydney median house price back to 1975:
http://www.propellvaluers.com/media/docs/pdf_docs/sydney_december.pdf

Anyway this exact point has already been covered in this thread multiple times before. I really have no idea where people get the idea that houses are "supposed" to cost only 3 x the average wage! That would make life sooooo easy! Of course you can buy a house that cheap if you want to live out in the country somewhere.....but not in the big city!



> I thought with technological advances and increased construction facilities, you would see prices to GO DOWN. Just like computers and/or food prices (before the recent rise) when we got more efficient at it. And we still have plenty of land left!




This last statement just really shows that you do not understand the R/E market or what drives prices in it.

Cheers,

Beej


----------



## pepperoni (4 September 2008)

Beej said:


> That would make life sooooo easy!




We wouldnt want that now would we.  And plus the banks wouldnt be able to turn us all into walking 30 year annuities with 100% land back security?  Perish the thought!


----------



## Beej (4 September 2008)

pepperoni said:


> We wouldnt want that now would we.  And plus the banks wouldnt be able to turn us all into walking 30 year annuities with 100% land back security?  Perish the thought!




Yes well, they can be the first against the wall when the revolution comes eh?? 

Beej


----------



## gfresh (4 September 2008)

Well to be honest, given improved efficiencies and building techniques, you'd maybe expect construction costs to come down, reducing house prices a little (yes land, blah, blah). Do most of our construction materials come from China yet? Can I import some Chinese to build my house at 1/5 the cost? hmmm 

Canada is mentioned as a more stable housing market, I wonder what Government assistance and schemes they have over there? Have they had recent booms that have given the population the idea that as property has made good gains over the last 15 years, it will continue to do so in-infinitum, hence making every man and his dog think his path to riches is through his property? I have a feeling the discounts could be the difference. 

Bank credit still shakier than it looks which should be a concern to any potential housing investor. If there is any further crisis write-downs for any of our majors, a few may be going into 'lockdown' mode, leading to the same problems which killed the UK market - credit rationing. 

http://business.theage.com.au/business/nab-peers-over-the-cliff-20080904-494k.html


----------



## Beej (4 September 2008)

gfresh said:


> Canada is mentioned as a more stable housing market, I wonder what Government assistance and schemes they have over there? Have they had recent booms that have given the population the idea that as property has made good gains over the last 15 years, it will continue to do so in-infinitum, hence making every man and his dog think his path to riches is through his property? I have a feeling the discounts could be the difference.




Canada is not that cheap - see figures here: http://www.livingin-canada.com/house-prices-canada.html

Vancouver and BC, which are like the Sydney and NSW of Canada, have median prices just about on par with Sydney and NSW. Then, like AU, there are some cities which are more and some that are less expensive, in a similar fashion to Melbourne/Brisbane say compared with Adelaide.

The overall average is $CA302k - whats the Australian national average? high 300s? Canada many be lower due to more regional cities than Australia has plus proximity to the US - but it's not *that* much lower. Their $ has tended to be worth than ours too.

Cheers,

Beej


----------



## IFocus (4 September 2008)

Temjin said:


> I thought with technological advances and increased construction facilities, you would see prices to GO DOWN. Just like computers and/or food prices (before the recent rise) when we got more efficient at it. And we still have plenty of land left!




Temjin the house bit is to some degree actually true its just that houses are now much bigger (Mac Mansions) compared to the pass.



> It's funny eh? An average house supposed to worth 3 times the average wage more than 2 decades ago, now it is close to 10 times.





I have seen the 3 times average wage thing here in the West a couple of times but never seen the last five years growth rates ever even in this boom bust state.


----------



## IFocus (4 September 2008)

Beej said:


> Lol! House prices 3 x average wages!! Tell him he's dreaming! That has certainly not been the case in Sydney at least during my lifetime! Even in 1987, JUST before the 88 boom (a convenient time statically to pick if you want to make houses look like they were as cheap as possible) , Sydney average price (~$100k) was STILL 5+ times the average wage (~$20k). By 1990 the multiple was 8 times, as house prices nearly doubled while average earnings went up to around mid $20ks.





Yes Sydney has always just been so far out there even in world terms I think. 

I knew some guys who were in the building game in the 80's and decided to risk every thing and build a apartment tower.

They pulled it off and both them and their families retired on the profits.


----------



## pepperoni (4 September 2008)

"Household recession" as per the numbers posted by dhukka

http://business.theage.com.au/business/recession-hits-on-the-home-front-20080903-48wf.html


----------



## Temjin (4 September 2008)

Beej said:


> Lol! House prices 3 x average wages!! Tell him he's dreaming! That has certainly not been the case in Sydney at least during my lifetime! Even in 1987, JUST before the 88 boom (a convenient time statically to pick if you want to make houses look like they were as cheap as possible) , Sydney average price (~$100k) was STILL 5+ times the average wage (~$20k). By 1990 the multiple was 8 times, as house prices nearly doubled while average earnings went up to around mid $20ks.




Dude, where are you getting your data from? Your "observation"? Unfortunately, you seem to refuse to see the real official statistic data that tell you otherwise. So I suggest you stop making numbers out of the hat. 

Let's use the "ridiculous" report that Johnston Dixon has posted recently, so to let you know I AM NOT BIASED.

http://blogs.abc.net.au/queensland/files/JOHNSTON_DIXON_Report.pdf

For example, the MEDIAN HOUSE PRICE in Brisbane in 1983 was $57,000

From here, http://www.ausstats.abs.gov.au/auss...BA277BD34A1CA2574A4001FA80D/$File/6302003.xls

The Ordinary Time earnings for a full time adult (for Australia) in Nov 1983 was merely $346.00 per week. That's $17,992 p.a. excluding overtime, sick leave, etc.

What is the ratio then??? 3.168

What about 1990? The median house price, for Brisbane, is now $118,000.
OTE for a full time adult in Nov 1990 is $555.60, that's $28,891.20 p.a. 

Ratio has now increased to 4.08. Where is this ratio of 8 you are dreaming about?? 

(For those interested, the ratio has increased to 7.8 ending 2007)



			
				Beej said:
			
		

> Anyway this exact point has already been covered in this thread multiple times before. I really have no idea where people get the idea that houses are "supposed" to cost only 3 x the average wage! That would make life sooooo easy! Of course you can buy a house that cheap if you want to live out in the country somewhere.....but not in the big city!




Historical data has proven that it is true. You just choose to ignore it because you have your own perception of reality, which is not really a representation of the REAL one. 



			
				Beej said:
			
		

> This last statement just really shows that you do not understand the R/E market or what drives prices in it.




This statement shows you that you are obviously biased in your own thinking and have limited "big picture" thinking. 

IFocus is right in the sense that houses are now bigger (mansion) than it was 30 years. The amount of man hours/effort needed to construct a house considered average today is definitely lot more than decades ago. But is it truly worth that much??

R/E market is driven by supply and demand, supported by the availability of free credit and supportive legistration that encourage speculations. Years of "house loving" by the Aussies have made speculating/owning a property the thing of a norm.




Oh yes Beej, I'm sure you will LOVE the Johnston Dixon's report. Three cheers to $30 million houses and 100%+ average income to average mortgage repayment by the year 2050!


----------



## Beej (4 September 2008)

So Temjin all your posts and views pertain exclusively to the Brisbane market do they? I think you are missing my point that I am talking about the Sydney market and using it to demonstrate what has happened in more recent times in other markets around Australia and thus the national housing figures. Sydney has never been near the affordability you claim as "normal" for half a century. I believe Sydney provides the lead, and the explanation for why other cities have got more expensive in recent times. If you don't get that, well whatever....

My stats are not made up or based just on observation - I posted the links which back them up. Eg, in Sydney in 1990 let's use your average OTE of $28k (I saw a figure of $25k elsewhere) vs median SYDNEY house price of $180k (from http://www.propellvaluers.com/media/docs/pdf_docs/sydney_december.pdf) that STILL gives you a ratio of 6.4. Nationally the median in 1990 was $140k, given a multiple of 5 using your wage figure. Still nowhere near 3! Remember those were the ratios during the middle of the last REAL recession and interest rates were 17%!!!! - so I still don't know why you expect or think houses will ever get cheaper than that.....

Or are you just upset you put off buying in Brisbane as the prices rose because you didn't understand why it was happening and convinced yourself they would fall??? If that's the case the next few years will provide a great opportunity to get in at lower real cost as the prices come off a little and stagnate for a while.

PS: Just to be clear, as I have stated numerous times, I do not believe average house prices will continue to grow in the next decade as fast as they have in the last. I believe prices will stabalise during the current period and probably track inflation plus a smidgen on average (thus avoiding your 100% of income needed to service the average mortgage scenario). In addition I bet their will be an increased focus on the supply side of lower cost affordable housing in cheaper area's which will be the primary factor in keeping the "average" price growth low. 

However, I also believe property in sought after well located area's that the wealthier and higher paid people desire to live in will continue to grow at a faster rate than the average. They are bought by people way above the average wages, so the average wage based stats are meaningless in understanding what will drive the prices of those houses - the primary factor being an increasing number wealthier people in absolute terms coupled with a static supply.

Cheers,

Beej


----------



## robots (4 September 2008)

hello,

oh temjin, since you love stats can you post the one from ABS showing how things are going with prices please (oopsies, we dont want to put that one up)

and also the one about specuvestor renters being 6x poorer than specuvestor property owners,

keep it coming homies, looking forward to the next 30yrs at least

thankyou

robots


----------



## Glen48 (4 September 2008)

Have a look at PATRICK.NET to look into the future and t*he Money managers *while you are at it.
To work out when is a good time to buy take the _monthly_ rent and x it by 150 and when a house get's to that price decide.
The USA market started to crash in 2006 and they think it will last until 2010 we are at the starting line.


----------



## xoa (4 September 2008)

Beej said:


> *Nationally the median in 1990 was $140k*, given a multiple of 5 using your wage figure. Still nowhere near 3!




Really? Is that 140k in 1990 or 2008 dollars?

Official statistics show that ratio of median house prices to median fulltime wages have risen from 4.3 in 1996 to 7.0 in 2006, even though house construction outstripped population and household growth over that period. It's almost certainly worsened since then. My guess is it's sitting at about 8.0.

At the peak of the last bubble, in 1989, the ratio was 5.0.

"Investors" accounted for 21% of new residential loans in 1990. In 2007, they accounted for 47%. Almost half of new home loans! That's what's caused the bubble.

You're fighting a losing battle, if you're trying to convince us that affordability hasn't worsened.


----------



## Beej (4 September 2008)

xoa said:


> Really? Is that 140k in 1990 or 2008 dollars?
> 
> At the peak of the last bubble, in 1989, the ratio was 5.0.




That's what the median price in 1990 in 1990 dollars. Let's see - 1989/1990 - pretty similar years, both post late 80s bubble - oh look, we both agree the multiple was 5x average wages! And yet you are still questioning my posted figures???? 




> "Investors" accounted for 21% of new residential loans in 1990. In 2007, they accounted for 47%. Almost half of new home loans! That's what's caused the bubble.




Which bubble? The Sydney bubble burst back in 2004?? Affordability here would have improved if it wasn't for interest rate rises.....



> You're fighting a losing battle, if you're trying to convince us that affordability hasn't worsened.




Well I've never argued that have I - please read my previous post again - read the last paragragh. I state very clearly what I am arguing - prices are unlikely to fall dramatically as contended by this very thread. I explain my rationale. You either believe it or you don't. The thing is that the market to date has backed my view not yours. Time well tell who is right from here.....

Any by the way, when using wage to house price multiples, you really need to consider the prevailing interest rates at the same time - ie the last 10 years they have been far lower than over the preceding 10 years.

Cheers,

Beej


----------



## xoa (4 September 2008)

Beej said:


> The overall average is $CA302k - whats the Australian national average? high 300s? _(LOL!)_ Canada many be lower due to more regional cities than Australia has plus proximity to the US - but it's not *that* much lower. Their $ has tended to be worth than ours too.




The Canadian market is much different to ours. Their bubble is concentrated in Toronto and Vancouver, as well as a few towns near the oil sands. 

Outside of these areas, Canada is an affordable place to buy a home. According to a study conducted this year, Canada has 22 cities where median prices are "affordable": less than 4 times median income. Australia has *nowhere* in this category. Every single Australian city was rated as unaffordable.


----------



## pepperoni (4 September 2008)

robots said:


> and also the one about specuvestor renters being 6x poorer than specuvestor property owners,




Spaming this nonsense is bad enough but this ridiculous flame spamming has no place on an otherwise intelligent forum.

You have every right to entertain yourself on this thread if you wish to thumb your nose at the forum rules every day you should be banned.


----------



## KIWIKARLOS (4 September 2008)

dhukka said:


> Actually from the latest GDP report, trade was a real fizzer.




terms of trade and balance of trade are two different factors. Yes in the last month inports increased whilst exports decreased. It was due to coal in particular qld has bad weather and two major coal exporting ports effected. Terms of trade refer to the price of ore. We are shipping more ore and are increaing and recently our prices rose 70-100% for coal and iron. We will reap the benefits for years the last figures were an exception.

I bought two years ago and I haven't lost a month ago a place 3 doors down went for $5K higher than what i paid. Yeah sure my house price stays even and inflation devalues it but I would rather have inflation kill my asset price then Have the asset drop capital cost. At least with inflation the lenders looses as well and not the owner, as inflation makes my repayments even cheaper and interest rates continue to fall im a happy camper considering the current climate. House prices or any asset price will always average increase in periods of stong economic growth, productivity growth and prosperity.

US REAL unemployment when you include people given up looking for work in 14% there deficiets are huge. The US is still the most productive country in the world and its economy is larger than the 3 next biggest combined. they are going through tough times but tey are far from terminal. I mean the strategic oil reserve alone at 700 Mill barrels is like sitting on $1 bill of oil.

Time will prove me right or wrong but i think we may see the start of a good recovery middle to late next year. Dont give up on oz just yet for a country of 25 mill we have one of the strongest (comparable) economies in the world. BHP and RIO are massive and only growing go the aussies!


----------



## KIWIKARLOS (4 September 2008)

pepperoni said:


> And while we are at it ...
> Id hardly see .3% growth as the basis for great news to come ... being .4% off recession levels of growth and all.




Come on mate put in into context thats 0.3 for an annual average of 2.7% thats fr from recession hell thats good growth for a european country or even the US we were at nearly 4% a couple quarters ago.


----------



## KIWIKARLOS (4 September 2008)

dhukka said:


> Building straw man arguments does not bolster your case. Where were these doomsday forecasts for second quarter GDP? Can you quote one?
> 
> Personally I'm quite surprised at the speed of the slowdown here. It needs to be acknowledged that the mining sector is powering along but that is not enough to keep the economy from slowing significantly.
> 
> The real eye opener in today's GDP report was that Household Consumption Expenditures showed negative growth for the first time since 1993.




We have had 17 years of economic growth and those downturns of the graph occured in periods where growth was still overall positive.


----------



## dhukka (4 September 2008)

KIWIKARLOS said:


> We have had 17 years of economic growth and those downturns of the graph occured in periods where growth was still overall positive.




Kiwi, 

You really need to check your facts before you make claims like that. On the Household Consumption expenditures graph there are 5 quarters showing negative growth excluding the current quarter just completed. They were;

3Q90 *-0.1%*, 4Q90 *-0.3%*, 1Q91 *-0.4%*, 1Q93 *-0.6%*, 3Q93 *-0.3%*. 

Here are the corresponding quarters of GDP growth;

3Q90 *-0.5%*, 4Q90 *0.0%*, 1Q91 *-0.7%*, 1Q93 *1.2%*, 3Q93 *-0.1%*, 

3 of the 5 quarters showed negative GDP growth, one was flat and one positive so your statement is completely wrong. How about that list of OECD countries with 2 consecutive quarters of negative growth? Or did you make that up as well?


----------



## dhukka (4 September 2008)

KIWIKARLOS said:


> terms of trade and balance of trade are two different factors. Yes in the last month inports increased whilst exports decreased. It was due to coal in particular qld has bad weather and two major coal exporting ports effected. Terms of trade refer to the price of ore. We are shipping more ore and are increaing and recently our prices rose 70-100% for coal and iron. We will reap the benefits for years the last figures were an exception.
> 
> I bought two years ago and I haven't lost a month ago a place 3 doors down went for $5K higher than what i paid. Yeah sure my house price stays even and inflation devalues it but I would rather have inflation kill my asset price then Have the asset drop capital cost. At least with inflation the lenders looses as well and not the owner, as inflation makes my repayments even cheaper and interest rates continue to fall im a happy camper considering the current climate. House prices or any asset price will always average increase in periods of stong economic growth, productivity growth and prosperity.
> 
> ...




I understand the difference between the terms of trade and the balance of trade, however those higher prices weren't enough to push trade into positive territory for GDP in the latest quarter. Next quarter will probably be a different story though. 

I agree that relative to the rest of the developed world that we are doing OK. However the mantra about the resources sector saving the day may be wishful thinking given that roughly 90% of the economy relates to the service sector and that sector has been in contraction for 5 straight months.


----------



## wayneL (4 September 2008)

Update from the Ewe Kay:



> From Times Online
> September 4, 2008
> Housing gloom deepens as prices plunge 12.7%
> Dearbail Jordan
> ...


----------



## theasxgorilla (4 September 2008)

wayneL said:


> Update from the Ewe Kay:




Ouch.

Former VP at one of the local big banks here is predicting price falls on average of up to 20% within the next year.  I'll be ready!

http://www.e24.se/branscher/bankfinans/artikel_673595.e24

Warning it's in Swedish, but it's not like you need a translation, the "song remains the same"!


----------



## gfresh (4 September 2008)

Story on the UK housing falls on Lateline business in a few minutes ABC.. might show how boyant housing markets can quickly reverse, for those who are skeptical it could ever happen here


----------



## theasxgorilla (4 September 2008)

gfresh said:


> Story on the UK housing falls on Lateline business in a few minutes ABC.. might show how boyant housing markets can quickly reverse, for those who are skeptical it could ever happen here




All the same, if you actually LIKE England and earn money either in Aust, on the continent or in the US then you might like to buy yourself a piece of UK property before too long...all of the aforementioned currencies are at exchange rate levels not seen since 1996/97.


----------



## Kauri (4 September 2008)

theasxgorilla said:


> All the same,




 not housing.. my abject apologies to all budding R/E tycoons... butt *ASX G*.. you are over thataways somewhere.. have you heard anyting along these lines???

talk of a possible takeover on TeliSonera by Vodafone for an estimated SEK 30bn. In July, TeliSonera rejected a USD 41bn takeover bid by France Telecom

Cheers
............Kauri


----------



## theasxgorilla (5 September 2008)

Kauri said:


> not housing.. my abject apologies to all budding R/E tycoons... butt *ASX G*.. you are over thataways somewhere.. have you heard anyting along these lines???
> 
> talk of a possible takeover on TeliSonera by Vodafone for an estimated SEK 30bn. In July, TeliSonera rejected a USD 41bn takeover bid by France Telecom
> 
> ...




I'm actually sitting here working at the OLD Vodafone Sweden right this second and no one seems to know anything.  After selling their interests to Telenor some years back it would be interesting to find out if they planned to buy Telia Sonera.


----------



## Kauri (5 September 2008)

theasxgorilla said:


> I'm actually sitting here working at the OLD Vodafone Sweden right this second and no one seems to know anything. After selling their interests to Telenor some years back it would be interesting to find out if they planned to buy Telia Sonera.




  Big rumours.. unsuse.. unsubte.. unsubstnted..   WTHakk.. unproved... butt.. well, watch thier butt.. haill metinks I is overdue for the scratcher... good nite all... and apologies for any offence/offense tonight..
  Slainte
..............kauri


----------



## CamKawa (5 September 2008)

Temjin said:


> Let's use the "ridiculous" report that Johnston Dixon has posted recently, so to let you know I AM NOT BIASED.
> 
> http://blogs.abc.net.au/queensland/files/JOHNSTON_DIXON_Report.pdf



I only read about half the first page. Didn't get much past this crap...

"Economic forecaster BIS Shrapnel, for example, is forecasting 20% growth for Brisbane over the next three years and 40% over the next five. 
Forecasts rarely turn out exactly right but BIS Shrapnel’s ‘future demand based’ type forecasting has in the past proven prudent as a guide."

What Dixon doesn't say is that BIS Shrapnel has ties with LJ Hooker. lol Just a minor oversight from a property permabull I suppose.


----------



## tech/a (5 September 2008)

Saw today that Melbourne's population is expected to rise to 8 mill by 2056.

Bit of longterm growth and demand there.
Property still remains the longterm profit cow it always has been always will be.

But for those who dont own a chunk of it you'll *ALWAYS* get the multitude of reasons *WHY* they dont.

This thread is full of dumb arguement.
Those that are enjoying the ride and those who cant pull the trigger.
Good for a laugh every few weeks.

Back to work.(I'm a builder---a very happy one!).


----------



## wayneL (5 September 2008)

tech/a said:


> Saw today that Melbourne's population is expected to rise to 8 mill by 2056.
> 
> Bit of longterm growth and demand there.
> Property still remains the longterm profit cow it always has been always will be.
> ...



Profit cow??

Yes - At the right price. I can be a loss cow as well as many "too late to the party" BTL investors are finding out right now. 

However the folks that bought earlier at correct value are fine and collecting cash flow.

Dumb argument?

Yes, on both sides. Especially those that leap to conclusions (e.g. "those who cant pull the trigger") pfffffft 

Gross generalisations are the preserve of the idiot. (both sides)


----------



## noirua (5 September 2008)

UK house prices have now fallen 12.9% in the last 12 months. As prices in Scotland have risen and falls in Northern England are lower, parts of the South have seen prices down 20%.
Key areas near major cities in Australia may well see similar falls shortly as the icy winds head for Australia, maybe.


----------



## gfresh (5 September 2008)

For anybody who wants to see the video story on the UK property market last night on the ABC. Probably not much of substance for those who occasionally reads the UK websites, however talking head predicts up to a 1/3 fall over there. 

http://www.abc.net.au/reslib/200809/r289474_1236687.asx 



			
				asxgorilla said:
			
		

> All the same, if you actually LIKE England and earn money either in Aust, on the continent or in the US then you might like to buy yourself a piece of UK property before too long...all of the aforementioned currencies are at exchange rate levels not seen since 1996/97.




Have a UK passport, so can freely work in the UK... I am actually considering something along these lines in a year or two  but will see.


----------



## tech/a (5 September 2008)

wayneL said:


> Profit cow??
> 
> Yes - At the right price. I can be a loss cow as well as many "too late to the party" BTL investors are finding out right now.
> 
> ...




Wayne.
I was a complete idiot when I bought property through the 90s and I'm a complete idiot when I buy/develope property now.

Frankly I dont mind being the idiot.

Seems I can hold the post in the trading arena just as well shorting both BHP and WPL---what an idiot!


----------



## wayneL (5 September 2008)

tech/a said:


> Seems I can hold the post in the trading arena just as well shorting both BHP and WPL---what an idiot!



If you couldn't short, would you "pull the trigger" and go long?


----------



## dhukka (5 September 2008)

tech/a said:


> Saw today that Melbourne's population is expected to rise to 8 mill by 2056.
> 
> Bit of longterm growth and demand there.
> Property still remains the longterm profit cow it always has been always will be.
> ...




Tech,

Since you're a builder I would have thought you could contribute quite a bit to this thread rather than silly 40 year forecasts that will almost certainly prove to be wrong. How about some some real commentary from a man in the trenches?


----------



## tech/a (5 September 2008)

dhukka said:


> Tech,
> 
> Since you're a builder I would have thought you could contribute quite a bit to this thread rather than silly 40 year forecasts that will almost certainly prove to be wrong. How about some some real commentary from a man in the trenches?





I used to comment but there is no point. Which is obvious from the responses you see here and the comments I post up.

People including myself have their own views.
So be it.
Mine is simply one of Business.



> If you couldn't short, would you "pull the trigger" and go long?




Dont get it---to deep for me.


----------



## wayneL (5 September 2008)

tech/a said:


> Dont get it---to deep for me.




OK I'll type this very slowly. 

* You castigated those who are bearish on property as "can't pull the trigger"

* You went short on BHP and WPL because you believed that they would go down. You were beraish

* If you could not short BHP and WPL, I'm guessing you would be sitting on your hands with those two stocks.

You still with me?

* Therefore, you wouldn't be pulling any triggers.

* Someone bearish on property (as you cannot short property) would be sitting on their hands also. (doesn't matter whether they are wrong or right)

Logical, yes?

* Therefore you stand condemned by your own hand. Otherwise you would be long BHP and WPL as they have great prospects over the next 40 years as well.

Get it now?

"Pulling the trigger" at the wrong time may be financial suicide. Property in 40 years time will certainly be well in excess of today's price in nominal terms. But it's what happens in between that may be financial life or death for an individual.

Landlords are going bankrupt in their droves over here due to "pulling the trigger" at the wrong time. They "pulled the trigger" but they are not "enjoying the ride" - the two definitive positions in your post.

When you go hunting, you don't rush into the forest and start blasting away. You'll scare off the deer and probably shoot your mates in the @ss like Cheney. 

You wait until you can pick off your quarry with one shot, then go home and have a festive meal with family and friends.


----------



## dhukka (5 September 2008)

tech/a said:


> I used to comment but there is no point. Which is obvious from the responses you see here and the comments I post up.
> 
> People including myself have their own views.
> So be it.
> Mine is simply one of Business.




Well that's unfortunate, whilst I don't expect you to be unbiased being a builder, I for one am interested in what you have to say.


----------



## pepperoni (5 September 2008)

wayneL said:


> "Pulling the trigger" at the wrong time may be financial suicide. Property in 40 years time will certainly be well in excess of today's price in nominal terms. But it's what happens in between that may be financial life or death for an individual.




And therein lies the nub of this thread.

Property has historically outperformed shares in the very long term on the numbers I have seen. My personal view is that it will continue to do so in the long term.  But in the long term we will all be dead.

This thread is more about what wayne just explained which I wont try to rehash.


----------



## dhukka (5 September 2008)

Just posted details of the PCI report on another thread but thought some of it was relevant here as well..




> ■ The seasonally adjusted Australian Industry Group/ Housing Industry
> Association Performance of Construction Index (Australian PCI ®)
> registered 43.1 in August, to remain below the critical 50.0 points level
> separating expansion from contraction for a sixth straight month.
> ...




Read the full report here:


----------



## tech/a (5 September 2008)

wayneL said:


> OK I'll type this very slowly.
> 
> * You castigated those who are bearish on property as "can't pull the trigger"




More didnt than cant.



> * You went short on BHP and WPL because you believed that they would go down. You were beraish




Err yeh thats why I went short.



> * If you could not short BHP and WPL, I'm guessing you would be sitting on your hands with those two stocks.




Brilliant.



> You still with me?




On every word.



> * Therefore, you wouldn't be pulling any triggers.




On those stocks.



> * Someone bearish on property (as you cannot short property) would be sitting on their hands also. (doesn't matter whether they are wrong or right)
> 
> Logical, yes?




Logical to you yes---to me no.
You dont discard ALL stocks because your bearish on 2



> * Therefore you stand condemned by your own hand. Otherwise you would be long BHP and WPL as they have great prospects over the next 40 years as well.
> 
> Get it now?




Get it sure---from your attempt to "box" my comments.
This attempt (example) is as dumb as anyone who discards property by placing a blanket opinion on ALL property without regard to opportunity which abounds---all you need do is find it and take advantage of it---sure its not available to everyone but it sure is there.



> "Pulling the trigger" at the wrong time may be financial suicide. Property in 40 years time will certainly be well in excess of today's price in nominal terms. But it's what happens in between that may be financial life or death for an individual.




More to the point is that triggers WOULDNT be pulled if people playing with loaded guns knew how to evaluate the risk involved in their use.
In property if the numbers work then do it.



> Landlords are going bankrupt in their droves over here due to "pulling the trigger" at the wrong time. They "pulled the trigger" but they are not "enjoying the ride" - the two definitive positions in your post.




Every landlord? Of course not only those who didnt get their numbers right.



> When you go hunting, you don't rush into the forest and start blasting away. You'll scare off the deer and probably shoot your mates in the @ss like Cheney.




True but you dont avoid the forest completely---there are deer in there! 



> You wait until you can pick off your quarry with one shot, then go home and have a festive meal with family and friends.




Yep no different than picking off a nice succulent property deal or JV (Joint Venture).

Anyway time for me to catch up with the other village idiots and have a beer.


----------



## dhukka (5 September 2008)

Interesting interview with Robert Shiller of Case-Shiller fame. The most interesting quote for mine was this doozy;



> "There's a lot of misconceptions about home prices, people think that there is a strong historical uptrend to them. In fact by my data there is not. In fact home prices in the United Sates if you correct for inflation, in 1990 were about the same as they were in 1890."




And before the delicate flowers leap all over me, no I'm not trying to say the OZ market is the same or that the historical pattern is the same. Just thought it was interesting. Well worth a watch.


----------



## KIWIKARLOS (5 September 2008)

dhukka said:


> I understand the difference between the terms of trade and the balance of trade, however those higher prices weren't enough to push trade into positive territory for GDP in the latest quarter. Next quarter will probably be a different story though.
> 
> I agree that relative to the rest of the developed world that we are doing OK. However the mantra about the resources sector saving the day may be wishful thinking given that roughly 90% of the economy relates to the service sector and that sector has been in contraction for 5 straight months.




Its actually about 75% and imports usually drop during periods of low growth. We'll see but i see of the balnce of trade improving in the next 6 months


----------



## KIWIKARLOS (5 September 2008)

dhukka said:


> Kiwi,
> 
> You really need to check your facts before you make claims like that. On the Household Consumption expenditures graph there are 5 quarters showing negative growth excluding the current quarter just completed. They were;
> 
> ...




I said overall positive mate you just quoted 9 quarters of ofabout 80 in 17 years thats about 15% still very ovrall positive


----------



## dhukka (5 September 2008)

KIWIKARLOS said:


> Its actually about 75% and imports usually drop during periods of low growth. We'll see but i see of the balnce of trade improving in the next 6 months




Yes I should have said 90% of Australians are employed in the service sector. I agree the balance of trade will be a positive contributor to GDP in the coming quarters, just don't think it is our saviour.


----------



## dhukka (5 September 2008)

KIWIKARLOS said:


> I said overall positive mate you just quoted 9 quarters of ofabout 80 in 17 years thats about 15% still very ovrall positive




If that's what you meant then that's an even dumber statement than the original.


----------



## wayneL (5 September 2008)

tech/a said:


> ......



Straight in the "too hard basket".

Have a nice evening.


----------



## tech/a (5 September 2008)

wayneL said:


> Straight in the "too hard basket".
> 
> Have a nice evening.





Yes most find that to be the case.


----------



## theasxgorilla (6 September 2008)

dhukka said:


> And before the delicate flowers leap all over me, no I'm not trying to say the OZ market is the same or that the historical pattern is the same. Just thought it was interesting. Well worth a watch.




The doozy for me is if someone can then answer the question: were houses expensive back in 1890?  And where were 1990 prices relative to recent levels before and after that time?

It still tells me that as an inflation hedge its better to hold your wealth in a property and pay down debt than it is to keep pouring it into things that depreciate.


----------



## wayneL (6 September 2008)

theasxgorilla said:


> The doozy for me is if someone can then answer the question: were houses expensive back in 1890?  And where were 1990 prices relative to recent levels before and after that time?
> 
> It still tells me that as an inflation hedge its better to hold your wealth in a property and pay down debt than it is to keep pouring it into things that depreciate.


----------



## CanOz (6 September 2008)

Oh no, more hockey sticks.


----------



## wayneL (6 September 2008)

CanOz said:


> Oh no, more hockey sticks.





Here's a longer hockey stick: For some reason I haven't been able to determine only goes to the 1970s

http://web.mit.edu/cre/research/papers/wp86eichholtz.pdf


----------



## Sean K (6 September 2008)

Question?

(and this may be way off)

Is that index, and this general discussion, about the price of land, or house, or house and land?

I have always thought that it was the price of the land that was the most significant factor in contributing to house prices.

Simple supply demand consideration is that, isn't there FAR less land available to be built on in metropolitan areas and therefore the prices of land (and houses) MUST go up over time. 

At this moment in human development populations have exploded, and everyone has moved to cities! There isn't a spare piece of dirt within 15km of the Melbourne CBD. (Except for the West, which is just a **** farm) 

Therefore, costs of land has exploded. 

It's just supply and demand. 

Someone slap me in the face, if I have no idea.


----------



## noirua (6 September 2008)

wayneL said:


>



This chart looks very dodgy indeed, would not like to be on the end of that red spike. A fall of 30%+ looks very likely.


----------



## Beej (6 September 2008)

kennas said:


> I have always thought that it was the price of the land that was the most significant factor in contributing to house prices.
> 
> Simple supply demand consideration is that, isn't there FAR less land available to be built on in metropolitan areas and therefore the prices of land (and houses) MUST go up over time.
> 
> ...




You are EXACTLY right Kennas. Others who try to analyse property prices in the same manner as stock prices fail to see the fundamental difference between the two asset classes.

In fact what I believe happens over long periods of time is the price of *established* land and houses goes up faster than inflation due to the limited supply, plus increasing demand and the increasing real wealth situation.

The *average* price of property will, in most cases, over the VERY long term, track inflation plus a small margin. How can this be? Because the SUPPLY side of property is increased via the building of new houses on land released either further out from the city CBDs, or in rural area's - where hopefully, over time, new towns and cities become established as population grows over long periods of time. You HAVE to consider this factor if you are going to attempt to analyse a property value chart dating back to 1890......

Away from the CBDs and in rural area's, the land is cheap and the cost to build a house is the cost of materials plus labour (not all houses are built by developers for massive profit remember - anyone can organise to build your own house if you want). So these "cheaper" new houses, which end up costing well below median/average, bring the over-all average price of property down to keep it roughly in line with inflation. As affordability in established areas becomes too high, there is greater and greater economic incentive for those who cannot afford it anymore to move further out (or to a new area) to the new affordable housing area. I have seen this happen for example in the mid late 90s when many people I know packed up and moved from Sydney to Brisbane, the central coast, or the Blue Mountains, simply because they could not afford a house here, but could there. And now surprise! Guess what? Brisbane and those other areas are now a lot more expensive in relative terms! Obviously this migration of wealth from Sydney and Melbourne to Brisbane in particular has been a major factor in that?

That, my friends, is how come you can always make good money in real terms from property, even though analysis of average and median prices over long periods of time might appear to suggest otherwise - or at least make one fearful of some sort of great correction being imminent....

That graph above that has been posted so many times on this thread I believe simply demonstrates the current major supply problem we have in Oz for new housing - especially affordable housing. Ie - yes we are due for a "correction" but the correction we need is a big increase in building of new, affordable homes in affordable land areas - either city outskirts of rural/regional centres. If affordable homes are not built, then rents will continue to increase rapidly and in effect the same thing will up hapenning, but it will take longer to work through. 

As all that happens over time, the average house prices will adjust back closer to the norm, but that doesn't mean your house in Sydney 10km's from the CBD is going to see any real drop in value.

Capisce?

PS: If you look at the development and population growth of the US through the 19th and 20th centuries you can this exact effect happening, just a lot faster than here.

Cheers,

Beej


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## noirua (6 September 2008)

Kennas appears quite right in his land views. Over a short period of time though prices go down, just because some sell and others hold off because next year it will be even cheaper. Lots of inner city appartment blocks have been driven up in price, quite often by Britishers escaping the drudgery over there. Some can't make it now as their property will not sell or that appartment in Sydney is looking a bit expensive.
On the otherhand the Aussie$ is collapsing, you may say, but so is the British Pound.

In South Africa some bought diamond exploration land from British investors who were bankrupted after the crash in rail stocks in the 1850's. Made their fortune a few did, especially Cecil Rhodes, who had a country named after him. 
Only point here really is that forced sellers arrive and then the floor opens up.


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## CamKawa (6 September 2008)

Beej said:


> That graph above that has been posted so many times on this thread I believe simply demonstrates the current major supply problem we have in Oz for new housing - especially affordable housing.



lol

Wow, don't know where to start here.

The property boom has been caused by 2 major factors.

*1. Psychology - the willingness to speculate.*
Some property buyers over previous years have been quite open about the fact that they paid too much for the property, but it doesn't matter because they believe that it will probably go up by even more next year. This attitude I believe has changed. As you can see from the chart the number of people applying for home loans has fallen off a cliff. The only supply problem the property market has is a shortage of speculators.

Here's a chart of latest housing finance figures. Looks to me to be falling off a cliff.


Source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0


*2. Finance - the ability to speculate.*
Speculators can want to buy houses all they want but if they can't get the finance for it how can they pay more for the property than the vendor did and push the price up? Finance though still freely available in Australia but lending standards may tighten as the credit crunch takes hold.




Beej said:


> As that happens over time, the average house prices will adjust back closer to the norm, but that doesn't mean your house in Sydney 10km's from the CBD is going to see any real drop in value.



These so called blue chip areas that rocketed up in price may fall just as fast and are the most risky.




Beej said:


> Capisce?



No.

House prices are falling here in Australia. Here's a chart of investor emotions. Does the denial stage ring any bells with you Beej?


----------



## tech/a (6 September 2008)

Kennas is 100% correct in his take.

I also agree with Beej.
The focus in the thread generally is on the specific issue of falling prices which are supported by the demand view point---prices fall hardest in areas of lowest demand.

Grouping all property as falling "off a cliff" is just as stupid as saying all property is going to return a short term and in some cases longterm gain.

New house approvals have fallen off a cliff.
Terrific I can negotiate building contracts and find trades---something I havent been able to do for years.I can even negotiate with trades!!

*On with the builders hat.*
My forward order book is still growing---why?
Here's why.
My market share in my field is around (We estimate) 8% of total market.
(Retention of land.Wet land developement and erosion control).
The market in general has "Fallen off a cliff" in the domestic field.Dropping 20% ish.
But by increasing my market share 2% I keep growing.The infrastructure and Company culture is built around exactly this---increasing market share to ensure growth. Wont go into how we do it.

But for those who are toying,with property you MUST investigate demand.
No point in investing in areas of high supply.Be that land,housing,units developement or refurbish.
You must place yourself in a position to take advantage of opportunity and while the market is the way it is---its a great time to get YOUR infrastructure in order.

Finance
Contacts
Builders
Approvals
Education
Research.

Treat it like the business it is.


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## KIWIKARLOS (6 September 2008)

dhukka said:


> If that's what you meant then that's an even dumber statement than the original.





Well your words of wisdom sure proved me wrong

Don't reply to my posts if your just going to be juvenile about it, you ego is oozing self righteousness atm and its not credible or constructive.


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## wayneL (6 September 2008)

UK publicly listed builders have written down hundreds of millions of pounds off their balance sheets because of the decline in the value of their landbanks over the last six months.

Sorry fellas, although that argument has merit, it is not absolute.

Land is getting cheap again here in this crowded island with high immigration.

('cept farm land, but that's another set of dynamics)


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## Beej (6 September 2008)

CamKawa - a drop off in housing finance approvals is a regular and likely event - and off course you expect that in a soft market with lower over-all sales volumes of established houses right now. Given that not enough new houses are being built for all sorts of reasons, that also all adds up. Doesn't mean s*&t for the long term future of property prices though as the fundamental factors I outlined are still well and truly in play. You can tell this is happening, because at the same time as falling new loan approvals, rents are rocketing up - capisce?

You also seem to believe that the primary driver of property demand is speculation - I think on that you are dead wrong, and that's why your analysis is flawed.

You completely miss the point of my arguments and try to debunk them with stock market based anaylsis, theories and graphs. I'm betting you don't own and have never owned property?? You probably never will then - fine your choice. I personally am currently setting up for my next step up the ladder in Sydney, as I think right now (and probably the next 12 months) could be the best opportunity for a decade to do so. And I don't think the stock market based investments will be doing much over that time, plus with a growing family, the spare cash has to go somewhere productive for me! 

Cheers,

Beej


----------



## KIWIKARLOS (6 September 2008)

Everyones throwing figures around like they are the word of god. Facts and figures mean nothing without taking them in context of an overall picture and they can also be manipulated to show many different arguements.

Interested to hear some real stories, anyone here actually in morgage stress right now or sitting in a house thats dropped 20% and had to sell ?

I think we have to remember that in many cases if you bought over 4 years ago a 20% drop wouldn't make your investment negative overall. The biggest problem is for people who bought in the last 2 - 3 years and you cant afford the repayments. Anyone getting a loan and not calcualting still been able to pay it off if rates ar 2-3% higher onlyhas them selves to blame. 

You only loose if you sell and many people still need a roof oveer their heads, can afford the repayments (even if they are struggling) and will ride out this cycle. 

Biggest loosers property investors who are short term, interest only loans etc who were assuming capital gains would race away for ever. 

Which home owner out there with a 300K loan say would sell their house with repayments of 600 a week to move into non existant rental market where comparable  rent for the house may be 400 - 450 anyway ? The cost of selling the house alone makes up the difference between reayments and rent for at least a year or two. 

I ask again anyone actually sold at a loss here? please share the story.


----------



## dhukka (6 September 2008)

KIWIKARLOS said:


> Well your words of wisdom sure proved me wrong
> 
> Don't reply to my posts if your just going to be juvenile about it, you ego is oozing self righteousness atm and its not credible or constructive.




Don't post nonsense if you don't want to hear juvenile responses. Here is your original quote:



> We have had 17 years of economic growth and those downturns of the graph occured in periods where growth was still overall positive.




So your point is that over the last 17 years economic growth has been overall postive. Wow! What a revelation! It must have taken years of research to come up with that nugget. 

We have recessions on average about every 8-10 years and those recessions (that usually involve some quarters of negative growth) usually last a little less than 12 months. You could pick any period of 17 years and say exactly the same thing. It is quite simply a dumb comment. 

How about those OECD countries that have had 2 consecutive quarters of negative growth?


----------



## KIWIKARLOS (6 September 2008)

wayneL said:


> UK publicly listed builders have written down hundreds of millions of pounds off their balance sheets because of the decline in the value of their landbanks over the last six months.
> 
> Sorry fellas, although that argument has merit, it is not absolute.
> 
> ...




The price of land isn't just indicative of the amount available, its the cost of servicing the land that makes a huge poportion of its value. Areas where transport public or private is expensive due to location should be cheaper and those are the areas we have seen hardest hit so far. People rushed out for huge blocks in whoop whoop (50ks from work) to find that the time and cost is just rediculous. 

In new developments the developers pay for the cost of services eg. water, gas and electricity up front then tack it onto the sale prices thats why the new developments these days out west are still not really affordable. In the next couple years you will see more urban consolidation with a result in some slightly more affordable housing although you wont have a quarter acre. We just need to get over our obsession with individually owning big blocks and relise that a smaller homee (less cost and maintainance) with big public areas is not only more economical but would improve our society and envirnoment.


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## KIWIKARLOS (6 September 2008)

dhukka said:


> Don't post nonsense if you don't want to hear juvenile responses. Here is your original quote:
> 
> So your point is that over the last 17 years economic growth has been overall postive. Wow! What a revelation! It must have taken years of research to come up with that nugget.
> 
> ...




Get over yourself, in comparison with many other countries a recession every 8 years isn't that bad, US had a recession about 6 ago then another with the dot come bubble before that. How many major economic problems has australia created and bore the brunt of in the last 15 years?
and its not recessions every 8 yearsits called an economic cycle and it refers to periods of below averge growth not neccessarily negative

one quarter of negative growth is not a recession officially we have had 17 years of growth if you think you can a) prove otherwise or b) think that you have the qualifications to decide what constitutes a recession then go get a job in treasury and rewrite history.


----------



## KIWIKARLOS (6 September 2008)

http://www.oecd.org/dataoecd/6/55/41156371.pdf

latest oecd gdp growth figures. Most were negative in current quarter and just wait for september quarter figures they will be just as low if not lower. many have been flirting with negative growth for many quarters and only just had their head above water. US and UK still show growth but really their measures are calcualted in some pretty dodgy ways (buts thats a whole other arguement)

At annualised rate as of this week of 2.7% australian growth is leagues ahead of all other oecd countires


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## Macquack (6 September 2008)

tech/a said:


> *On with the builders hat.*
> My market share in my field is around (We estimate) 8% of total market.
> (*Retention of land.Wet land developement and erosion control*).




So your one of those developers that sell land below the high tide mark?


----------



## CamKawa (6 September 2008)

Beej said:


> Given that not enough new houses are being built for all sorts of reasons, that also all adds up.



One reason good is not enough demand.



Beej said:


> Doesn't mean s*&t for the long term future of property prices though as the fundamental factors I outlined are still well and truly in play.



The so called "fundamentals" have been long left behind. Property maybe in a speculative bubble.



Beej said:


> You also seem to believe that the primary driver of property demand is speculation - I think on that you are dead wrong, and that's why your analysis is flawed.



As you have stated you are builder and I believe you may be suffering from a case of confirmation bias.



Beej said:


> You completely miss the point of my arguments and try to debunk them with stock market based anaylsis, theories and graphs.



They are facts. Do they make you uncomfortable?



Beej said:


> I'm betting you don't own and have never owned property?? You probably never will then - fine your choice.



You know nothing about me.



Beej said:


> I personally am currently setting up for my next step up the ladder in Sydney, as I think right now (and probably the next 12 months) could be the best opportunity for a decade to do so. And I don't think the stock market based investments will be doing much over that time, plus with a growing family, the spare cash has to go somewhere productive for me!



Good luck with all, but should it all go belly up please don't go to the government cap in hand asking for a bail out.


----------



## tech/a (6 September 2008)

Macquack said:


> So your one of those developers that sell land below the high tide mark?




No but work on many that are.
Technology is such that these days if you had a swamp in the middle of an area which you wanted to populate then it can be done.
A long way from Vienna---Dubai is!!




wayneL said:


> UK publicly listed builders have written down hundreds of millions of pounds off their balance sheets because of the decline in the value of their landbanks over the last six months.
> 
> Sorry fellas, although that argument has merit, it is not absolute.
> 
> Land is getting cheap again here in this crowded island with high immigration.




Wayne this is true.
BUT
Is this a written down value from purchase price or valued pricing after purchase. I know of property held here by developers for 20 yrs and still not released---some still to come into the Housing Zoning.

I'll bet demand and price still remains firm in certain areas,its not blanket.

Correct me if I'm wrong but is it customary for UK builders like many in the US of A to build complete sub divisions--50/100 or more homes before release to the public for sale?


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## xoa (6 September 2008)

CamKawa said:


> Good luck with all, but should it all go belly up please don't go to the government cap in hand asking for a bail out.




Exactly...

When the bubble bursts, these speculators will be crying foul and demand a government bailout. They'll want us all to pay the price for their stupid choices.


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## Beej (6 September 2008)

CamKawa said:


> As you have stated you are builder and I believe you may be suffering from a case of confirmation bias.




I have no idea where you got the idea I was a bulder! LOL - I've never stated that nor is it even close to being true. 

Seems that it is also the case that you know nothing about me  PS - I never presumed to know anything about you - I merely speculated (seemingly correctly) that you have not been a property owner in the past. Maybe you considered it even and missed the boat, and therefore suffer from your own "confirmation bias" syndrome!



> Good luck with all, but should it all go belly up please don't go to the government cap in hand asking for a bail out.




Whatever hapens, why would I ever have to go to the government cap in hand to bail me out? I'm not a farmer or an automotive industry executive  Bail me out from what exactly anyway? Being "unlucky" enough to own a luxury home with plenty of room for my family in one the best suburbs in one of the best cities in the world?? LOL.

Cheers,

Beej


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## CamKawa (6 September 2008)

Beej said:


> I have no idea where you got the idea I was a bulder! LOL - I've never stated that nor is it even close to being true.



Sorry my mistake, I got you confused with another permabull - tech/a.


Beej said:


> I merely speculated (seemingly correctly) that you have not been a property owner in the past. Maybe you considered it even and missed the boat, and therefore suffer from your own "confirmation bias" syndrome!



Very interesting Beej. What evidence do you have to support this?


----------



## Beej (6 September 2008)

CamKawa said:


> Sorry my mistake, I got you confused with another permabull - tech/a.




Fair enough I figured that might have been the case 



> Very interesting Beej. What evidence do you have to support this?




No evidence - pure speculation as I stated. Totally up to you if you want to prove my guess to be right or wrong!

Cheers,

Beej


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## CamKawa (6 September 2008)

Beej said:


> No evidence - pure speculation as I stated. Totally up to you if you want to prove my guess to be right or wrong!
> 
> Cheers,
> 
> Beej



I am a bored single mother, living in government housing commission.


----------



## dhukka (6 September 2008)

KIWIKARLOS said:


> Get over yourself, in comparison with many other countries a recession every 8 years isn't that bad, US had a recession about 6 ago then another with the dot come bubble before that. How many major economic problems has australia created and bore the brunt of in the last 15 years?
> and its not recessions every 8 yearsits called an economic cycle and it refers to periods of below averge growth not neccessarily negative
> 
> one quarter of negative growth is not a recession officially we have had 17 years of growth if you think you can a) prove otherwise or b) think that you have the qualifications to decide what constitutes a recession then go get a job in treasury and rewrite history.




What are you on dribbling on about? Overall the Australian economy has been growing for the past 17 years? Absolutely brilliant, any moron who can read the headlines in the newspaper knows that. And who claimed one quarter of negative growth was a recession? You are arguing against a shadow. 

Unlike the U.S.A, Australia does not have an official body such as the NBER to date recessions. However, using a set of coincident indicies and an algorithm based on the NBER's rules for identifying peaks and troughs in the business cycle, 3 recessions have been clearly defined since 1974 and they all clearly show negative growth in a wide range of indicators, including GDP, not just a slowdown. The Melbourne Institute however identifies another recession in 1976-77 (which also shows negative growth in GDP terms) and thus they have 4 recessions over the same period. See The Australian Business Cycle: A Coincident Indicator Approach  

So depending on who you want to believe there has been a recession every 8 or 11 years since 1974. If you use the peaks and troughs of GDP there have been 6 recessions since 1965. But there are good reasons not to use the GDP measure as outlined in the paper cited above. 

So


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## dhukka (6 September 2008)

KIWIKARLOS said:


> http://www.oecd.org/dataoecd/6/55/41156371.pdf
> 
> latest oecd gdp growth figures. Most were negative in current quarter and just wait for september quarter figures they will be just as low if not lower. many have been flirting with negative growth for many quarters and only just had their head above water. US and UK still show growth but really their measures are calcualted in some pretty dodgy ways (buts thats a whole other arguement)
> 
> At annualised rate as of this week of 2.7% australian growth is leagues ahead of all other oecd countires




You just really need to check your facts Kiwi. There are *30* OECD countries. GDP estimates for *8* of those countries are not available yet. Of the *22* that have supplied estimates, *4* have recorded negative growth rates for the 2Q08. Even if the remaining 8 reported negative numbers it still wouldn't be a majority. 

But that is beside the point because your intial claim was that: 



KIWIKARLOS said:


> most of the OECD has been negative for at least 2 quarters.




So if we examine that claim, *not one *country out of the 22 that have reported has shown negative growth for 2 consecutive quarters. OECD stats.


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## robots (6 September 2008)

hello,

people need to understand "we are australia" not UK, US or Spain

we are miles ahead of those countries for many numerous reasons which some dont want to hear,

thankyou

robots


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## WaySolid (6 September 2008)

I found this article very interesting. No doubt there is plenty for both sides of the fence to take some ammunition for their argument.

http://www.portfolio.com/views/blogs/market-movers/2008/09/04/global-property-bubbles-not-bursting

The housing bubble was not confined to the United States. If anything, the bubble here was later and smaller than in most of Europe. So it's hardly surprising that house-price declines are not confined to the US either. According to the latest Knight Frank survey, the year-on-year decline in New Zealand house prices is 2.2%; in Germany it's 2.5%; in the UK it's 3.9%; and in Latvia it's a whopping 24.1%, even bigger than the USA's 16.8% fall.

But more interesting, to me, is that globally, house prices are still rising, which is not necessarily what you'd expect to see in an article headlined "House price crash goes global":

Globally, the rate of house price growth fell to 4.8% in the second quarter of 2008, down from 6.1% in the first quarter of the year.

Yes, I know it can be confusing with all those negative words, but house prices are up almost 5% year-on-year, even including the US. (I'm not clear how the countries are weighted, though.)


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## Nicks (7 September 2008)

dhukka said:


> However, using a set of coincident indicies and an algorithm based on the NBER's rules for identifying peaks and troughs in the business cycle, 3 recessions have been clearly defined since 1974 and they all clearly show negative growth in a wide range of indicators, including GDP, not just a slowdown.




Where did you get this methodology from?


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## dhukka (7 September 2008)

Nicks said:


> Where did you get this methodology from?




It is the methodology cited in the paper above.


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## pepperoni (8 September 2008)

FWIW fin review said auction clearance in syd last weekend 44% down from 46% the week before.


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## Beej (8 September 2008)

pepperoni said:


> FWIW fin review said auction clearance in syd last weekend 44% down from 46% the week before.




Still not so bad - FYI SMH says it was 50% (and that includes counting the withdrawals as no sales): http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

 Some good results in there for vendors with realistic expectation (as is often the case!) 

Cheers,

Beej


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## pepperoni (9 September 2008)

anything less than 50% is shocking IMO ... nothing worse than a failed auction for a property ... better to withdraw.

Shouldnt even start an auction campaign without a clear idea of what price range reasonable bids are likely to be and an idae of whether you are happy with middle to low of that range.

Should be selling 60 -70% ... any less is just hail mary stuff on the part of owners and agents that proceed with iffy auctions ... like putting 10% of your house value on black at the casino.

It was once said under 60% is a buyers market/indicated falling prices.

But with these VOLUMES (just about nil in some better areas) its the worst ive seen in spring.

Might impove when the $40 a month saving get blown into a huge call to action ;-)


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## gfresh (9 September 2008)

How much does a failed auction set you back out of interest? 




			
				pepperoni said:
			
		

> But with these VOLUMES (just about nil in some better areas) its the worst ive seen in spring.




Noticed the new boards really going up in the last week, as the temp heats up, spring mood takes place. Number of new listings will be interesting to follow over the next month. A massive spike would be a worry, rather than a positive. 

So the question is, where are these spring buyers going to come from? Maybe the realestate leprechauns at the bottom of the garden


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## CamKawa (9 September 2008)

New ABS housing finance data came out today. Looks like the trend is still down.







Source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0?OpenDocument


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## professor_frink (9 September 2008)

gfresh said:


> How much does a failed auction set you back out of interest?




Don't have any recent information on this, but the cost for my dad trying to sell his house at auction back in 2002 was well over $2K. This wasn't in a capital city either. Can't imagine it would be any cheaper to try and do in a place like Sydney.

Not a cheap way to find out that your house isn't worth as much as you think!


----------



## cuttlefish (9 September 2008)

> how much does a failed auction set you back out of interest



Cost of the marketing campaign plus auctioneers fee - I think about $500 ish for auctioneers fee - marketing campaign depends on spend.  In Sydney maybe around $4k - $5k for a typical sort of campaign (from memory).   If going full page glossy colour adverts a bit more.   If committed to selling an auction can still be an ok way to go imo but its important that the agent markets it properly, that the price expectations are properly set to match the market and that the property isn't too unusual (though with the right price expectation maybe this last point is debatable).


----------



## tech/a (9 September 2008)

cuttlefish said:


> Cost of the marketing campaign plus auctioneers fee - I think about $500 ish for auctioneers fee - marketing campaign depends on spend.  In Sydney maybe around $4k - $5k for a typical sort of campaign (from memory).   If going full page glossy colour adverts a bit more.   If committed to selling an auction can still be an ok way to go imo but its important that the agent markets it properly, that the price expectations are properly set to match the market and that the property isn't too unusual (though with the right price expectation maybe this last point is debatable).





Sadly the in experienced Vendor is pressured by the agent to "Sell at Market" on the day---often using phrases like.
"The market is telling us that $x is what its worth,our advice is you should listen"

Many fold.

But one statistic Ive not ever seen is those sales which take place on the property up to a month after.
From experience I know that a LARGE MAJORITY are sold after auction to buyers flushed out by the auction,many who bid un successfully return to the negotiating table---and yes I have seen many sold at above the original reserve---not reached at auction.


----------



## gfresh (9 September 2008)

camkawa said:
			
		

> New ABS housing finance data came out today. Looks like the trend is still down.




Few mixed signals I guess in there. Could be worse. Non-bank lenders squeezed out another 8% 

Just whipped up a quick long-term chart of the existing-dwellings trend series. The swiftness of the falls are the fastest in 30 years. Back to 2001 levels presently.


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## gfresh (9 September 2008)

Looking further at longterm trends, here is (possibly) an interesting one. 

Total finance commitments (ex. refinancing) since 1975. 

Maybe it's not appropriate to draw a trendline for such data(?), however, if this was a long-term trend, I'd say it was broken.


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## pepperoni (9 September 2008)

professor_frink said:


> Don't have any recent information on this, but the cost for my dad trying to sell his house at auction back in 2002 was well over $2K. This wasn't in a capital city either. Can't imagine it would be any cheaper to try and do in a place like Sydney.
> 
> Not a cheap way to find out that your house isn't worth as much as you think!




Also brings the low ballers out in force ... upper range price becomes impossible, reasonable price becomes hard, and it sort of goes down from there each week as people reevaluate what its worth and what they could get back if they had to sell.  After a few week pretty much best to call it quits till the failed auction is somewhat forgotten.

ALL IMO of course.


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## pepperoni (9 September 2008)

Great graphs!

I think the volumes are more telling than the values 

"In trend terms, the number of commitments for owner occupied housing finance decreased 3.7%. The number of commitments for owner occupied housing finance excluding refinancing fell 3.9%."


----------



## CamKawa (9 September 2008)

The SBS's Insight program topic tonight is Bursting the Bubble for those interested at 7:30pm.


----------



## robots (9 September 2008)

CamKawa said:


> The SBS's Insight program topic tonight is Bursting the Bubble for those interested at 7:30pm.




hello,

i wonder if they will put up a link to all the affordable homes on realestate.com.au?

thankyou
robots


----------



## xoa (9 September 2008)

CamKawa said:


> The SBS's Insight program topic tonight is Bursting the Bubble for those interested at 7:30pm.




Thanks, I'll definitely watch it.


----------



## pepperoni (9 September 2008)

Yes ill be watching it.

Nice to see someone is finally giving the sheeple something to watch other than the block and auction squad.


----------



## gfresh (9 September 2008)

Ahhh, things are starting to become unravelled... NSW expects a *$1bn shortfall* in it's budget chiefly due to reduced expected income from property stamp duty, taxes, etc. 

http://www.abc.net.au/news/stories/2008/09/09/2359847.htm

Looks like some state governments have been relying on ever increasing property values as well 




> The new Premier of New South Wales, Nathan Rees, has pointedly refused to rule out raising taxes to help deal with a $1 billion budget shortfall, but his new Treasurer has not backed him up.
> 
> The Government's June Budget Estimates forecast a small surplus of $268 million for this financial year but Treasury officials informed Mr Rees of the $1 billion shortfall during his Cabinet's first meeting this morning.
> 
> ...




...



> reasury officials say the property market is down everywhere in New South Wales, and that means falling stamp duty from house and unit sales.
> 
> Making a difficult situation even worse is that previously resilient parts of the top end of the market are no longer immune from the downturn.
> 
> ...


----------



## pepperoni (9 September 2008)

gfresh said:


> Ahhh, things are starting to become unravelled... NSW expects a *$1bn shortfall* in it's budget chiefly due to reduced expected income from property stamp duty, taxes, etc.
> 
> http://www.abc.net.au/news/stories/2008/09/09/2359847.htm
> 
> ...




I saw this too ... shows how much of a vested interest they have in increasingly unaffordable prices.


----------



## robots (9 September 2008)

hello,

Re: Insight on SBS

thanks for giving the HIA guy a few seconds otherwise the violin crew had the usual extreme representation,

thankyou
robots


----------



## robots (9 September 2008)

hello,

how's the first lady selling, been in house for 23yrs, dug up some masterpieces,

no discussion on all the affordable places on re.com.au

thankyou
robots


----------



## robots (9 September 2008)

hello,

bloody hell carry on as the world is going to end, we all doomed

anybody got any real issues to discuss

thankyou
robots


----------



## professor_frink (9 September 2008)

robots said:


> hello,
> 
> Re: Insight on SBS
> 
> ...




if they had of let him speak any longer the whole room would have burst out laughing


----------



## Temjin (9 September 2008)

robots said:


> hello,
> 
> bloody hell carry on as the world is going to end, we all doomed
> 
> ...




We already have discussed the REAL ISSUES.  The insight was excellent and one of the most unbiased I've ever seen. 

The evidences are obvious, you just don't choose the believe them. I feel bad for the assistant treasurer though, he had a duty to "talk up" the economy regardless of contrary evidences. (or else he would get blamed again haha)

Love Steven Keen, and glad he was there to show those people how private debt has reached extraordinary level. And then the fact that house affordability in Australia has reached unsustainable level. I was quite surprised to hear when it was mentioned that an average size home in Australia is worth 7 times more than the average "combined household income" compared to 5 in the UK, 4 in Ireland (after massive crash) and just went back to 3 in the US. 

I do, however, agree with future solutions in decentralising the cities in order to make infrastructure a lot easier to maintain. Though it's too late now, the market will soon revert back to its true fundamental.

And oh, something new I learnt today. I wasn't aware of the fact that a lot of small business debt were secured by the owner's house. Now it made things double worse when the global economy continue to deteriorates. Can't change the sentiment because...it is the sentiment.


----------



## pepperoni (9 September 2008)

Temjin said:


> Love Steven Keen, and glad he was there to show those people how private debt has reached extraordinary level. And then the fact that house affordability in Australia has reached unsustainable level.




That was the best bit ... one of the fundamentals people conveniently ignore!



Temjin said:


> And oh, something new I learnt today. I wasn't aware of the fact that a lot of small business debt were secured by the owner's house. Now it made things double worse when the global economy continue to deteriorates. Can't change the sentiment because...it is the sentiment.




These are the sorts of people I know that are already in trouble ... from full ownership to negative equity due to business borrowing in a few years.


I really liked the stories of people taking a loss on places bought 4 years ago ... thats roughly where I see the market


----------



## wayneL (9 September 2008)

http://www.bloomberg.com/apps/news?pid=206...Jo&refer=uk

Redrow Posts Loss Following Writedowns of Land, Work (Update1)

    By Tim "Timothy" Barwell

    Sept. 9 (Bloomberg) -- Redrow Plc, the U.K. homebuilder with the lowest average selling price, had a second-half loss of 163.2 million pounds ($286.5 million) *after writing down the value of its land *and work in progress.

    Writedowns totaled 259.4 million pounds, St. David's Park, Wales-based Redrow said today in a statement. That's around 32 percent of the company's gross asset value, compared with rival Taylor Wimpey Plc, which wrote down 11 percent, according to Panmure Gordon analyst Mark Hughes.

    ``It looks pretty big,'' said Hughes, who has a ``sell'' rating on the stock. ``It's either very, very conservative and the company is getting as much bad news out as it can, or the market is significantly worse than we had imagined.''

    Redrow closed two offices, slashed 500 jobs, or 40 percent of the workforce, and scrapped the second-half dividend as it reels from the country's most widespread housing slump in 30 years. The group said it secured new conditions on its debt, which stood at 223.3 million pounds at the end of the period.


----------



## CamKawa (9 September 2008)

Temjin said:


> The insight was excellent and one of the most unbiased I've ever seen.



The value of independent media is priceless. Long live SBS and the ABC.


----------



## gfresh (9 September 2008)

robots said:
			
		

> anybody got any real issues to discuss




Well as this topic is about falling house prices, and well thought out arguments for and against said topic, maybe you had better skidaddle if it's all too much for you 

I thought it was fairly well done with coverage of a few issues in a short space of time. As usual, often the people you wish to hear more from you didn't hear much of, such as Steven Keen. He has a blog with some futher data and audio commentary here http://www.debtdeflation.com/blogs/ (probably posted somewhere here, but here it is again)

Bit of a bias towards putting one of the worst housing areas in the country out there as being a-typical of all of Australia, but I guess it showed that things aren't going to well for some areas. 

Then again, ANZ has  announced pontially quite a few job cuts to middle  management, and I doubt any of them live in Western Sydney. 

Some of those recent buyers didn't look so confident however... especially that bloke who had been trying to sell for 4 months to realise his "$70k" profit. Well it ain't profit until it's in the bank unfortunately. 

Decentralisation would be wonderful, if only our Governments were not so thick and looking only 4 years in front of them.. although I was speaking to a QLD Government worker the other week, who said the "grand plan" is to move much of government jobs out towards Ipswich in the coming decade. With any luck, some private business will follow the lead in setting offices outside of the CBD.


----------



## wayneL (10 September 2008)

http://www.estateagencynews.co.uk/goodman_articles/mgood0908.asp



> Now tell me some good news...
> LSL results ‘satisfactory’, while Connells’ estate agency operation just breaks even...
> 
> THE number of housing transactions will fall to only 500,000 this year and could fall even further in 2009.
> ...


----------



## prawn_86 (10 September 2008)

On my street alone (which is in an expensive suburb) there are 7 houses or units for sale, excluding a 14 unit re-development. 

When we first started living where we are now (2 years ago) there was usually zero or one for sale signs up at any one point in time.


----------



## gfresh (10 September 2008)

Noosa, the play domain of the hoity toity really getting smacked around, and these figures come from the REIQ. No sugar coating here.. 

Goldcoast down 2.4% in median values in June quarter according to the REIQ as well. 

Falling house prices? they're happening... 

http://www.abc.net.au/news/stories/2008/09/09/2359502.htm



> Noosa house prices plunge
> 
> Posted Tue Sep 9, 2008 12:00pm AEST
> 
> ...


----------



## pepperoni (10 September 2008)

The cremorne unit block I was interested in was passed in last night at a fizzer auction.

Then again all 8 properties were passed in without one sensible bid so they shouldnt feel bad.

I guess they all watched the SBS housing bust prog ... now that the all knowing idiot box has told us it must be true.  

Might very well be the end of the denial stage for our *little* *young* and  naive property market ... Passing the age of innocence and realising houses can be a bad investment, esp at 6-7 times earnings.

What next ... 30% year on year drop ... nahhh!

 ... oh wait noosa had that in a quarter???!!!!


----------



## pepperoni (11 September 2008)

Interesting ....

http://www.news.com.au/business/story/0,27753,24328717-5013953,00.html

"Mr Skilbeck said owing derivatives meant savings would effectively increase in line with house prices, providing a hedge against a future housing boom.

While the ASX declined to reveal details of the scheme -- including the cost to investors -- market players will be able to punt on falling house prices. "


Shorting on the ASX doesnt exactly help support overpriced shares does it ...


----------



## pepperoni (11 September 2008)

From home price guide ...  close to city blue chip ... big falll in at least one area

Northbridge	
Region:  Lower North 
Houses   	
6 mths to Jul 08

-29%


----------



## xoa (11 September 2008)

Good news from across the ditch: median house prices in NZ have fallen $20k over the past year, and are now down $35k from their peak. So much for their "housing shortage". Kiwi real estate agents and speculators are in a panic. 

http://www.bloomberg.com/apps/news?pid=20601081&sid=aMhPXMagcZUA&refer=australia


----------



## dhukka (11 September 2008)

For those interested, Our Finance Blogs will be hosting a debate on October 15th called “[URL="http://ourfinanceblogs.com/property-2009/]"Property 2009: Crash, Boom or Stagnate?!”[/URL] They claim that they will be inviting "various high-profile experts." Could be interesting.


----------



## robots (12 September 2008)

xoa said:


> Good news from across the ditch: median house prices in NZ have fallen $20k over the past year, and are now down $35k from their peak. So much for their "housing shortage". Kiwi real estate agents and speculators are in a panic.
> 
> http://www.bloomberg.com/apps/news?pid=20601081&sid=aMhPXMagcZUA&refer=australia




hello,

still having trouble finding something on australia the greatest country in the world, 

thankyou
robots


----------



## numbercruncher (12 September 2008)

robots said:


> hello,
> 
> still having trouble finding something on australia the greatest country in the world,
> 
> ...





Not looking to hard then are we Robi !!

One eyed permabulls being roasted all across this fine nation, just go ask your mate Jim Raptis and many of his Ilk that are being sucked down the vortex of " prices just dont rise forever " .....

Happy days !


----------



## robots (12 September 2008)

hello,

surely the holy bible (ABS) must have something number?

still a bit embarrassing to post I guess

thankyou
robots


----------



## pepperoni (12 September 2008)

NY Times abandons the sinking "property to rise forever" ship.

Must be getting pretty lonely on there?


GUANGZHOU, China ”” China has joined the United States, Britain, Spain and others on the list of nations suffering a real estate decline.
Skip to next paragraph
The New York Times

Although the last national statistics showed single-digit growth from July 2007 to July 2008 in the average price of commercial and residential real estate, real estate brokers say prices are down from peaks reached earlier this year, while the number of transactions has plunged.

This downturn comes as the growth rate of Chinese exports has slowed ”” sharply in yuan terms ”” and stock markets have plummeted. The confluence of events has resulted in what economists describe as a deceleration in China’s economic growth ”” although at nearly 10 percent it remains the envy of many nations.

Brokers say that sales volumes first dropped precipitously here in southeastern China, and then the decline spread across the country. Faced with few buyers, sellers started cutting their prices for residential and commercial real estate.

In some neighborhoods in the southeast, prices have dropped by 10 to 40 percent.

In other parts of the country, transactions have fallen, but prices have only started to follow. For instance, the number of home sales has plunged by two-thirds in Harbin in the northeast, though prices are down as little as 4 percent from the same period last year.

“People are thinking more carefully and taking much longer before they decide to buy or not to buy property,” said Hwang Sha, a real estate broker in Xiamen in east-central China.

Cities deep in China’s interior are least affected. Dan Yian, a real estate agent in Chongqing, the largest city in southwestern China, said that the volume of housing transactions there had slowed by 20 to 30 percent so far this year. But prices have not yet fallen from a stable level of $730 a square meter, or 10.76 square feet, which works out to nearly $66,000 for a typical apartment of about 970 square feet.

Export-dependent coastal cities in mainland China have had the steepest downturns in their real estate markets. Some of those problems are starting to make ripples elsewhere in Asia.

Freddy Wu, the chief executive of Hong Kong Property Services, said his real estate agency had seen mainland investors default in recent months on a tenth of their purchases of Hong Kong apartments, forfeiting the down payments that they made.

“A lot of investors from China have their cash tied up in the mainland stock market and in mainland real estate, so they would rather take a loss now,” instead of being forced to sell mainland investments at a loss to come up with the cash to complete purchases in Hong Kong, Mr. Wu said.

The skylines of Chinese cities remain dotted with cranes. But Ralph J. Gerson, the executive vice president of Guardian Industries, the largest American glass-making company and the world’s third-largest, said that demand was rising less rapidly in China for the company’s high-tech insulated glass for modern office buildings.

“It used to be booming, and now it’s growing at a slower pace,” he said. Fresh evidence of broader economic problems in China came on Wednesday as the government released monthly statistics. Growth in imports and in fixed-asset investments slowed. Inflation dropped sharply at the consumer level, to 4.9 percent in August from 6.3 percent in July.

But unlike the subprime meltdown in the United States, and the resulting credit crisis, weaknesses in China’s real estate market do not at this point appear to pose a threat to the vitality or stability of the financial system.

One reason is that Chinese banks require down payments of at least 30 percent, giving banks an ample cushion of cash against losses. American banks frequently did not require down payments. Foreclosures are also rare here, and many Chinese still pay cash for their homes, particularly in rural areas.

Leo Wah, a Chinese banking analyst for Moody’s, said that Chinese banks could weather the decline in real estate prices, but cautioned that they could face more challenges if economic troubles spread.

“We do not believe that it would cause a serious problem, but if property prices fall some more, it won’t be the only sector that has problems,” he said.
Real estate difficulties pose a dilemma for China’s leaders because they coincide with a two-thirds drop in share prices on the Shanghai stock market since the market’s high last October. The two together could produce a negative effect, causing Chinese consumers to feel poorer and to reduce spending.

The most recent national data from the government shows that the average price for all residential and commercial real estate was 7 percent higher in July than a year earlier. But brokers across China say that within that period, prices peaked in many markets ”” either at the end of last year or at various times this year ”” and have slid since. The stocks of real estate developers have plunged, too. China Vanke, the country’s biggest publicly traded developer, reported on Tuesday that its sales had plummeted in August by 35 percent from a year earlier.

The real estate decline is affecting ordinary Chinese, too. Perhaps most consequential is the emerging view, apparent on blogs and in interviews, that apartments and houses, like shares on the declining Shanghai stock market, are no longer a certain path to prosperity.

Lin Bin, a 48-year-old insurance saleswoman who lives in Guangzhou, said the 1,000-square-foot, three-bedroom apartment she bought here in 2002 was still worth more than she paid in 2002. But she said she had lost two-thirds of the $4,400 she put into the stock market a year ago and worried that the housing market might be next.

“I’m not contemplating buying a second home as an investment because I hear that stock market and housing prices will continue to fall through next year,” she said while shopping recently.

Part of the problem is a severe credit squeeze. Through last winter, China’s central bank repeatedly raised the amount of capital it required Chinese commercial banks to deposit with it. The goal was to slow bank lending and control inflation. The commercial banks responded by continuing to lend to big corporate customers, most of them state-owned or at least state-controlled, while reining in other lending.

Central bank data shows that total loans to households plummeted by a third from March to July of this year. The bulk of these loans are mortgages because Chinese shoppers, even car buyers, use mostly cash.

“It’s collapsing; it’s unbelievable, and most of it is from mortgages ”” I don’t see how the housing sector is going at all,” said Nicholas R. Lardy, a specialist in Chinese finance at the Peterson Institute for International Economics in Washington.

He added that the decline was so precipitous that it had to reflect weaker demand for housing, and not just regulatory restrictions on credit.

To increase lending may be difficult now. The central bank needs ever greater reserves from commercial banks to buy dollars and prevent China’s currency from rising against the dollar, which could cause China’s exports to slow further.

China’s trade surplus set a record of $28.7 billion in August, the government announced on Wednesday, mainly because of an unexpected slowdown in the growth of imports. Slower growth of imports is a common sign of a weakening economy.

Assessing national trends in Chinese real estate is often difficult because of long lags in the data. Real estate brokers say prices are holding up better for homes in prime locations than in outlying areas. Top-quality commercial buildings are faring better than older buildings.


----------



## gfresh (12 September 2008)

Noosa.. sunshine coast, gold coast all down "on average" via REIQ figures robots, as posted here.

You can live in denial all you like, but prices are coming down somewhat. Many "price reduced", "urgent sales" listed as well indicating buyers are starting to lower their prices. 

No crash yet, but these things don't happen over night. They didn't in the UK or the US. May not be the worst for another 6-12 months. May not happen at all, granted. Can only watch and observe the signs, see what happens.


----------



## robots (12 September 2008)

hello,

is this the one from REIQ:

http://www.reiq.com.au/MediaReleases/view_media.asp?media_id=442

will have a look around at reiq

thankyou
robots


----------



## gfresh (13 September 2008)

Well, that is their spin article.. These are the figures for the goldcoast, although doesn't mean much without volumes:

http://www.goldcoast.com.au/article/2008/09/09/16013_news.html

This also shows some falls are taking place in other markets: http://www.rpdata.net.au/news/rp/20080901_media.html. Looks like Melbourne is pretty steady however, lucky you.


----------



## jeflin (13 September 2008)

gfresh said:


> Noosa.. sunshine coast, gold coast all down "on average" via REIQ figures robots, as posted here.
> 
> You can live in denial all you like, but prices are coming down somewhat. Many "price reduced", "urgent sales" listed as well indicating buyers are starting to lower their prices.
> 
> No crash yet, but these things don't happen over night. They didn't in the UK or the US. May not be the worst for another 6-12 months. May not happen at all, granted. Can only watch and observe the signs, see what happens.




Currently most of the damage is in the US market but we can see economic slow down and credit problems slowly surfacing around the world (esp. Europe and Asia).

I think we will experience the brunt of depression in 2009 and the malaise drag its way till 2010 before we see a glimmer of hope.


----------



## wayneL (16 September 2008)

UK top ten property price cuts (so far):

http://timesbusiness.typepad.com/money_weblog/2008/09/post.html



> 1. Point Gribben, St Austell, South Cornwall
> 
> Was: £725,000  Now: £499,500    Price cut: 31.7 per cent
> 
> Point Gribben (above) has apparently only ever been occupied by “a lady and her maid” and a “childless couple”, although confusingly, the agent refers to it as a “gentleman’s residence”. Whoever is destined to live in the massive five-bedroomed house, stuffed-full with period features, will be pleased to hear that £225,500 has been cut from the asking price. It has stained-glass windows, a scattering of period fireplaces, deep sprocketed eaves and a generous amount of oak panelling and oak staircases. It is certainly not for buyers with minimalist aspirations. Estate agent: Lillicrap Chilcott


----------



## nat (16 September 2008)

ive been keeping an eye on real estate .com on sunshine coast prices and i dont see them falling yet, if a slightly cheaper then normal house appears it is snapped up within days, may hold up better then a lot of other places around australia,ive been waiting for prices to drop $50000 to $100000  but to many otheres waiting to. Mainly looking warana to caloundra area .

that could all change still , Nathan


----------



## tronic72 (16 September 2008)

Here they go....

With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. My reasoning for this:

China/India - China has been living off the west for the past 5 years. The west is fast running out of money. Literally trillions of dollars have disappeared from the worlds economy is the last 12 months.

USA - Is in recession. How many more banks will tumble? It's reasonable to expect the collaps of Lehman (and AIG) will almost certainly bring more banks on the edge, over the edge. The US has said "no more". They won't bail out anymore companies. 

Europe - Property prices in the UK are tumbling

AU - We've been riding on the back of the mining truck and with China's decline in commodities use. We'll feel the pinch big time. 

$200,000 will soon be worth what $500,000 was worth.


----------



## Gspot (16 September 2008)

tronic72 said:


> Here they go....
> 
> With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. My reasoning for this:
> 
> ...




I've just read a report, that says 90% of China's GDP is within China. And if you ask the big miners who have more knowledge than any of us, of whats really going on, they don't believe their will be a decline in commodities use.
 Also with a recession, cheap made from china products are all that the americans can afford.
Meaning we won't fall like other countries, because we really are 'the lucky country'.
Now shoot me down, boys!


----------



## pepperoni (16 September 2008)

tronic72 said:


> Here they go....
> 
> With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. My reasoning for this:
> 
> ...




Agree, and would add the potential for china to export inflation, and us to import it with our 80c dollar!

And oil heading for $80 doesnt seem to be helping one bit.

But IMO you left it too late to try to sell your house ... In the best bits of sydney at least regular and reasonable sales are a distant memory.

You may be lucky if you are in a "slow on the uptake" area ...  particulary the ones that missed the first year or 2 of the property boom hysteria. They tend to do a deer in the headlights at HUGE market signals for months and months 

Id hold, pay off loans and wait for some solid upward momentum before selling, or buying shares for that matter.


----------



## Hagtwoeight (16 September 2008)

tronic72 said:


> Here they go....
> 
> With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. ...
> 
> $200,000 will soon be worth what $500,000 was worth.




Pretty much my thinking and my house went on the market last week.
Fingers crossed that people stay oblivious to what may be about to fall upon us.


----------



## N1Spec (16 September 2008)

ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.

im actually one of the rare ones looking for a residential property(to live in), my logic is that were not immune. Was gonna dip my toes in later this year but will probably put it off till late 2009.

One thing i notice is prices in the RE websites such as realestate.com does not reflect the true state of the market. Some of those listings have been there for months i mean like over 6 months with the price staying the same?? does that make sense??

Cheers


----------



## Beej (16 September 2008)

N1Spec said:


> ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.




Very hard to tell as there are raging differences of opinion (and data!) on this one!



> im actually one of the rare ones looking for a residential property(to live in), my logic is that were not immune. Was gonna dip my toes in later this year but will probably put it off till late 2009.




You are not so rare! There are probably at least a million people just like you out there in the same position as well. Hanging out until next year is not a bad idea in the current market, especially if you keep saving. However, I would also watch the market closely to see what happens as interest rates come off. Be ready to buy if you find the right house at a price you are happy with. Also depends on the area in Australia in which you live and the price range you are looking at to a very large extent as well.



> One thing i notice is prices in the RE websites such as realestate.com does not reflect the true state of the market. Some of those listings have been there for months i mean like over 6 months with the price staying the same?? does that make sense??




This is often the case, even in strong markets, but more so in a soft market. Properties that are not correctly priced will hang around for ages - those priced correctly for the market and owned by a motivated vendor will sell fairly quickly. Others will appear, and then disappear rather than hanging around, but the owners decide to hang on them.

Cheers,

Beej


----------



## robots (16 September 2008)

N1Spec said:


> ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.
> 
> im actually one of the rare ones looking for a residential property(to live in), my logic is that were not immune. Was gonna dip my toes in later this year but will probably put it off till late 2009.
> 
> ...




hello,

jump in bro if going to live in it, pay P & I, and before you know it off she goes,

you wont regret it when you hitting 55+ and you know the roof is over you're head, and you have all the time in the world to walk the street or travel the world

thankyou
robots


----------



## pepperoni (16 September 2008)

Beej said:


> Very hard to tell as there are raging differences of opinion (and data!) on this one!




Really?  I cant fathom any such raging difference.

The majority of people see that the fortunes of:

(a) the huge numbers of highly leveraged buyers and 

(b) the various sources of these funds,

were, are, and will continue to be strongly linked.  

These people are now paying increasing attention to the spot of bother of a few bit players like Fannie, Freddie, Bear, Lehman etc.

Any competing view is limited to those of single figure IQs, the clinically insane, and tin foil hat wearers.  We saw them laughed off insight on SBS last week ... not may people stupid enough to buy into that cr@p anymore

Not many things in this world exist in a vaccum.



Beej said:


> There are probably at least a million people just like you out there in the same position as well.




Do you believe this sort of stuff?  And do you realise that even if there were 20 million people out there waiting on the sidelines that prices are and will be capped out by what people are physically able to pay.  Have you read we have been reached and past that point for a few years now??

As in the old saying "money does not grow on trees".


----------



## YChromozome (16 September 2008)

N1Spec said:


> ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.




The cause is speculation funded by debt. 

The speculative bubble for housing in Australia is bigger than the US or UK. In terms of the number of wage years to buy a house, Australia is leading.

Unfortunately all this speculation and huge price increases had to come from somewhere. After all wages were not rising at the same rate, the key to why house prices don't increase every 7 to 10 years. 

In terms of Household debt to disposable income, Australians now have 160 cents in the dollar of debt, vs the USAs 130 cents at the top of their boom. Australia's household debt has been accelerating much faster than the US. Debt is now double what it was in the lead up to the Great Depression.


----------



## Beej (16 September 2008)

pepperoni said:


> Really?  I cant fathom any such raging difference.




Holy BS batman - have you actually been reading this thread???? It's full violent agreement then is it???



> Any competing view is limited to those of single figure IQs, the clinically insane, and tin foil hat wearers.  We saw them laughed off insight on SBS last week ... not may people stupid enough to buy into that cr@p anymore




Well there is still plenty of evidence to the contrary - see last weekend auction clearances, see the *actual* house price statistics. You're proclaiming "victory" in the argument and attacking those of us with differing opinions on the basis of a 2.5% fall in median house prices nationally??? A soft market does not a housing crash make... we are NOT the US and we are NOT the UK. We do not have the credit rationing and over supply issues being faced in the US and the UK. We've had all these arguments before.....



> Do you believe this sort of stuff?  And do you realise that even if there were 20 million people out there waiting on the sidelines that prices are and will be capped out by what people are physically able to pay.  Have you read we have been reached and past that point for a few years now??




Do YOU actually believe that most people in AU don't desire to own their own homes!!???? That everyone would be happy to be at the mercy of their land-lord forever??? Just because YOU feel that way does not mean that the majority of people think the same - the opposite is in fact the case.

And PS: I'm simply arguing against the price *crash* scenario.... I don't believe that will happen.

As for the capacity to pay argument, well if prices are flat to slightly lower now, and interest rates are lower, then surely capacity to pay has INCREASED for everyone?? If large numbers could afford to buy in the last few years, then why couldn't they afford to now? Your argument does not make sense, and is not backed up by what actually happens out there - you should have been at the auctions I was at last Saturday! Buyers everywhere bidding each up like crazy - why? Because they WANTED the houses that were for sale - personal and lifestyle factors motivate buyers of residential property much more than fears about short term price movements.

So what is YOUR advice to the original question then? The guy said he WANTS to buy his own home.... what should he do in your view??? Keep paying ever increasing rent while earning an ever diminishing return on his cash as interest rates fall and the tax man takes his chunk? What else can he do - invest the surplus in the stock markets?? LOL! You seem to think everyone in AU is just going to put their lives and aspirations on hold in order to make the "dream" of a house price crash come true just just for your benefit???

Cheers,

Beej


----------



## pepperoni (16 September 2008)

Beej said:


> Holy BS batman - have you actually been reading this thread???? It's full violent agreement then is it???
> 
> 
> 
> ...




Congratulations - Every point in this post is 100% incorrect, apart from "we are not the US" which is plain kooky.

I wont bother debating the relevance on clearance rates lower than last year on lower volumes.  And Im not aware of "opinions" on the house fall statistics ... the facts speak for themselves.

But if you reread the thread you will find that it covers all of your points.  In doing so you will notice that the intelligible posts are all in violent agreement.  Coincidence?

And I didnt give advice to the question, nor should you until you understand:

- for the second time  that money does not grow on trees; and
- that "supply and demand" is a quick way to say "demand AT A PRICE and supply AT A PRICE";
- as your PM said in parliament today, "we are not immune" from events in the US and UK.


----------



## robots (16 September 2008)

hello,

wow, asx down 1.4% yes its fairly clear we aint nothing like the US

great words from M.Pascoe on sunrise this morning, 

so in future please present facts and figures on australia

thankyou
robots


----------



## Gundini (16 September 2008)

Sunrise?

So that's where to get all the good info...


----------



## robots (16 September 2008)

hello,

yes, kochie, mel and the sunrise family

thankyou
robots


----------



## pepperoni (16 September 2008)

What happened to the mutual boycott?  Cant control yourself? 

This thread was started to discuss falls and was doing fine without you.

If you want to keep digging your hole do it on the "price rise" thread please.

This thread has a topic and posts like yours are troll jobs ... if you want to debate start a thread for it.

And if you troll on this one Ill call your tactic every time from now on.


----------



## robots (16 September 2008)

pepperoni said:


> What happened to the mutual boycott?  Cant control yourself?
> 
> This thread was started to discuss falls and was doing fine without you.
> 
> ...




hello,

we all troll's token multimillionare, everyone of us

i didnt post anything about a boycott, can you find that post for me? and I will stick to it

thankyou
robots


----------



## Gundini (16 September 2008)

pepperoni said:


> What happened to the mutual boycott?  Cant control yourself?
> 
> This thread was started to discuss falls and was doing fine without you.
> 
> ...




robots has got a stalking issue with you pepperoni it seems. Copying your Tag, Token multimillionaire, and spelling it incorrectly, and I see he has moved into the same suburb lol... At least he keeps on the ball through Mel and Kochie... You have to respect their opinion... ROFLMAO  Good Luck!


----------



## Temjin (16 September 2008)

Beej said:


> Well there is still plenty of evidence to the contrary - see last weekend auction clearances, see the *actual* house price statistics. You're proclaiming "victory" in the argument and attacking those of us with differing opinions on the basis of a 2.5% fall in median house prices nationally??? A soft market does not a housing crash make... we are NOT the US and we are NOT the UK. We do not have the credit rationing and over supply issues being faced in the US and the UK. We've had all these arguments before.....




Likewise, there is also plenty of evidence to YOUR contrary too. I look in BOTH side of the arguments and then make my own opinion of the future, you just seem to ignore almost all evidences that is contrary to your believe. 

Put it this way, none of us are 100% sure that there will be a housing crash. In fact, NO ONE in the world could predict ANYTHING with 100% accuracy. There is always a "black swan event" that will surprise us all, and the global credit crisis was considered one for many people (except a certain few). 

Can you, with ABSOLUTE CERTAINLY, that the housing market WILL NOT stagnate or crash over the next few years? That is, pure 100%!! If you are, then you are making a fool yourself because even Warren Buffet himself will never make such a claim. 

The fact remains that Australia is NOT immune to the global credit crisis because banks in Australia DO SOURCE funding from oversea and also LEND money and/or INVEST in "distressed" assets. The fact remains that global funding have become more expensive, it would have an effect on the profitability of the banks in Australia. No one is DENYING, because these are pure facts. The government don't, the mainstream economists don't, the Austrian/independent analysts don't and the banks don't either. 



			
				Beej said:
			
		

> ... I don't believe that will happen.




Again, you should think twice before making that statement again. Nothing is certain in life, and this is especially true for investment. It's a person's complete ignorance of black swan events and dismissing random events what make them RICH and also EXTREMELY POOR. 


Beej, I know there is a lot at stake for you so I can certainly understand why you are so determined to defend your views. It's definitely difficult to look at this from our perspective because you aren't on the sideline. (i.e. If I had $2 million worth of IP with only 10% of real equity, I would definitely find every bit of evidences to support properties will NEVER crash)


----------



## CamKawa (16 September 2008)

Temjin said:


> Beej, I know there is a lot at stake for you so I can certainly understand why you are so determined to defend your views. It's definitely difficult to look at this from our perspective because you aren't on the sideline. (i.e. If I had $2 million worth of IP with only 10% of real equity, I would definitely find every bit of evidences to support properties will NEVER crash)



Isn't that true.


----------



## pepperoni (16 September 2008)

robots said:


> hello,
> 
> we all troll's token multimillionare, everyone of us
> 
> ...




No you are the troll and the liar now ... You posted it and it got deleted for all the guff you stick in every post.

IMO you should stick by your word and leave this thread to those that wish to discuss recent falls.

The mods here are exceptionally nice to you which is fine but I do think its pathetic how you take advantage of it.

Have some respect for them and take the ramping posts to the old ramping thread.


----------



## pepperoni (16 September 2008)

Temjin said:


> Likewise, there is also plenty of evidence to YOUR contrary too. I look in BOTH side of the arguments and then make my own opinion of the future, you just seem to ignore almost all evidences that is contrary to your believe.
> 
> Put it this way, none of us are 100% sure that there will be a housing crash. In fact, NO ONE in the world could predict ANYTHING with 100% accuracy. There is always a "black swan event" that will surprise us all, and the global credit crisis was considered one for many people (except a certain few).
> 
> ...




Amen.


----------



## Macquack (16 September 2008)

pepperoni said:


> And I didnt give advice to the question, nor should you until you understand:
> 
> - for the second time  that money does not grow on trees




Well it actually does. Look up "fractional reserve banking".

The problem is that the Wall Street bankers "forgot how" to or "could not be bothered" to plant any new seeds.

Unfortunately, *inflation* is the rain needed to sprout the next season of money trees.


----------



## pepperoni (16 September 2008)

Macquack said:


> Well it actually does. Look up "fractional reserve banking".
> 
> The problem is that the Wall Street bankers "forgot how" to or "could not be bothered" to plant any new seeds.
> 
> Unfortunately, *inflation* is the rain needed to sprout the next season of money trees.




It doesnt - I know I planted one 

You can grow paper to make dollars notes on trees.

But as you say inflation is the result, so you end up up with the same amount of money, its just represented by more dollar notes. :

As for fractional banking, I think this is the reason for all the failure in the US vs none in aus touch wood.


----------



## pepperoni (17 September 2008)

Good article.

http://www.news.com.au/business/money/story/0,25479,24355125-5013951,00.html

Interesting points:

- A $300,000 mortgage will cost you $570,000 in interest over 30 years.

- Negative gearing may be a little less attractive with recent tax cuts.

- Rent versus buy

Leanne Wilson of Suncorp says more than a third of Australian households rent -- mostly 35- to 44-year-olds -- and it is definitely still cheaper to rent than buy.

"I looked at blocks of units where there was both a unit for sale and one for rent,'' she says. "I looked at units under $400,000. It worked out that the rent would be about 50 per cent less than taking on a mortgage for 30 years. And of course that doesn't factor in the cost of maintenance of the property and rates.

"Obviously renting also gives you flexibility -- especially when you are in a job where you move around a lot.

"The attraction for a lot of people is also the lifestyle. If they can't afford to buy near the CBD, rent is an affordable option.

"Obviously the downside is actually finding a rental property in the current market environment.''


----------



## gfresh (17 September 2008)

Yup.. and renting and saving $250/wk gives you somewhere around $13k larger deposit for when the time is right to buy. Even an extra $13k can make a massive difference to the payment terms over 25 years. 

Bigger deposit = less debt. No need for this minimum deposit rubbish during a flat market, as prices aren't constantly chased upwards on a monthly basis.

FHB may also be more inclined to pay off credit cards now @ 20% before they enter the market, also improving their free cash each week after mortgage repayments. 

Even a flat market would be great for affordability, and long term stability :70:


----------



## robots (17 September 2008)

gfresh said:


> Yup.. and renting and saving $250/wk gives you somewhere around $13k larger deposit for when the time is right to buy. Even an extra $13k can make a massive difference to the payment terms over 25 years.
> 
> Bigger deposit = less debt. No need for this minimum deposit rubbish during a flat market, as prices aren't constantly chased upwards on a monthly basis.
> 
> ...




hello,

unfortunately for the masses this is clearly not happening and the graphs that many on this thread have posted show the "negative" savings, not many save

and ASF over the next 5,10,20 yrs will be great research into whether what you mention will really occur,

phil ruvthen from ibisworld has been a great campaigner for rent vs buy

thankyou
robots


----------



## brty (17 September 2008)

Pepper,



> Interesting points:
> 
> - A $300,000 mortgage will cost you $570,000 in interest over 30 years.




Also interesting is that if you take rents over 30 years and add 4% pa as an inflation factor, you will pay ~$750,000 in rent.(starting at $250 pw)

But they don't wont you to know the whole story.

brty


----------



## pepperoni (17 September 2008)

brty said:


> Pepper,
> 
> 
> 
> ...




A 300k mortgage costs 2500 a month whereas to rent such a property the property would be less than 1200 a month - WITH NO RATES/MAINT??

This accords with the article less than half price.  

I doubt the $700k figure is right but apples for apples you should factor in 30 years compounding on the savings starting at 50%

This is very conservative in my exerience.

Interest on buying the house I live in would be $400,000 pa.  Clearly I could never afford to buy it but to rent it I pay $36,000.


----------



## pepperoni (17 September 2008)

http://business.smh.com.au/business/property-yet-to-bottom-20080917-4ica.html

As Ive said before I think sydney boomed first and is busting first.  

This article suggests syd is yet to bottom but will lead next boom starting in about a year???


----------



## brty (17 September 2008)

Pepper,

Do the math. By year 20 you will be paying $547 pw, up to over $800 by year 30. This with a 4% yearly inflation.

Also with 4% inflation an average income today of $55,000 would be $178,000 in 30 years time, yet the $300,000 borrowed will still be only $300,000 if IO and $0 if P&I.

Most renters tend to spend the money not save it.

brty


----------



## gfresh (17 September 2008)

You forgot the most important parts Pepper.. 



> *Respondents included a who's who of the Australian property universe, including the Commonwealth Bank, NAB, Westpac, ANZ, Macquarie Bank, JP Morgan, Merrill Lynch, Lend Lease, GPT Group, Mirvac, Ernst & Young, Jones Lang LaSalle and CB Richard Ellis.*




...



> Of significance was that most respondents said yields across all property sectors would increase, *not due to rental shortages but because prices would drop* as the higher price of risk capital was factored in.




...



> Most respondents thought it would be unlikely that residential property would outstrip equity market returns soon, although on a five-year outlook the chances narrowed to about even.




So even the 'experts' agree the market is headed for a downturn and lower prices in the next couple of years.. higher yields, but only due to lower prices..


----------



## pepperoni (17 September 2008)

Brty

You are still comparing apples with oranges until you factor the years of compounding savings.  Year 1s savings alone are worth $60k in year 30 at 7%.

I couldnt bother going through the whole calcs as I know what the answer will be although we could manipulate it with dodgy assumptions.

But anyone basing their decision on you numbers would be making an analytical  mistake.



brty said:


> Most renters tend to spend the money not save it.




We seem to get this one regularly - I dont see the point - whether "most" do or dont (Id say they do) isnt really relevant to which investment path is better.

And frankly its an argument against price growth ("most people that rent will have spent any deposit money") and makes it better for those that do save with the renting 30% of the population out of the picture.

Whether people want or need forced savings is a completely separate issue.

We should do an FAQ on these sorts of points so we can stick to the new ones (tax changes, price movements, trend movements etc)


----------



## brty (17 September 2008)

Pepper,

I think you are still making mistakes in assumptions. The savings/interest earned will be taxable. Paying off the mortgage is giving you an asset without having to pay tax on it.

At the end of 30 years if you rent you may have a good deposit on a house (probably tripled in nominal dollar value just due to inflation), if you invested the savings by renting.

Exactly the same argument about it being cheaper to rent than buy has been used for over 30 years. Yet when you look at the population as a whole, those who bought a house 30 years ago with a mortgage have an asset they no longer have to pay for. Those who rented and continued to all that time, tend to have some nice toys but few assets.

Don't let the nice theory get in the way of reality.

brty


----------



## Temjin (17 September 2008)

Well, the collapse of Lehman Brothers and potential collapse of AIG (even though it will be bailed out) has just pretty much erased the reduction of global credit cost that the market enjoyed over the past few months. 

http://www.bloomberg.com/apps/news?pid=20601087&sid=atGzU9EAf240&refer=worldwide

I don't know how much of our local banks' funding sources have increased or affected, but I'm sure the cost has NOT BECOME CHEAPER. Probably got a lot more expensive over the last 2-3 days. They dropped the mortgage rate because the various "credit spread??" index has obviously trend back down over the last few weeks/months, enabling our banks to lower their mortgage rate.

But unfortunately, we are back to square one again with what just happened. 

The key is how long will this sudden spike in lending spread will hold and how our banks would react. 

So much for people trying to argue that "interest rate" is trending down = mortgage rate is going down = house prices going up. IT IS NOT THAT SIMPLE unfortunately.


----------



## pepperoni (17 September 2008)

brty said:


> I think you are still making mistakes in assumptions. The savings/interest earned will be taxable.




Actually Im pointing out the glaring omissions in you numbers!

If you are acknowledging that apples for apples includes a return on the savings then put it in your numbers! Not as clear cut as you thought now is it?

Then consider possible actual market conditions and not static assumptions.

The fact is renting for a time in the right conditions eg in falling property markets with high rates, can be a goldmine.


----------



## pepperoni (17 September 2008)

http://business.smh.com.au/business/household-debt-boom-may-be-over-rba-20080917-4ics.html

More bad news for property from the RBA ...

"He noted that one major trend of the past decade or more was a huge rise in household debt, both in Australia and many other industrialised economies.

"The question is whether this long period of gearing up by households might now be approaching an end,'' Mr Stevens said.

"There is a good chance that households will for some time seek to contain and consolidate their debt, grow their consumption spending at a pace closer to income, and perhaps look to save more of their current income than in the recent past.''"

And then then this Gem ...

"Mr Stevens said the latest turmoil in financial markets had re-opened the debate on whether policymarkers should try and dampen cycles in markets, perhaps by trying to prevent an asset bubble forming in the first place.

He offered no judgement on the debate, but welcomed the fact that it had resumed."


These are the policies that have world economy is on life support!!!! Its like saying " I just ran over a guy - I take no responsibility but would  be would be happy to chat about it."


----------



## robots (17 September 2008)

hello,

more great debate here today, any chance of giving us the latest stats from ABS on property prices please,

i am sick to death of all the "noise" people keep posting, give us the facts on house prices in australia

thankyou
robots


----------



## Temjin (17 September 2008)

robots said:


> hello,
> 
> more great debate here today, any chance of giving us the latest stats from ABS on property prices please,
> 
> ...




I'm still amazed that you haven't been banned from this forum yet with all the trolling and pointless posts you have been making.


----------



## robots (17 September 2008)

Temjin said:


> I'm still amazed that you haven't been banned from this forum yet with all the trolling and pointless posts you have been making.




hello,

thats because ASF respects the truth and people's opinions,

thankyou
robots


----------



## robots (17 September 2008)

hello,

wasnt sure where to post this so placed in here,

http://www.news.com.au/heraldsun/story/0,21985,24360663-661,00.html

look at that, plenty of affordable places around, one lazy $, instead of helping the guy out the front of coles you can go and get yourself a plot,

see things exist

thankyou
robots


----------



## wayneL (17 September 2008)

brty, et al,

The question is not whether to buy now or rent for the next 30 years. The question is *when* to rent and *when* to buy depending on your circumstances and how the numbers add up.

10 years ago was a no brainer buy.

for many people right now is a no-brainer rent.

Many renters *will buy* when the numbers add up.

I've been a property owner since I was 21 and have some IP. But I can tell you that for my PPOR in my situation, I am delighted to rent, because that's what the numbers say to me.

Here in the UK, there are buy opportunities where the numbers are *starting* to add up, but plenty of time for better deals to appear.

Cheers


----------



## theasxgorilla (17 September 2008)

wayneL said:


> The question is not whether to buy now or rent for the next 30 years. The question is *when* to rent and *when* to buy depending on your circumstances and how the numbers add up.




Annecdotally, in the markets I'm looking at (Sweden and Holland), there are LOT of properties for sale right now.  A lot have come onto the market after the summer break, and I notice several which were there before the break are still there now.

Also worth noting is the property that I talked about on another thread sold within about 4-6 weeks.  That was 200 metres to beach, 20 minutes to center of town and ferry to Denmark, 1367 sqm block, 70 sqm livable guest house out the back, $425k AUD, house over the road selling for $1 mill AUD.  That fact that I even saw this property appear amongst regular real estate listings suggests to me that things have slowed here.



wayneL said:


> I've been a property owner since I was 21 and have some IP. But I can tell you that for my PPOR in my situation, I am delighted to rent, because that's what the numbers say to me.
> 
> Here in the UK, there are buy opportunities where the numbers are *starting* to add up, but plenty of time for better deals to appear.




Exactly as you say.  Soon I'll move to Holland and it's the reverse to me.  Private rental situation is pretty tight, so you don't get much for the money.  I reckon I can triple my standard of living for about 2-3rds of the monthly mortgage repayment through buying in Holland instead of renting.

A 52% top tax bracket and full tax deductability of the interest portion of mortgage repayments is a factor.  So is the government housing program which provides rentals at big discount to market, making private rentals very costly by comparison.

Even in this market buying will still make sense, for me.


----------



## xoa (17 September 2008)

robots said:


> hello,
> 
> wasnt sure where to post this so placed in here,
> 
> ...




Yeah, if you agree to sign a binding contract to build and develop the land, and live on it. Remember this is in a dying town of 700, in the middle of the outback. You'd better be a multi-talented tradeperson, because the town doesn't have many. Bring some scissors too, because the town doesn't have a hairdresser.

There might be an "affordable" outpost in the middle of nowhere, but it doesn't change the fact that we have the English speaking world's worst housing bubble.


----------



## pepperoni (17 September 2008)

theasxgorilla said:


> Annecdotally, in the markets I'm looking at (Sweden and Holland), there are LOT of properties for sale right now.  A lot have come onto the market after the summer break, and I notice several which were there before the break are still there now.




This was how it was in inner north syd in winter ... most properties are still for sale or withdrawn.

But round here now we have gone past that and right when you would expect a few new listings a week there are NONE!


----------



## wayneL (17 September 2008)

G

Is there VAT on property in Holland?

I know there is 21% in Belgium.   Mon Dieu!!


----------



## wayneL (17 September 2008)

This property:




Just sold for £350,000

That's a gross yield of > 11% after transaction costs. Pe ratio of about 11. (Mixed commercial residential mind you)

Deals are getting better all the time.


----------



## theasxgorilla (17 September 2008)

On a different note and from a different angle I just had lunch with a friend who is getting back together with a girlfriend.  He's selling his apartment, girlfriend will sell hers, then they'll buy again and move-in together.  Both bought their apartments on the way up.  His apartment is in a good area (he's my neighbour!), newly reno'd, so I believe he will get a good price.  Her's is in a less good part of town (put diplomatically) and will sell for almost 20% of it's equity peak. 

They're currently living at her apartment.  When they sell his apartment and live in hers they can save a lot of money, but, ultimately it's too small for the two of them, so it's not a long term solution.

He was very gloomy about the timing of their activities, so I tried to introduce him to another idea, like selling his apartment which has held a lot of it's equity, living in her apartment and saving like hell, and when they have enough saved buying a house up the coast or in the countryside (which means 20 to 30 minutes driving time where we live...you can afford to go there everyday/weekend...year round if it's isolated).  Unfortunately he didn't seem enthused at all by the idea...maybe I planted a seed...hopefully.

The thing he couldn't seem to grasp was how bad value apartment living is in Sweden.  When you have a mortgage here you can receive a monthly tax deduction for up to 30% of the interest payments.  Given where the market already is right now and the direction interest rates are going, I can't see why you wouldn't borrow a bit more and go interest only...as it gives you the opportunity to make a tax deduction on the full amount, allowing you to buy slightly better for the same montly outlay.  I know what you're all thinking about the last part of that statement but remember, this is Sweden...The Welfare State, where moral hazard is rife.

Then you have the famous monthly body-corp fees which can typically be $700 to $800 a month, and are not tax deductable at all.  You buy a house, you avoid having these monthly fees.

The other plus to this strategy is that you can buy into a upmarket holiday house area, which are for all intents and purposes at the margin right now, and where prices are softest.  During growth and prosperity expansion phases these areas get converted to year round living as people knock down the old summer holiday cottages and build dream houses.

But he's my friend.  You gotta be careful giving advice to friends.  Particularly if it's not asked for.


----------



## theasxgorilla (17 September 2008)

wayneL said:


> Is there VAT on property in Holland?
> 
> 
> 
> ...


----------



## pepperoni (17 September 2008)

New bad property news from the US

http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD938FKKO1


----------



## wayneL (17 September 2008)

theasxgorilla said:


> Then you have *the famous monthly body-corp fees which can typically be $700 to $800 a month*, and are not tax deductable at all.  You buy a house, you avoid having these monthly fees.




Knulla helvete!


----------



## Warren Buffet II (18 September 2008)

pepperoni said:


> This was how it was in inner north syd in winter ... most properties are still for sale or withdrawn.
> 
> But round here now we have gone past that and right when you would expect a few new listings a week there are NONE!




And remember, every time they do that, they pay RE agent listings fees (for 60 days listings) and all that stuff, that is from $1000 up to whatever you want to do.


----------



## theasxgorilla (18 September 2008)

wayneL said:


> Knulla helvete!




Yeah it's a classic how it works here.  That fee often includes heating, water, and sometimes cable TV and Internet, plus the expected maintenance and upkeep.  So it's not all bad.  

The real gotcha though is that it can also include paying for the debt that the company which owns the property has on the property.  You see, under the typical owner-occupied apartment arrangement here in Sweden, your title doesn't entitle you to ownership of a share of the property as defined by a plan of strata or subdivision.  Instead you have a contract which entitles you to a share (and associated voting rights) of the company which owns the property.  It's actually a bit like the old Victorian _stratum title_ (no, not strata, _stratum_) with a service company.  I'll be _uber_ impressed if anyone actually knows what that is.

The catch is that the company may (and probably does) have it's own mortgage on the property.  Oooh, yes, layers of debt 

So basically, in addition to taking out an individual loan with the bank to buy the contract, for which you have an associated repayment, your monthly body corp fee may also be paying a proportion of the mortgage that the company which owns the property has on the property!

The layers obscure the true price that you pay and what you are really paying for, but most people don't delve into such things as the financials of the _bostadsrÃ¤ttfÃ¶rening_ (the company they're buying into).  They just look at the asking price for the contract, the monthly fee, and what is included.  

It's not uncommon for a single company to be established for the sole purpose of owning a single property.  And it's typically the case that newer properties have larger outstanding loans and therefore higher monthly fees.  As the company's mortgage is paid down your monthly fee ought to reduce and the value of your contract ought to go up.

It's complicated, but makes sense in a socialistic, communal kind of way.  Or as a Swiss guy standing beside me looking at the display window of a real estate office once remarked, "Only in Sweden could I pay all of this money for an apartment that I still don't actually own".


----------



## robots (18 September 2008)

wayneL said:


> brty, et al,
> 
> The question is not whether to buy now or rent for the next 30 years. The question is *when* to rent and *when* to buy depending on your circumstances and how the numbers add up.
> 
> ...




hello,

as a renter when most make decision to buy the only numbers you are interested in is repayments,

i bought bang on 10yrs ago, the differential between buying and renting was exactly the same as it is today, even 20yrs ago the differentials where still there (hence Negative Gearing been around for how long?)

now that takes on numerous issues such as deposit, interest rates, location and style of property

rental income and council data (if stats avaivalbe) will be a guiding factor,

all the best and ah let us know when RE statistics HERE in aus have dropped 30% this year,

wow dow J down another 3%

thankyou
robots


----------



## Temjin (18 September 2008)

wayneL said:


> This property:
> 
> Just sold for £350,000
> 
> ...




WayneL, I would place a skeptical mind on the advertised income. It first need to be verified by a valid accountant and then you need to project the future income that could be generated from this restaurant. With global economy worsening and small retail businesses all around the world suffering a revenue slump due to the crappy consumer sentiments, the yield on that business might not be "that" attractive.  

While rent on a residential property is more consistent and predictable, business revenue are not.


----------



## noirua (18 September 2008)

The UK new forecast is for a 12 month fall of 25% in house prices.
Australia is looking fine but a fall of 15%, over a 12 month period, sometime in 2009 now looks increasingly certain. Those apartments in outer Sydney are set to tank.
Anyway, if you don't have to sell, who cares.


----------



## wayneL (18 September 2008)

Temjin said:


> WayneL, I would place a skeptical mind on the advertised income. It first need to be verified by a valid accountant and then you need to project the future income that could be generated from this restaurant. With global economy worsening and small retail businesses all around the world suffering a revenue slump due to the crappy consumer sentiments, the yield on that business might not be "that" attractive.
> 
> While rent on a residential property is more consistent and predictable, business revenue are not.




110% agree! Personally, I would want ONE HELLUVA LOT more risk premium than that. 

But, those numbers would have been a dream for "property investors" (and I use that term advisedly) only six months ago.


----------



## pepperoni (18 September 2008)

noirua said:


> Anyway, if you don't have to sell, who cares.




Actually its better than that - if its your HOME and you dont have to sell its great as the next step up will become that much easier!

High house prices are only good for speculators ... and it seems that meddling in house prices doesnt cut it for them now as they have moved on to create oil and food bubbles


----------



## CamKawa (20 September 2008)

Sounds like credit is drying up. Can't see how that is going to be good for property prices.

Low-doc loans dead


----------



## Mofra (20 September 2008)

noirua said:


> The UK new forecast is for a 12 month fall of 25% in house prices.
> Australia is looking fine but *a fall of 15%, over a 12 month period*, sometime in 2009 now looks increasingly certain. Those apartments in outer Sydney are set to tank.
> Anyway, if you don't have to sell, who cares.



I'd be surprised if we haven't seen that in some areas already, espcially in the outer-suburban mortgage belt areas.

Looks like the median houses in close to CBD areas will fare better than most again - not listed on REIV data, but *85*(!) properties are due to be offered for sale in Brighton* Vic (not all publically) and most are clients (witrh some directors/partners) of private wealth firms who have been caught out with high market exposure due to double-gearing.

* Brighton for anyone who doesn't know is a particularly dark-blue shade of blue chip suburb in Melbourne.

I'd hate to be seriously negatively-geared right now, considering CBs worldwide are opening the floodgates and the market is at historical PER lows. LT positioning looks set to get a whole lot easier soon


----------



## MrBurns (20 September 2008)

House prices will tumble over the next 18 months, it takes a while and happens slowly so you hardly notice until you try to sell something.

Just rang a friend of mine who I haven't spoken to for a long time, I repect his views as he's a great store of economic knowledge, he says the bail out is nothing , this is just the start and he's been expecting it for more than 5 years, closer to 10 if I remember our conversations from way back.

I reckon he's right.


----------



## Glen48 (20 September 2008)

The best rumour I heard was houses to pick up 2022 in USA people are back to crash pads like the 70's living in Caravans in some ones back yard or moving in with the Parents and renting out their own homes because they can't sell them so we have a rent glut.
The next problem is the 180 TRILLION of CDS floating around.


----------



## subaru69 (20 September 2008)

I'm not sure if it was meantioned on this thread 13 days ago but the Sunday Mail's (Brisbane) front page article was 'BUY, BUY, BUY' (or words to that effect).  Funnily enough when you read the acticle in a few pages, please don't think less of me because I did, all of this propaganda was from the chairperson of the REIQ.

'You'll miss the boat' ' Everything is on the way up' etc

I want to cry when my friends proudly tell me they've bought property, and 'bargains' at that.  As they're explaining to me that the repayments are the same as renting and then I probe a little deeper against this fallacy it almost always turns out that as that their parents have fronted a few $100K!!

Good for the kid, but more borrowing none the less.

So the borrowing bubble continues...

As you can see below I like slow motion footage, problem is the market is doing the opposite.


----------



## pepperoni (20 September 2008)

theasxgorilla said:


> Yeah it's a classic how it works here.  That fee often includes heating, water, and sometimes cable TV and Internet, plus the expected maintenance and upkeep.  So it's not all bad.
> 
> The real gotcha though is that it can also include paying for the debt that the company which owns the property has on the property.  You see, under the typical owner-occupied apartment arrangement here in Sweden, your title doesn't entitle you to ownership of a share of the property as defined by a plan of strata or subdivision.  Instead you have a contract which entitles you to a share (and associated voting rights) of the company which owns the property.  It's actually a bit like the old Victorian _stratum title_ (no, not strata, _stratum_) with a service company.  I'll be _uber_ impressed if anyone actually knows what that is.
> 
> ...




Not a property lawyer but sounds like  "company title" in NSW.

Basically you buy shares in a company that are tied to a particular unit.  You can block people buying and selling such units in syd and they are to be avoided at all costs.


On the auction front ... the only decent 1m - 2.5m property to go to auction round here was passed in.  Its vacant and the agent sounds desperate even though he claims to have a keen buyer and the place is new with views and DA for pool.

And to be honest I dont know what the place is worth any more ... kind of like MQG or BNB shares.  Seems like there are few to no buyers around.  Freefall is a word that springs to mind.


----------



## theasxgorilla (20 September 2008)

pepperoni said:


> Not a property lawyer but sounds like  "company title" in NSW.
> 
> Basically you buy shares in a company that are tied to a particular unit.  You can block people buying and selling such units in syd and they are to be avoided at all costs.




Yes, that's exactly what it is.  I was told that it was invented by Jewish people so they could control who was allowed to buy into to joint-ownership properties.  Don't shoot the messenger...consider this, maybe it's true!

In Sweden you can't avoid them as until this year they've been the ONLY way to own an apartment.  You're not allowed to rent the property out without permission from the company either.  So there are massive rental apartment shortages here, and lots of people doing dodgies ie. "if you meet the neighbours at all while I'm in the US, tell them you're my cousin, ok???".


----------



## pepperoni (20 September 2008)

sound like the middle east ... no statutory concept of strata titles so they come up with these makeshift apartment ownership models.

Steer clear IMO!


----------



## Glen48 (20 September 2008)

Some time Monday 22/09 I hope to be homeless having sold my home and using the profit to play the share market with LNC up 640% things are looking good.
As more people are staying at home with nothing to do cleaning items are the next items to jump.
Having brought and sold 8 houses over 30 yrs I can tell you this is the only boom albeit false and driven by greed that I have made money.
Most home owners can't do maths and think houses are a good buy. Good bye for me.
Keep checking Patrick.net


----------



## Pommiegranite (21 September 2008)

Was dining last night and met a guy who a project manager/architect for a major residential/commericial developer.

His first hand experience is that projects are getting canned due to cost factors. Simple as that.

There is an ever increasing amount of anecdotal evidence out there pointing to a major slowdown in the real estate market.  It's everywhere!


----------



## pepperoni (21 September 2008)

Glen48 said:


> Some time Monday 22/09 I hope to be homeless having sold my home and using the profit to play the share market with LNC up 640% things are looking good.
> As more people are staying at home with nothing to do cleaning items are the next items to jump.
> Having brought and sold 8 houses over 30 yrs I can tell you this is the only boom albeit false and driven by greed that I have made money.
> Most home owners can't do maths and think houses are a good buy. Good bye for me.
> Keep checking Patrick.net




Congrats ... did you get what you hoped for?  Was the price below previous years sales?


----------



## wayneL (21 September 2008)

For no other reason than !!!

I was in Knightsbridge in London today (where Harrods is) and had a look in a estate agent's window across the road from Harrods. Took this picture.

Check out the price... remember that's pounds!


----------



## MrBurns (21 September 2008)

Tell 'm they're dreamin' , offer them $500K AU Pesos and they're lucky to get it.
Not even a garage


----------



## Beej (21 September 2008)

pepperoni said:


> On the auction front ... the only decent 1m - 2.5m property to go to auction round here was passed in.  Its vacant and the agent sounds desperate even though he claims to have a keen buyer and the place is new with views and DA for pool.
> 
> And to be honest I dont know what the place is worth any more ... kind of like MQG or BNB shares.  Seems like there are few to no buyers around.  Freefall is a word that springs to mind.




Here's 2 properties around your way that were up for auction on the weekend that sold PRIOR for good prices well above the expectation set in the adverts:

This one sold for $1.575M: http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007333701

This one sold for $1.55M: http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007326956

Perhaps they help you value the one you are looking at that passed in?? 

A lot of the good places that are priced correctly are being sold prior to auction at the moment, with the others being left to languish come auction day. That's just the way the market is right now - but to give the impression that NOTHING is selling - even in a particular area like say Mosman and surrounds, is just plain wrong.

The rest of the Sydney auction results for the weekend (53% clearance rate, 119 sold) can be found here: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf. Plenty of other good results in many areas there as well.

Cheers,

Beej


----------



## Glen48 (21 September 2008)

I should have sold at Xmas would have got 30 K more sold it to a mate ( well use to be ) only way I could get a buyer its in the 300 k bracket have picket up 170 K less 10 yrs or rates house payment insurance repairs.
Have a look at ONTHEHOUSE.COM in my area last June they sold 87 houses this yr 8 
I could have sold it 3 yrs ago fo lees and would have ended up with trhe same money just paid 30 K to live here for 3 yrs.


----------



## pepperoni (21 September 2008)

Beej Im looking for myself and wouldnt consider semis units or townhouses or the properties you posted.

That first example is a great price .. you could get an original freestander for that in sirus cove.  Maddisons had one a few weeks back.

The one I thought was OK was this one ... "$2m-$2.5m".  Quality newish house.

http://www.realestate.com.au/cgi-bi...r=&cc=&c=25001428&s=nsw&snf=rbs&tm=1221973846


Of the ones Im following NOTHING is selling ... this one has been on market forever 

http://www.realestate.com.au/cgi-bi...r=&cc=&c=25001428&s=nsw&snf=rbs&tm=1221973846

And the one you looked at is STILL for sale!  How much lower can they go?


----------



## Mooose (21 September 2008)

Ass has fallen out of UK market. Home here was valued at 250K now only sell it for 175K if find a buyer. This robots person obviosly has an interest in beating up real estate.


----------



## Mooose (21 September 2008)

wayneL said:


> For no other reason than !!!
> 
> I was in Knightsbridge in London today (where Harrods is) and had a look in a estate agent's window across the road from Harrods. Took this picture.
> 
> Check out the price... remember that's pounds!




Looks like business is booming lol


----------



## robots (21 September 2008)

Mooose said:


> Ass has fallen out of UK market. Home here was valued at 250K now only sell it for 175K if find a buyer. This robots person obviosly has an interest in beating up real estate.




hello,

thanks for giving us a report on conditions in the UK, 

glad you enjoy my writings you can get plenty more at "house prices to keep rising" and the mother of all threads "house prices to stagnate for years", have a great day

thankyou
robots


----------



## Mooose (21 September 2008)

You are most welcome. And how were the auctions this weekend in beautiful oz?


----------



## robots (21 September 2008)

hello, 

i am sure you know where to find that info moose, great you have such an interest from over there in Ascot,

thankyou
robots


----------



## Mooose (21 September 2008)

Yes very nice weather here today. Perfect autumn day. Giddy up


----------



## robots (21 September 2008)

hello,

yes great day in melbourne, chapel st was pumping and as I look out now the sky is clear and another great day is on the cards tomorrow,

thankyou
robots


----------



## Mooose (21 September 2008)

Very nice. I have a property in South Yarra. Have not been there for some time, might visit next year when things settle down.


----------



## robots (21 September 2008)

hello,

what needs settling down?

planes are still running from the airport

thankyou
robots


----------



## Mooose (21 September 2008)

That they do. But better opportunities here in Uk and Europe ;-) Australia is overheated and about to encounter a big financial shock, according to my crystal ball.


----------



## robots (21 September 2008)

Mooose said:


> That they do. But better opportunities here in Uk and Europe ;-) Australia is overheated and about to encounter a big financial shock, according to my crystal ball.




hello,

great, thanks for you're opinion

hopefully things work out well for you and you able to sort out the unemployed and bankruptcy status

thankyou
robots


----------



## Mooose (21 September 2008)

Short term ;-) Thanks for your concern though mate.


----------



## robots (21 September 2008)

hello,

yeah no worries mate, here to help all at ASF

thankyou
robots


----------



## Aargh! (21 September 2008)

robots said:


> hello,
> 
> great, thanks for you're opinion
> 
> ...




Hello,

Great. Thanks for your opinion.

Hopefully things work out well for you and you're able to sort out the unemployed and bankruptcy status.

Thankyou,
robots



Correct spelling and grammar is appreciated.


----------



## Mooose (21 September 2008)

lol


----------



## theasxgorilla (21 September 2008)

wayneL said:


> For no other reason than !!!
> 
> I was in Knightsbridge in London today (where Harrods is) and had a look in a estate agent's window across the road from Harrods. Took this picture.
> 
> Check out the price... remember that's pounds!




My instant reaction, _what a gorgeous freakin' building!_.  Second thought, times must be tough, why else would they be driving that crummy old Mercedes.  they'll prolly upgrade once the sale has gone through. 

There are some pockets of London (numerous actually) where real estate must be more expensive than any other place on the planet (even New York???).


----------



## theasxgorilla (21 September 2008)

pepperoni said:


> Beej Im looking for myself and wouldnt consider semis units or townhouses or the properties you posted.
> 
> That first example is a great price .. you could get an original freestander for that in sirus cove.  Maddisons had one a few weeks back.
> 
> ...




That last one is a terribly unattractive house.  I don't think it has any architectural appeal whatsoever.

I'm curious now...if you compare what Beej has posted, they're far more tasteful buildings IMO.  So what does one have to pay to get a free-standing place that is also tasteful in these area's of Sydney?  Is 2-2.5 mil too low?


----------



## wayneL (21 September 2008)

theasxgorilla said:


> My instant reaction, _what a gorgeous freakin' building!_.  Second thought, times must be tough, why else would they be driving that crummy old Mercedes.  they'll prolly upgrade once the sale has gone through.
> 
> There are some pockets of London (numerous actually) where real estate must be more expensive than any other place on the planet (even New York???).



Indeed.

I had an idea to rent around around there... but the cheapest was a ground floor 1 bedroom flat for £1025 per week. 

Here's another one. This one's a cheapy at £8.75 mil, but shows the interior, very swank:


----------



## pepperoni (21 September 2008)

I remember $100m houses in london BEFORE the boom.

And whilst we carry on about how different aus is to the UK, the bigger differences with london are:

- near unparalleled opportunities for fun at your doorstep or an hour flight away
- huge demand for weekenders etc from russian billionaires et etc
- every rich person from anywhere in the world almost having to own a house there
- the massive amount of money to be made there compared to here and the concentration of mega rich and famous.



On another topic, did anyone see the economics professor selling his house before the 40% fall hits!  We should get him on this thread as our absurdly fanatical bear to counter our as-fanatical-as-osama property bull


----------



## MrBurns (21 September 2008)

> On another topic, did anyone see the economics professor selling his house before the 40% fall hits!




I've seen it before in the early 90's and the economic scene now is far, far worse, he's right just wait and see


----------



## robots (21 September 2008)

hello,

perhaps mr keen can bring with him the ABS stats to support his claims,

this guy is the biggest chameleon around, he is like a guy rocking up in collingwood jumper but really barracks for carlton,

debtwatch, yet behind the scene's he is part of it all, sell out

thankyou
robots


----------



## MrBurns (21 September 2008)

I've never heard of him but he seems to have some track record - 

http://www.abc.net.au/news/stories/2008/03/19/2194170.htm


----------



## CamKawa (21 September 2008)

MrBurns said:


> I've never heard of him but he seems to have some track record -
> 
> http://www.abc.net.au/news/stories/2008/03/19/2194170.htm



This is his web site.


----------



## robots (21 September 2008)

hello,

man i need to get a blog, 

10ys ago, people bought with debt

20yrs ago, people bought with debt

30yrs ago, people bought with debt

50 yrs ago, people bought with debt

all the best, have a great night

thankyou
robots


----------



## MrBurns (21 September 2008)

> This is his web site.




I see so he's a professional devotee of everything that's wrong.

I can see through that and it becomes boring fairly quickly but there's no doubt things will get worse, the bailout will only slow it down a little and property will take a very large fall over the next 18 months, it's already started, properties not selling at Auction etc. It's a slow process no sudden dip like with shares.


----------



## pepperoni (21 September 2008)

MrBurns said:


> I've never heard of him but he seems to have some track record -
> 
> http://www.abc.net.au/news/stories/2008/03/19/2194170.htm




Wow thats a great link ... he seems to have had it right way back in march!   

Some really good reading in that ... looks like Ill need to read up on the great depression "new deal" ... seems we may see some features of it again soon.


----------



## MrBurns (21 September 2008)

Yeah I just read the rest of it , have a look at this from March ! ! ! 



> ELEANOR HALL: Well, what options does he have?
> 
> STEVE KEEN: Well, I don't think the options he expects to work, will work. His academic papers imply that he thinks ... and this is almost a direct quote. If we do - all else fails - and we do get into a deflation, you can always rely upon the logic of the printing press to cause inflation once more, in other words, saying he believes that if you get into a serious crisis, what you do is you drastically increase the government-funded money supply, largely by buying some of this totally shonky debt that the private sector in America has put out in the last 10 years.
> 
> That was tried by Japan. Japan has been in a depression now for 15 years, so I don't believe the mechanism Ben Bernanke is going to rely upon will actually work.


----------



## pepperoni (21 September 2008)

Just read about the new deal ... sort of rebuilding from the bottom up (people) instead of top down (Banks).

Probably a better option than bailing out banks ... put the trillion dollars towards infrastructure and jobs and getting subprimers in a better position to pay the loans.

Yes banks failing will have a few trillion impact, but they will probably need many trillions to keep them afloat anyway.

Of course they will support the rich at the expense of the poor.  Would love to see someone like obama propose more of a new deal ... they would be dead  before that day ended though.


----------



## MrBurns (21 September 2008)

I think whatever they do this will be ugly.
There's no way out except to take the consequences and rebuild , the Fed cant make it all go away.
We live in interesting times.


----------



## Mooose (22 September 2008)

wayneL said:


> Indeed.
> 
> I had an idea to rent around around there... but the cheapest was a ground floor 1 bedroom flat for £1025 per week.
> 
> Here's another one. This one's a cheapy at £8.75 mil, but shows the interior, very swank:




Very nice.


----------



## Mooose (22 September 2008)

It is good in small doses. Most poms don't even live here anymore. Too expensive **** weather etc. much prefer the Algarve. Nice climate friendly people great food, fantastic beaches great weather, did I mention the food and the weather mmmmmmmmmmmmm 

On another topic, did anyone see the economics professor selling his house before the 40% fall hits!  We should get him on this thread as our absurdly fanatical bear to counter our as-fanatical-as-osama property bull [/QUOTE]


----------



## gfresh (22 September 2008)

robots said:
			
		

> man i need to get a blog,
> 
> 10ys ago, people bought with debt
> 
> ...




And yes, 78 years ago people loaded up with debt, because it was the most freely available in history. Then the economy crashed, they lost their house, lost their life savings as the banks fell over, lost their jobs, and were begging in the streets for food. 

I'm sure your blog will be great reading with all your brilliantly thought out one liners


----------



## robots (22 September 2008)

gfresh said:


> And yes, 78 years ago people loaded up with debt, because it was the most freely available in history. Then the economy crashed, they lost their house, lost their life savings as the banks fell over, lost their jobs, and were begging in the streets for food.
> 
> I'm sure your blog will be great reading with all your brilliantly thought out one liners




hello,

not my grandparents

would be far better than the sour grapes you get every where else bro,

go rent, its no big deal, if you dont want to own then dont, move on with the sour grapes its fairly evident people dont want to keep hearing this from you and others

thankyou
robots


----------



## Pommiegranite (22 September 2008)

robots said:


> hello,
> 
> not my grandparents
> 
> ...




Hey Robot, great to see you increasing your presence on this thread. If you can't beat them....join them eh?


----------



## robots (22 September 2008)

hello,

just helping the token multimillionaire out by getting the views up for his pet thread,

thankyou
robots


----------



## numbercruncher (22 September 2008)

Hows the RE boom going folks ? as good as your Super funds ?

I see realists like Prof Steve Keen are now getting picked up by the main stream press .....

Interesting times !! Been far to busy to keep up with this thread , any conclusions yet ?

Cheers ...


----------



## robots (22 September 2008)

hello,

good to hear from number, yeah the D&G brigade are out in force 

i would prefer to see the bones brigade around though,

will all still enjoying a great life here in Australia and there are many where super is irrelevant

thankyou
robots


----------



## numbercruncher (22 September 2008)

Words of wisdom Robi -- good to hear -- Healthy happy and wise huh, anything else is a bonus !


----------



## Beej (22 September 2008)

numbercruncher said:


> Hows the RE boom going folks ? as good as your Super funds ?
> 
> I see realists like Prof Steve Keen are now getting picked up by the main stream press .....
> 
> ...




Keen - a "realist" you call him?? More like an "opportunist"! Ie, Just another boring acedemic who has been banging on with the same old story and predictions for a decade. Finally, doom and gloom is selling again, so now that anyone is actually remotely interested in listening there he is milking the media exposure for all it's worth! Makes for great acedemic career qdos.... especially when you are stuck out at UWS.......

Of course generally speaking we all know acedemic economists are sooo good at predicting the future, and the behaviour of markets in particular...... 

Oh and PS - no conclusions yet that can be backed up by solid ABS or REI price data etc. Many eagerly awaiting to see if their house price crash dreams will be fullfilled though! 

Cheers,

Beej


----------



## pepperoni (22 September 2008)

Beej said:


> Oh and PS - no conclusions yet that can be backed up by solid ABS or REI price data etc. Many eagerly awaiting to see if their house price crash dreams will be fullfilled though!




Official stats are nice but in the end it comes down to what you can negotiate    when you buy.

I know of a number of good houses in the best areas i can get for a song so i have my answer.

Going forward Im more interested in market conditions like credit growth, credit availability, and rates/affordability.

I just bought a new car for an absurdly low price last month ... official prices didnt change but ability to negotiate for those with the skill is unprecedented.


----------



## Beej (22 September 2008)

pepperoni said:


> Official stats are nice but in the end it comes down to what you can negotiate    when you buy.
> 
> I know of a number of good houses in the best areas i can get for a song so i have my answer.
> 
> ...




No question there are some bargains around - I've been looking at a couple of good places in good area's that can be had for a good 10-15% less than they would have sold for last year, but that still only puts them back at 2005/2006 prices. There are still plenty of places selling though if priced correctly (examples posted here and in the other thread). Nothing surprising there though or what I would call a "crash". In fact the conditions right now remind me a great deal of 1990/91, and a little like what happened for about 3-4 months before the olympics and after the GST first came in (2000). 

My feeling is the Sydney market in particular is very close to the bottom right now, but it will take a while (2-5 years) before it really moves fast again. We shall see....

Cheers,

Beej


----------



## numbercruncher (22 September 2008)

> Cheers,
> 
> Beej





Cheers to you to Beej ,

I enjoy everyones opinion these days ...


----------



## Glen48 (22 September 2008)

House prices will come down just the same as they went up a few % a month.
If we get to depression stage will Rudd et al give out food stamps or go to CentreLink to pick up some loot so every  Australian can get  our share of the mining boom because there is no other way the average person can get a benefits. 
So far ot looks like the USA bail out is going down as there is now a push to bail out commercial sector


----------



## wayneL (22 September 2008)

The shakeout of City boys begins.

http://www.dailymail.co.uk/news/art...housing-slump-11m-home-repossessed-banks.html



> City millionaire is latest victim of housing slump as his £11m home is repossessed by banks
> 
> By Daily Mail Reporter
> 
> ...


----------



## ROE (23 September 2008)

pepperoni said:


> Official stats are nice but in the end it comes down to what you can negotiate    when you buy.
> 
> I know of a number of good houses in the best areas i can get for a song so i have my answer.
> 
> ...




You know you already over paid  for a new car, it's a bad investment from the start so you already over pay j/k

but I do like my new car as well, it's indefensible investment but you got to spend at some stage 

and I enjoy the entertainment in this thread with punch throw here and there .. I like to stay on the side line and watch with this whole property vs shares vs owning vs renting


----------



## pepperoni (23 September 2008)

Beej said:


> No question there are some bargains around - I've been looking at a couple of good places in good area's that can be had for a good 10-15% less than they would have sold for last year, but that still only puts them back at 2005/2006 prices.




15% on a 2m property is $300 - alot to be saved by waiting out the last 6 months!

And Im sticking with my "property prices back to 2002 levels" position.  In my areas the HUGE majority of prices are below the peaks of the boom, although admittedly there are the odd exceptions.


----------



## Temjin (23 September 2008)

What are your view on this, guys?

http://www.theaustralian.news.com.au/story/0,25197,24345079-30538,00.html

It looks like Suncorp is too heavily exposed in the property market through its loan book. The article say if they couldn't recover 2% of those loan, their whole year profit would be wiped out. I wondered what it takes to bankrupt the company???!! I'm worried about my deposits now....


----------



## CamKawa (23 September 2008)

Temjin said:


> What are your view on this, guys?
> 
> http://www.theaustralian.news.com.au/story/0,25197,24345079-30538,00.html
> 
> It looks like Suncorp is too heavily exposed in the property market through its loan book. The article say if they couldn't recover 2% of those loan, their whole year profit would be wiped out. I wondered what it takes to bankrupt the company???!!



I don't know.


Temjin said:


> I'm worried about my deposits now....



Then move to one of the big four.


----------



## MrBurns (23 September 2008)

Temjin said:


> What are your view on this, guys?
> 
> http://www.theaustralian.news.com.au/story/0,25197,24345079-30538,00.html
> 
> It looks like Suncorp is too heavily exposed in the property market through its loan book. The article say if they couldn't recover 2% of those loan, their whole year profit would be wiped out. I wondered what it takes to bankrupt the company???!! I'm worried about my deposits now....




Get your money out before the rush.


----------



## pepperoni (23 September 2008)

Id only go big 4 ... and Im too scared to move from CBA to ANZ to be honest.


----------



## ROE (24 September 2008)

Temjin said:


> What are your view on this, guys?
> 
> http://www.theaustralian.news.com.au/story/0,25197,24345079-30538,00.html
> 
> It looks like Suncorp is too heavily exposed in the property market through its loan book. The article say if they couldn't recover 2% of those loan, their whole year profit would be wiped out. I wondered what it takes to bankrupt the company???!! I'm worried about my deposits now....




Play the probability game, if Suncorp goes most banks will be in trouble as well and without seeing the other banks balance sheet you just rely on someone opinion to dictate your decision 

you can see the effect of the US already, when one goes belly up it not just one it will be a string of other, who's next? who know.

If moving to the big 4 make you feel safer, then do it otherwise it just another day in the market with news fly left and right.


----------



## dhukka (24 September 2008)

Temjin said:


> What are your view on this, guys?
> 
> http://www.theaustralian.news.com.au/story/0,25197,24345079-30538,00.html
> 
> It looks like Suncorp is too heavily exposed in the property market through its loan book. The article say if they couldn't recover 2% of those loan, their whole year profit would be wiped out. I wondered what it takes to bankrupt the company???!! I'm worried about my deposits now....




Interesting read, sounds like Mulcahy took Chuck Prince's line _"As long as the music is playing, you’ve got to get up and dance"_ a little too far. Seems he kept dancing after the music stopped.


----------



## robots (24 September 2008)

hello,

hows that, the colonel has bought into an investment bank

wacked 6 bil on the table for Goldman, great news

up up and away

thankyou
robots


----------



## gfresh (25 September 2008)

IMF warns Australia on Interest rates.. Not too good for the old investors if interest rates don't plummet back under 7%

p.s. I think the IMF is a little more influential on the RBA than a few overborrowed home-owners. 



> http://business.theage.com.au/busin...ting-interest-rates-20080924-4nh6.html?page=2
> 
> IMF warns against cutting interest rates
> 
> ...


----------



## robots (25 September 2008)

hello,

good evening hope everything is going well,

http://www.theaustralian.news.com.au/story/0,25197,24399196-5017771,00.html

gee, howzat the IMF also having a few comments about aussie house prices,

maybe 5-15% overvalued, chicken feed when you put that against the 30% drop on the shock exchange, with many suffering 50,60 or 70% falls,

thankyou
robots


----------



## pepperoni (26 September 2008)

http://www.smh.com.au/news/national...-on-edge/2008/09/25/1222217430693.html?page=2

Reminds me of all the folk talking a while back about how we are light years from US Subprime situation (incl RBA Gov). 

Whilst we may not have been lending to crack heads, I dont know anyone that has sought a home loan and has not been offered an irresponsible amount of money by ALL banks.  

The smart ones didnt take it and the others are toast.

In fact the last mortgage I had on title was $600,000 ... on a PPOR - would be almost $60k a year interest alone now.  No thanks old conservative CBA 

And whilst the article only refers to the western suburbs, sub prime issues were similarly limited to those types of areas and yet look how it spread through the whole property market and financial market.

No part of the market is immune from other parts - nothing exist in a vaccum.


----------



## pepperoni (26 September 2008)

More on the aussie market's "sub prime" with some mention of the aspirational buy to let scene.


http://www.smh.com.au/news/national...e-stress/2008/09/26/1222217506281.html?page=2


----------



## YChromozome (27 September 2008)

robots said:


> maybe 5-15% overvalued, chicken feed when you put that against the 30% drop on the shock exchange, with many suffering 50,60 or 70% falls,




How about a 64% fall in a Sydney Unit?


----------



## robots (27 September 2008)

hello,

surely you arent trusting what a couple of journo's and a paper print?

could you post the actual address so that sales history can be obtained otherwise it didnt occur

thankyou
robots


----------



## wayneL (27 September 2008)

Ruh Roh... bad news for BTL landlords.

Luckily mine aren't in the city (down in the SW) but this is a worry.

http://www.telegraph.co.uk/finance/...086987/Job-loss-headache-for-landlordspp.html



> Job-loss headache for landlords
> 
> With unemployment rising, what should landlords do if a good tenant loses his job?
> 
> ...


----------



## pepperoni (27 September 2008)

Auction this week with 3.5m expectations ...now for sale 1.95+.

http://www.realestate.com.au/cgi-bi...r=&cc=&c=12906058&s=nsw&snf=rbs&tm=1222466427

A fair number of new listings in most areas hoping for the usual spring/summer push ... should get interesting.


----------



## Glen48 (27 September 2008)

Swan the swine is giving taxpayers funds to Aussie and Wizard home loans to prop them up, the good part is they will only lend to quality home  buyers who will then buy a house in a market which is loosing value...wait a minute didn't I read were some thing like that is happening already in some socialist country..


----------



## gfresh (27 September 2008)

Well unless the credit markets unfreeze, nobody will be getting a loan soon anyhow.. 

Here are some of the latest comments by RPdata on sales volumes.. Looks like number listed growing, and new listings shrinking = things aren't selling. As I said a few pages back, there will be the brief spring rush, and then realisation will set in. Need a few more weeks, but looks like this may be the case. 

Even they seem confused.. 



> TOTAL LISTINGS:
> The number of new properties listed for *sales last week dropped significantly following a significant increase during the previous week*. Last week saw just over 8,500 new listings during the week which represents the fewest number of new listings across the nation since the last week of December 2007. *This result is particularly surprising given the dramatic increase witnessed during the previous week and the fact that it is the middle of the spring selling season.*
> 
> As a result of the drop in new listings, the total number of properties listed for sale has also declined during the week to just over 145,000 listings. With the likelihood of a further interest rate cut in October *and consumer confidence rebuilding* we would expect that market conditions will continue to improve and the number of total properties listed for sale will continue to fall as buyers re-enter the market...
> ...




Confidence improving? since when?! Turn on the ABC and the first lead story nearly every night this week has been the collapse of the United States financial system. 

Now even amongst work colleagues and friends, there is the growing talk that things are very bad right now. It's starting to seep into those that don't even follow the markets. Growing confidence? pft! people aren't stupid when they read things such as "America's Largest Ever Bank Collapse" in the papers today.


----------



## Mofra (27 September 2008)

Glen48 said:


> Swan the swine is giving taxpayers funds to Aussie and Wizard home loans to prop them up, the good part is they will only lend to quality home  buyers who will then buy a house in a market which is loosing value...wait a minute didn't I read were some thing like that is happening already in some socialist country..



No he isn't, he's creating an artificial market for collatoralised debt. Big difference. Hopefully the gummint will make a profit 

NBLs have reduced their market share to only 4% so Rudd has to try something.


----------



## Temjin (27 September 2008)

Latest release 

http://www.rba.gov.au/PublicationsA...008/Html/financial_stability_review_0908.html

Everybody check out GRAPH 15.





I'm actually surprised that Spain had a house bubble even larger than ours! 

I haven't finished reading the review document yet, but seem to contain a lot of unbiased information on the status of our economy BASED on current data and assumptions. Of course, who knows what will happen in the future.


----------



## Beej (27 September 2008)

gfresh said:


> Well unless the credit markets unfreeze, nobody will be getting a loan soon anyhow..




I spoke to my bank this week re a potential loan, absolutely no problem getting a loan at all!



> Confidence improving? since when?! Turn on the ABC and the first lead story nearly every night this week has been the collapse of the United States financial system.
> 
> Now even amongst work colleagues and friends, there is the growing talk that things are very bad right now. It's starting to seep into those that don't even follow the markets. Growing confidence? pft! people aren't stupid when they read things such as "America's Largest Ever Bank Collapse" in the papers today.




Well consumer confidence in Australia bottomed in July and has risen considerably for August (see http://business.smh.com.au/business/surprise-rebound-in-consumer-confidence-20080813-3uf1.html)  - So that statement in the article is based on actual statistics rather than just conjecture as yours is. Of course due to recent events the CC index may well tick down for Sept, but it may not - we don't know yet. Historically the CC index tends to stick with an up or down trend and doesn't reverse direction suddenly or easily. Also aussie consumers seem to be much more effected by interest rates and petrol prices than fears of financial crisis in far away lands.....



			
				pepperoni said:
			
		

> Auction this week with 3.5m expectations ...now for sale 1.95+.
> 
> http://www.realestate.com.au/cgi-bin...&tm=1222466427




$3.5M for a vacant block followed by all the cost of holding it and funding the building of what needs to be a very expensive house?? Even there in a GREAT location on the Balmoral slopes, tell him he's dreaming son! ~$2M sounds much more realistic for that - a good opportunity though if you have the ability to finance that and the stomach to deal with all the invetible development risks/hassles....

Cheers,

Beej


----------



## pepperoni (27 September 2008)

Beej said:


> $3.5M for a vacant block followed by all the cost of holding it and funding the building of what needs to be a very expensive house?? Even there in a GREAT location on the Balmoral slopes, tell him he's dreaming son! ~$2M sounds much more realistic for that - a good opportunity though if you have the ability to finance that and the stomach to deal with all the invetible development risks/hassles....
> 
> Cheers,
> 
> Beej




This is some of the most expensive real estate anywhere in the country remember.  The place Im renting was on the market this year for 4.5m as a knockdown.

2m with a da and demolished is a huge drop ... the markham close harbour trust places were 2.2m plus 2 years back!

And whilst it seems like there MAY be money to be made, I saw this place today ... from 3.5m to "will take 2.5m" and "make a low ball offer if you want".

Newish double brick all built for you with HUGE views.  Makes you re assess your ideas of good value a bit.

http://www.realestate.com.au/cgi-bi...r=&cc=&c=37159991&s=nsw&snf=rbs&tm=1222495022

Most importantly though, I was the only person through both open houses I went to!  Its lonely out there again for the first time since I started in the late 90s


----------



## pepperoni (27 September 2008)

Glen48 said:


> Swan the swine is giving taxpayers funds to Aussie and Wizard home loans to prop them up, the good part is they will only lend to quality home  buyers who will then buy a house in a market which is loosing value...wait a minute didn't I read were some thing like that is happening already in some socialist country..




The $4b is less than 10% of the funds these lenders used to have access to in the market ... unlikely to be the difference between them living or dieing ... not much point really IMO.


----------



## robots (27 September 2008)

hello,

probably only an attempt by swan747 to make sure banks (big 5) pass on 0.5% reduction coming up

thankyou
robots


----------



## Beej (28 September 2008)

Well, well - Sydney auction clearance rate for the weekend was a robust 60%, with volume up quite signifanctly (184 properties sold at auction). See http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf.

So we are STILL waiting for the great property crash it seems  Sales of bankers row type places in the $2.5M+ mark seem to be thin on the ground (last weeks record $47M sale in the East not with-standing!), so I'm guessing your Macquarie and Babcock executive types probably still have their heads pulled in a bit, however there is plenty of activity in the sub $2.5M price brackets by the looks. It can only be a matter of time before that flows through.

Here's one in Mosman - nice character house, beautiful renovation, good land and location, but no water views etc etc, sold for $2.19M: http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007350308

This also mirrors my own house-hunting experience over the weekend (I'm looking to move up a couple of rungs), where 2 places I was very interested in (but not quite ready to put in offers) sold this weekend either at, or prior to auction, for very solid prices. Also a place in my area sold for what is a very good price for the house and street, to back up the record sale on the same street in my area 2 weeks earlier.

It looks to me like things are actually picking up a bit. The trick when selling your PPOR is to ensure you sell into and buy from the same (or better for buyers) market. If you sold 6 months ago and buy now you would have achieved that for sure, but if you sell now and buy in 6 months I'm not so certain that will the case.....

PS: I you are looking for a starter with good access to public transport and within commuting distance of Parammatta, CBD etc - this could have been had for $183k, which is around the level of DEPOSIT I'm looking at for my next place   http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007348430

Cheers,

Beej


----------



## aleckara (28 September 2008)

Beej said:


> PS: I you are looking for a starter with good access to public transport and within commuting distance of Parammatta, CBD etc - this could have been had for $183k, which is around the level of DEPOSIT I'm looking at for my next place   http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007348430
> 
> Cheers,
> 
> Beej




I severly hope you don't think this is a "great" starter for the first home buyer. Even 10 years ago you could at least bought a place for a decent price comparative to wages that wasn't a flat, and definitely had better tenants than the average in those units. They are cheap for a reason in that area; the crime, the people, etc. I definitely wouldn't want to raise a family there. If that's all first home buyers have to aspire to in these times I wish that they were born earlier to when they were more affordable. Suburbs behind Mt Druitt are known for their crime, and hence they are priced similar to something from Macquarie Fields or the like - there is no bargains, you get what you pay for. People are too wise about property these days to get any sort of bargain unless their is a foreclosure sale.


----------



## noirua (28 September 2008)

They say that the slide will come as soon as everyone thinks they'll buy properties very much cheaper in a years time.


----------



## Beej (28 September 2008)

aleckara said:


> I severly hope you don't think this is a "great" starter for the first home buyer. Even 10 years ago you could at least bought a place for a decent price comparative to wages that wasn't a flat, and definitely had better tenants than the average in those units. They are cheap for a reason in that area; the crime, the people, etc. I definitely wouldn't want to raise a family there. If that's all first home buyers have to aspire to in these times I wish that they were born earlier to when they were more affordable. Suburbs behind Mt Druitt are known for their crime, and hence they are priced similar to something from Macquarie Fields or the like - there is no bargains, you get what you pay for. People are too wise about property these days to get any sort of bargain unless their is a foreclosure sale.




I knew I would get a rise out of someone for that one  

No I was not completely serious, but at the same time just trying to demonstrate the range of prices/properties that are actually available in Sydney. There are decent houses in non "Macquarie Fields" type area's for less than $250k. It all goes back to first home buyer expectations rather than affordability IMO. FYI that place I posted, if you look at it, is actually quite decent.

And to be fair to Mt Druit, while it is certainly not the most salubrious area in Sydney, I went to uni with a mate who grew up in a housing commission flat there (single mum on the pension deserted early on by father and left with 3 kids to bring up), and although he has some colourful stories from his experiences there, it is probably actually not as bad as most people think.

Bottom line, first home buyers need to "aspire" to what they can afford - it's that simple. They can whinge about the cost of trendy inner west houses etc all they like, and "hope" for a price crash on the back of some sort of major financial crisis/collapse (which is of course still a possibility, IMO a very remote one for this country though). However, at the end of the day the people that already own the property are going to want as much for it as they can get (ie that someone richer than the next guy will pay) if they are selling.

PS: Did you know that in terms of average full-time wage multiples in Sydney median house price affordability has actually IMPROVED in the last 4 years from nearly 12x in 2004 to 9x right now? The only reason this hasn't been a major story is because as it happenned interest rates have gone up at the same time. As rates come down everyone is going to realise that houses have actually got cheaper and that the next couple of years is going to be one of the best times to buy for a decade - unless of course you wait too long, and miss out, again...... 

Cheers,

Beej


----------



## gfresh (28 September 2008)

beej said:
			
		

> ...and that the next couple of years is going to be one of the best times to buy for a decade




Won't argue there.. in fact I don't think anybody will argue that in this thread there 




			
				beej said:
			
		

> I spoke to my bank this week re a potential loan, absolutely no problem getting a loan at all!




Of course.. and I doubt anybody else would have trouble either, at the moment. The important question is what will it be like in 6 or 12 months time. Will the finance situation be worse, or in fact better out there in the global space? Personally, I still think the former will be the case, and many will probably agree.

Australian banks get *77% of their long-term funding from overseas*, and 44% of their short-term funding from overseas. The long term one is the one we should be concerned about, as it's used for our home loans greater than 12 months. This source comes essentially from the same place the US, and UK source their loans, which is the messy place right now, and may still be  months down the track. 

In the UK over the weekend, I read (http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4827670.ece) that banks will in fact be passing increase on long-term rates due to the latest developments. It is also getting to the point, where unless you have a 25% deposit, you have little chance of getting a loan. 

If we ever even get close to that situation here, of restricted loans, large deposits, this is going to really kill the borrowing market. And we are tapping the same source of funding our UK pals are, which will eventually roll-over to costs here.

While yes, you, me, others in this thread who have large wads of cash to put on deposits, or large equity in their property(s) will still probably not have too much trouble obtaining credit, for everybody else (new home buyers, those with less than impeccable records), they're not going to find it so easy. For them, it has been easy in the past few years. 

For short term funding, the spread last week between the BBSW and Overnight index swap is the largest it's been for months, which is used to set variable rates. This is to levels seen when banks were raising rates above the cash rate, as they had to pass on this cost. In fact the situation is that banks will be raising rates, not lowering them, unless the RBA drops rates, so we can be guaranteed of the latter on the 7th.  The RBA's hands are tied. 

Deal or no deal? it's a very important question over in the US right now, and it will effect the rest of the world quite significantly.


----------



## xoa (28 September 2008)

Beej said:


> PS: I you are looking for a starter with good access to public transport and within commuting distance of Parammatta, CBD etc - this could have been had for $183k, which is around the level of DEPOSIT I'm looking at for my next place   http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007348430




Would you want your grandkids to grow up in that environment?

(Waiting for another permabull to mention all the "affordable" housing in other ghettos)


----------



## Beej (28 September 2008)

xoa said:


> Would you want your grandkids to grow up in that environment?
> 
> (Waiting for another permabull to mention all the "affordable" housing in other ghettos)




I might not *like* them to grow up in that environment, and the reality is that is unlikely that they will have to, however, if they did, then I'm sure they would be fine, and what's more if it was really that bad then I'm sure that my kids would pay that starter place off quickly, sell and buy in a better area ASAP, probably before the grand kids were really bothered by it. Like I said I know someone personally (a few in fact) who grew up in such area's of Sydney, and they have all got on and done well in life since.

Cheers,

Beej


----------



## pepperoni (28 September 2008)

The reality is that if that bulls get their 10% pa compounding re growth, our grandkids will be lucky to rent these ghetto properties from funds and the 1% ultra rich.

Inflation due to all the credit/money creation will have compounded 10% pa each year and said grandkids will forever struggle to make ends meet and pay the price for their selfish and fiscally short sighted grandparents.


----------



## CamKawa (28 September 2008)

The gulf between what's happening in the market place and the views of the permabulls in this thread is amazing.


----------



## Beej (28 September 2008)

CamKawa said:


> The gulf between what's happening in the market place and the views of the permabulls in this thread is amazing.




Do you see me as a "permabull"?? (Which by the way I don't think I am if you actually read what I write - I merely disagree with the contention that we are heading for a long term crash/decline in property prices).

If yes, care to show me what is actually hapenning in the maket place then? I've been posting consistenly links that show what IS actually happening in the market place (in Sydney at least), so I am curious to see if/how your information can differ from those facts??

Cheers,

Beej


----------



## robots (29 September 2008)

hello,

<deleted>

we all still waiting on the ABS data, the last quarter showed a great result considering the shock exchange, and "maybe" people will be surprised again come next quarter results,

thankyou
robots


----------



## pepperoni (29 September 2008)

robots said:


> hello,
> 
> <deleted>
> 
> ...




Im not waiting on any data - Ive seen the falls and discounting in the market.

Esp given that last quarter showed something like a 9% annualised fall in syd and things are clearly worse now.

Ive been happy enough with the market to want to buy all year ... right now its a pure buyers market Id snap up the right house at the sort of prices Im seeing.

I think its more the permabulls looking for the one bit of hope amongst all the other clearly negative signs.

For me its of marginally more interest than Beej posting the 1 or 2 sales inner north sales from homepriceguide when there are 200-300 houses languishing on the market.


----------



## Pommiegranite (29 September 2008)

pepperoni said:


> Im not waiting on any data - Ive seen the falls and discounting in the market.
> 
> Esp given that last quarter showed something like a 9% annualised fall in syd and things are clearly worse now.
> 
> ...




Pepperoni, why would you want to buy 'at the sort of prices which you are seeing'? Are you saying that prices won't go lower than what you are seeing?

In my opinion, house price falls are just beginning to gain momentum i.e the shift from denial to panic. Once this happens, nearly all prosepctive buyers begin to hold off.


----------



## Beej (29 September 2008)

pepperoni said:


> For me its of marginally more interest than Beej posting the 1 or 2 sales inner north sales from homepriceguide when there are 200-300 houses languishing on the market.




One or two sales??? I have posted specific links to *selected* sales only to highlight to people examples of what is ACTUALLY happening vs all the BS and conjecture that get's posted on this thread. The auction results I have posted list 100's of properties all selling at auction every week at good prices - in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.

It's strange, but my experience right now is so different to yours Pepperoni - maybe it's just the different price range (sub $2M), but every decent place I've had interest in in the last 3 weeks has sold, and for good prices. There are plenty of buyers out there, plenty of bids at most auctions. The only places I see languishing on the market are houses that typically languish anyway as they are compromised in some way or over-priced, or have a crap agent and/or are poorly presented.

Again, top tier property was hit hard in the early 90s as well - quite similar price falls and volume drop off to right now. It turned out that that was absolutely the bottom for prestige houses in Sydney and was by far the best time to buy for 20 years. I agree with you that we are in that situation now - especially for the prestige end - and this is no surprise, it happens periodically, but I think we are just about at the bottom from what I am seeing. Soon the people who are all selling there sub $2M places will start buying at the higher end.

Those of you who are expecting/hoping for a continuing price crash - well good luck to you, but I really don't see it happening, and I'm actually out there looking. If anyone can post specific instances of actual forced SALES at low prices in good area's in Sydney please go right ahead.

Cheers,

Beej


----------



## Happy (29 September 2008)

Beej said:


> The auction results I have posted list 100's of properties all selling at auction every week at good prices - in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.
> 
> 
> Those of you who are expecting/hoping for a continuing price crash - well good luck to you, but I really don't see it happening, and I'm actually out there looking. If anyone can post specific instances of actual forced SALES at low prices in good area's in Sydney please go right ahead.
> ...





Could be that people remove money from shaky stock market and plough into real estate.

This could be one of the reasons, another possibility that market bottomed out and is on a way up is also a possibility, but somehow I would not subscribe to this one.

In few years time we will be able to say who was closer to the mark.


----------



## MrBurns (29 September 2008)

We are going into an era of tighter money, property will crash, watch the cycle.

Ok set your watch by this - 


1. Rising interest Rates

2. Falling Share Prices

3. Falling Commodity Prices

4. Falling Overseas Reserves

5. Tighter Money

6. Falling Real Estate Values

7. Falling Interest Rates

8. Rising Share Prices

9. Rising Commodity Prices

10. Rising Overseas Reserves.

11. Easier Money

12. Rising Real Estate Values


----------



## pepperoni (29 September 2008)

Beej said:


> Those of you who are expecting/hoping for a continuing price crash - well good luck to you, but I really don't see it happening, and I'm actually out there looking. If anyone can post specific instances of actual forced SALES at low prices in good area's in Sydney please go right ahead.
> 
> Cheers,
> 
> Beej




ITS CRASHED!!!   I cant post sales as nothing is selling apart from the odd place you find off homepriceguide that Im not even aware of.

Ive posted some stupidly cheap advertised places ... they are not selling or being withdrawn.  

You even went to one in cremorne ... waterfront reserve for "1.69m" - 2 failed auctions in 6 months.  In cremorne - they would have started expecting boom prices of mid to low 2s !   In the boom they would have got that price in fricken woy woy.


On 2 other points posted ... yes land banking will prevent the supposed "30% crash" for years if not forever.

And ill buy now because its easy to negotiate a bargain with literally every property Ive followed being passed in or withdrawn compared to 100% being sold last year.  I think Ive seen one sale of something Id consider in the last 6 months.

And with stamp duty on a niceish house near the CBD running at $100k I sincerely hope Ill never feel the need to upgrade ... but thats another thread.


----------



## MrBurns (29 September 2008)

> ITS CRASHED!!!




Think so ? 
You ain't seen nothin' yet.


----------



## pepperoni (29 September 2008)

MrBurns said:


> We are going into an era of tighter money, property will crash, watch the cycle.
> 
> Ok set your watch by this -
> 
> ...





I think its 5:35. Rates will drop asap if they can


----------



## MrBurns (29 September 2008)

I think we have a different scenerio than the last time, this will be a little different and a lot bigger.

The share crash to come and economy disruption will mean there will be a lot less people in the market and banks will tighten lending considerably.

I think the recent era of very low interest rates has pushed prices way beyond where they should be and the correction will come in the next 12 months, yes it's already started but a long way from being over.


----------



## OzWaveGuy (29 September 2008)

Beej said:


> One or two sales??? I have posted specific links to *selected* sales only to highlight to people examples of what is ACTUALLY happening vs all the BS and conjecture that get's posted on this thread. The auction results I have posted list 100's of properties all selling at auction every week at good prices - in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.
> 
> It's strange, but my experience right now is so different to yours Pepperoni - maybe it's just the different price range (sub $2M), but every decent place I've had interest in in the last 3 weeks has sold, and for good prices. There are plenty of buyers out there, plenty of bids at most auctions. The only places I see languishing on the market are houses that typically languish anyway as they are compromised in some way or over-priced, or have a crap agent and/or are poorly presented.
> 
> ...




The Real Estate sector index (XPJ) looks very bearish. Right now it looks to have completed a significant 5 wave decline (of multiple degrees as shown) since near the beginning of 07. When a 5 wave decline on indexes is visible, it means there will be a 3 wave correction (where we are now, and a reason for the increased sales) and then another 5 wave leg down. Hence, once completed a further 5 wave decline is required. The minimum scenario is the completion a full zig-zag correction (5-3-5) from the top of 07.  It should be noted also, that in the US the housing index topped in mid 2005 (and declined in 5 waves from memory), then it took 2yrs or so before people actually saw the fallout. I doubt it'll be any different in Aust.


----------



## Beej (29 September 2008)

pepperoni said:


> ITS CRASHED!!!




I think your definition of a crash is different to mine and most posters here. Right now I would say the (Sydney) property market has turned down off a boom/high/peak. It is soft yes, especially in certain price brackets (which has happened before and will happen again), but it hasn't crashed. People here are looking for a 30-40% drop from the peak to call it a crash - a prediction that I believe will never come true. You seem to actually agree with me as you are saying that you agree now and the next year may well be the best time to buy for a decade! So what are we actually arguing about again??



> I cant post sales as nothing is selling apart from the odd place you find off homepriceguide that Im not even aware of.




Well all I do is look at the auction results and click on the address of anything that SOLD that caught my eye - the links are actually from domain which is the SMH property web-site. The best way to gauge a market is to look at what is actually selling and what people are paying for it - you don't value a stock at level 10 in the depth do you?? 



> Ive posted some stupidly cheap advertised places ... they are not selling or being withdrawn.




As I have stated in many other posts, this is classic real estate market behaviour. Part of what turns the cycle is the drop off in availability of good property because most owners don't have to sell, and therefore if things cool off too far they just withdraw and wait a couple of years. To be convinced we need to see actual SALES at "silly" prices. I don't see it.



> You even went to one in cremorne ... waterfront reserve for "1.69m" - 2 failed auctions in 6 months.  In cremorne - they would have started expecting boom prices of mid to low 2s !   In the boom they would have got that price in fricken woy woy.




That place was pretty crap - and I wouldn't buy it. Yes in a BOOMING market it would sell as buyers are desperate, but I am not and never have argued we are currently in a boom! In this sort of market sub-standard or compromised properties struggle to sell - why would you buy that if you can spend a bit more and get the place that is immaculate, not split into 2 worn out flats etc etc?



> On 2 other points posted ... yes land banking will prevent the supposed "30% crash" for years if not forever.




Again - looks like we actually agree! 



> And with stamp duty on a niceish house near the CBD running at $100k I sincerely hope Ill never feel the need to upgrade ... but thats another thread.




Yes well stamp duty sucks - it does mean that as a buyer in higher price ranges you need to buy something you are happy to stick with for a fair while. However I should remind the first home buyers reading this that in NSW property under $500k is stamp duty FREE for you, and doesn't reach the full amount until $600k. In addition thanks to Mr Howard you also get an extra $7k thrown in from the tax payer as well!

Cheers,

Beej


----------



## pepperoni (29 September 2008)

OzWaveGuy said:


> The Real Estate sector index (XPJ) looks very bearish. Right now it looks to have completed a significant 5 wave decline (of multiple degrees as shown) since near the beginning of 07. When a 5 wave decline on indexes is visible, it means there will be a 3 wave correction (where we are now, and a reason for the increased sales) and then another 5 wave leg down. Hence, once completed a further 5 wave decline is required. The minimum scenario is the completion a full zig-zag correction (5-3-5) from the top of 07.  It should be noted also, that in the US the housing index topped in mid 2005 (and declined in 5 waves from memory), then it took 2yrs or so before people actually saw the fallout. I doubt it'll be any different in Aust.




Interesting post.

So what % fall would you expect over how many months/years from here.


----------



## kotim (29 September 2008)

There is no shortage of property for rent in the market.  I have a friend who a few months ago bought a house on the Sunshine Coast, Qld in a good area and he paid 600 grand.  NOw the place remained vacant for rent at $380.00 a week, he had to drop the rent to the 350 a week mark to get it rented and this took about 10 weeks to rent it out..

Besides the fact that 350 is a piss poor return, there were no people beating a path to his door to rent it, yet if you listen to the marketing agents, this cannot happen in that area.  However this is by no means an isolated occurence in that area.

All booms and bust are the same, people get hurt in the bust and it leaves a very long memory of pain, so what happens is that after the fall in prices of whatever magnitude the market goes sideways effectively for a number of years until wages catch up and the feeling/memory of pain dissapears.  The pain has to subside enough for the mum and dad investers to get back in.

Remember there is way to go but down, both husband and wife have to work full time to afford the mortgage on a house in the coastal cities,  We are now going into a softening period where unemployement will increase, wages won't grow like they supposedly have and besides the very real impact upon people the psychological impact will hurt even more.

Of course its not the end of the world, however it is a downturn/bust and the same will happen as it has before. Whatever happens now we can expect the property market to go down to sideways for the next 3-5 years at least.

If anyone does not believe this then go and have a look at the real estate data for the last 30-40 years and see what happens in cycles.


----------



## robots (29 September 2008)

hello,

no worries man,

have to wait another 3 yrs, and another 3 yrs, and another 3 yrs,

thankyou
robots


----------



## Pommiegranite (29 September 2008)

Phew...almost missed this one from yesterday. Momentum is certainly building.

http://www.news.com.au/story/0,23599,24410702-421,00.html




> *House prices tumble in 50pc of suburbs*
> 
> 
> September 28, 2008 03:00am
> ...


----------



## robots (29 September 2008)

hello,

phew, lucky i read that

fantastic article, units down 0.79% but up 3.09% for year in sydney, howzat the shock exchange down some 30% for the year

pretty good for the syd area. what do you think beej?

reality

thankyou
robots


----------



## numbercruncher (29 September 2008)

I find it kinda cute that you guys even want house prices to rise further considering exactly that has nearly toppled the worlds economy !


House prices to boom for ever , place yer bets, double down, split em aces !!


----------



## pepperoni (29 September 2008)

"Killarney Heights, Turramurra, Forestville, East Lindfield ....  were the worst performers in Sydney, recording drops of more than five per cent in the August quarter."

Shock horror this confirms what Ive been seeing and saying about houses in sydneys north .... worse actually at 20% annual.

Unit are supposedly up although trending down?  Does that say something about the asset or the people that are buying them   Im sure the abs would tell us unit owners and 90% poorer than house owners which must therefore mean blah blah blah.

Anywayy whatever happens in sydney houses will eventually flow through just as the boom did ... just might take a while for *some of us* to *catch on*.


----------



## robots (29 September 2008)

hello,

yes number practises in ONE country, a country which is being exposed for the fraud it is,

but hang-on, how we doing in AUS? prices down like US, 

no way man, not here in the greatest place in the world, the free world, the lucky country, utopia, heaven and all others

man the planes are still flying and you can always get a $1 house in detroit just make sure you have the $ for the arsenal required to exist

reality

only a debate, we all walk out as friends

thankyou
robots


----------



## pepperoni (29 September 2008)

This year some places at least are experiencing *more severe falls* than the US and UK according to some data.

Eg on top of the falls in poorer areas we have these large falls in pretty good middle class areas

"Killarney Heights, Turramurra, Forestville, East Lindfield .... were the worst performers in Sydney, recording drops of more than five per cent in the August quarter."

Its not surprising given *avg aussie has more personal debt* and *avg aussie house is less affordable*.

15% falls take a while to show in the numbers but I guarantee its now possible to negotiate the odd deal at 15% down on the peak prices.

Its a buyers market.


----------



## gfresh (29 September 2008)

Well UK started falling a lot quicker than the US once the contagion caught on.. so it's always possible we'll even top that. After all, when one market falls, the fear is already out there that it could happen here. 

House prices never go down.. do they.. sure? wait.. damn, ****.. oh no..

Australia is fine..resource boom will save us right? er, that's a breach of a 5 year trend. That means the shows over..

p.s. sorry for bringing a stock chart into this, but it is relevant to the broader economy :


----------



## chops_a_must (29 September 2008)

And of course the resource boom is located in western Sydney as well...


----------



## wayneL (29 September 2008)

gfresh said:


> Well UK started falling a lot quicker than the US once the contagion caught on.. so at least we have plenty of knowledge of what to expect.



Ten months ago:

There is no subprime in the UK

The UK economy is sound, it won't affect us

There is a shortage of housing and high immigration, small island etc, prices therefore cannot fall

Prices to rise 50% by 2012

The gu'mint won't let price fall

Recession? LOL Gordo won't allow it.

Prices might plateau for a while but never fall

House prices only ever go up

If house prices go down BTLs will buy more with ears pinned back. This will prop up prices



> Financial crisis: Mortgage lending plunges 95 per cent as housing market suffers
> The value of mortgages lent to British homebuyers fell 95 per cent last month, according to the Bank of England.
> 
> 
> ...


----------



## robots (30 September 2008)

hello,

oh yeah lads, residex just reported syd down 1.7% for the quarter

the shock exchange going to be slammed around a MASSIVE 6% today, taking the yearly work to around 40%, great result

yeah, lets rent and buy shares this is the road to prosperity

real asset real return.

even token multimillionaire is promoting RE as a safe haven

have a great day lads, dont look at those stock prices too much

thankyou
robots

ps. oh top effort united states of america


----------



## wayneL (30 September 2008)

robots said:


> hello,
> 
> oh yeah lads, residex just reported syd down 1.7% for the quarter
> 
> ...



Don't forget gearing 

For BTLers geared up to the gills 1.7% is not insignificant.

We've been hearing over here how one guy with £400,000 equity in his portfolio at the beginning of the year, with 13% drop in prices is now down to about £50k... with more drops to come and almost zero liquidity, this guy is in a schtook.

Do them numbers.

Meanwhile, true stock market guerrillas have been trading the downside in this market and coming out in front.

Have a great day... and tanking stock prices are a matter of great joy to me personally, so will have bo-beep every now and then.


----------



## robots (30 September 2008)

wayneL said:


> Don't forget gearing
> 
> For BTLers geared up to the gills 1.7% is not insignificant.
> 
> ...




hello,

what a classic reply, i'm a gun too

thankyou
robots


----------



## wayneL (30 September 2008)

robots said:


> hello,
> 
> what a classic reply, i'm a gun too
> 
> ...



You'll have a good day then.


----------



## pepperoni (30 September 2008)

wayneL said:


> Don't forget gearing
> 
> For BTLers geared up to the gills 1.7% is not insignificant.
> 
> ...




This is the point ... property investment is based around huge borrowing and negative gearing.

So its the double hit of the 8% annualised fall plus the increased interest rates causing larger repayments/dead interest money.


----------



## Temjin (30 September 2008)

pepperoni said:


> This is the point ... property investment is based around huge borrowing and negative gearing.
> 
> So its the double hit of the 8% annualised fall plus the increased interest rates causing larger repayments/dead interest money.




It's called leveraging, and most RE players don't even understand it properly. 

To put it in a simple context, a lot of people are setting up a margin lending at a LVR of 95% (equal 20 TIMES leverage) on their equity to invest in ONE SINGLE asset class. Where is the diversification??? 

This is similar to someone buying BHP shares for $200,000 but only have $10,000 in capital, and borrowing the rest. The dividends that come from the shares would be used to "cover" the interest on the margin loan, and any shortfall be regarded as "negative gearing". Exactly what's RE investors are doing except they never believe prices will ever fall and leveraged gain will make them millionares. If it rises by 5%, wooot, 100% in profit! RICH! If it falls by 5%, bye bye capital. 

Perhaps a rule to make RE investors to make a margin call on their loan if their properties are now valued lower by an apprasial. That would wake them up.  (of course, this would be a political suicide move..) 

I shock a lot of friends who just recently purchased a home with this cold hard fact. They have never thought of it.


----------



## gfresh (30 September 2008)

When stocks are high, there is quite a bit of risk, but when stocks are down a massive amount, this is actually the lowest risk period, where you can double your money in the next 10 years. 

Whereas house prices at a record high (relative to income), then there just isn't that scope. And there is always the risk they could fall, on leverage, as temjin points out above. 

Anyhow, credit tap just turned off to a trickle... This will get nasty, for borrowers as well.


----------



## Mofra (30 September 2008)

Temjin said:


> To put it in a simple context, a lot of people are setting up a margin lending at a LVR of 95% (equal 20 TIMES leverage) on their equity to invest in ONE SINGLE asset class. Where is the diversification???



I don't think I've ever met anyone who has done this, nor have I seen the financial statements of anyone who meets this description _except_ for owner occupiers whom, if they have no other assets, are likely to be buying on emotion rather than by any form of numerical analysis anyway.



Temjin said:


> This is similar to someone buying BHP shares for $200,000 but only have $10,000 in capital, and borrowing the rest. The dividends that come from the shares would be used to "cover" the interest on the margin loan, and any shortfall be regarded as "negative gearing". Exactly what's RE investors are doing except they never believe prices will ever fall and leveraged gain will make them millionares. If it rises by 5%, wooot, 100% in profit! RICH! If it falls by 5%, bye bye capital.



Except equities are more liquid, have lower holding costs, lower acquisition costs and the value is clear for all to see at any time of day - less not forget dividend imputation as well. There have been plenty of people who bought stock on margin who have already blown up their accounts - January was a particularly difficult month, with the 11 day stretch of falls destroying many more margin account than mortgage loans (by percentage of market share)

In any case, professional property valuations are as much art as they are a science which is fantastic when it comes to negotiation  



Temjin said:


> Perhaps a rule to make RE investors to make a margin call on their loan if their properties are now valued lower by an apprasial. That would wake them up.  (of course, this would be a political suicide move..)



Unlike the US, mortagors are responsible for any shortfall in funds if a repossession sale does not clear debt, so we'd have some form of growth in the debt recovery business. Would add some healthy liquidity into the property market, provided state governments were willing to slightly release their grip on the stamp duty rort.



Temjin said:


> I shock a lot of friends who just recently purchased a home with this cold hard fact. They have never thought of it.



Not very bright then are they


----------



## theasxgorilla (30 September 2008)

Temjin said:


> Perhaps a rule to make RE investors to make a margin call on their loan if their properties are now valued lower by an apprasial. That would wake them up.  (of course, this would be a political suicide move..)




Never mind the politics, it's just not very intelligent.

Whilst property can be a challenge to "value", because when we're talking about houses we're talking about largely heterogeneous assets whose valuations are imprecise at best.  It is possible eliminate this issue by saying that we're comparing homogeneous apartments, flats or town houses.

Now imagine this...during a situation of forced-selling not related to market forces (moving for work, got a better opportunity somewhere else, family crisis, whatever) a couple of your neighbours sell their properties at fire sale prices.

You and your neighbours would not sell for anything less than $400,000, yet two neighbours just accepted offers for $340,000 on near enough identical properties.

In the eyes of an appraiser your property is now worth less.  But you are not selling.  Your other neighbours are not selling either.  The reality is that the market will not support these lower prices.  

It could be represented on a bar chart as a long tail.  On the day that those two properties transacted you would see a long ranging bar, with a tail protruding down to the low sale price level of $360,000, but open and close for these days would still be $400,000.

This is the problem with marking property to market and it's a key element in this financial crisis because this is what the investment banks have been forced to do.  Some say it has caused the crisis.


----------



## MrBurns (30 September 2008)

> You and your neighbours would not sell for anything less than $400,000, yet two neighbours just accepted offers for $340,000 on near enough identical properties.




Stiff cheese, your property is now worth $340,000 also.

Who would pay $400,000 ? no one.

If the bank decided to value youyr property it would come in at $340,000 because that's what similar peoperties in your street sold for and if you happen to owe $350,000 the bank are within their rights to ask you to tip in $50,000 or so otherwise they may sell you up as you are in breach of your mortgage conditions.



> The reality is that the market will not support these lower prices.




The market has already supported the lower prices what it wont support is $400,000 for a house thats worth $340,000.


----------



## Glen48 (30 September 2008)

I have made money out of real estate by using other people greed and have sold knowing it will never be like this again , this is just another Dot com bubble which will burst just like the rest did and then next ones will.
Picked up 1.3% return on my house profits today on a market which has had the biggest fall in History. Just annoyed I got sucked in to owning property all these years now I reaslise the World need suckers to get in to debt and stay there all their lives to keep the money going around. So if you own a house please don't sell so I can rent of you and let you help support my life style.
Houses don't go up in value only by replacement cost until the fall down and then get back to land value.


----------



## robots (30 September 2008)

gfresh said:


> When stocks are high, there is quite a bit of risk, but when stocks are down a massive amount, this is actually the lowest risk period, where you can double your money in the next 10 years.
> 
> *Whereas house prices at a record high (relative to income)*, then there just isn't that scope. And there is always the risk they could fall, on leverage, as temjin points out above.
> 
> Anyhow, credit tap just turned off to a trickle... This will get nasty, for borrowers as well.




hello,

to your income most likely but not others, 

no worries glen48 great work, 

another fantastic day

thankyou
robots


----------



## robots (30 September 2008)

hello,

if anybody is looking for a laugh tonite check Today Tonight at 6.30pm,

that guy Jenman is running around trying to "confront" a legendary landlord,

no rental crisis hey lads, great use of property by landlord which shows the free market working well

thankyou
robots


----------



## motion (30 September 2008)

Beej said:


> in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.
> 
> Beej




I have to agree with Beej, we have been to auctions in the inner west now for the last 5 months and all the houses have gone anywhere from 80k-180k over the reserve or what we thought was a top $$ price for the place. We have been at auctions lately where 6-12 bidders have been bidding. 

The market has turned and is turning and with the shortage of homes on the market in the inner west placing are being snapped up at crazy prices.. 

If you need proof spend every sat with me and my wife and you will see how tight the market is and how much confidence people have... 

Out west is a difference story... But inner west or 10km within the city is going strong...

I say - if people are telling you the housing market is booming you have missed the boat...


----------



## pepperoni (30 September 2008)

motion said:


> I have to agree with Beej, we have been to auctions in the inner west now for the last 5 months and all the houses have gone anywhere from 80k-180k over the reserve or what we thought was a top $$ price for the place. We have been at auctions lately where 6-12 bidders have been bidding.
> 
> The market has turned and is turning and with the shortage of homes on the market in the inner west placing are being snapped up at crazy prices..
> 
> ...




The "market has turned and is turning"?  Turning up from falls?  Not sure I get this.

Inner west has always been undervalued and I dont think it has recently fallen much.

If you are thinking places are going for too much now you *could* have a chronic low balling problem.  Inner west has top notch amenity and has always been cheap as chips for what you get.

Ask the agent for a price guide ... they are obliged to be accurate and nowadays its almost always + or - 5%.  If you are hoping it will go lower you are wasting your weekends.

Id tell you to look elsewhere if you think its running hot but you wont get any other central suburban area for anywhere near the money.

North shore is dead sales wise but you wont get anything for 6 figures.


----------



## pepperoni (30 September 2008)

pepperoni said:


> North shore is dead sales wise but you wont get anything for 6 figures.




For the unimaginative, or with fertile bull imaginations, "auction clearance rates" from RP data:

North shore houses last week 46% from 39 auctions avg price $847k 

North shore units this week "20%".

Quick quick buy buy buy before renting gives you brain cancer. 

As for rentals ... Im looking at moving to mcmahons point .... 2 waterfront 2 bedders in a waterfront block one for $550 ... sound like a nice place to wait out another few months.


----------



## gfresh (30 September 2008)

Excellent read on the way it will play out. 

http://www.businessspectator.com.au/bs.nsf/Article/Property-will-suffer-JXV9B?OpenDocument&src=mp

Sorry to property bulls, it involves economics .. you've probably tuned out already.


----------



## refined silver (30 September 2008)

One of biggest problems for real estate, is that in a fractional reserve banking system, banks lend out 10-15 times (sometimes more) than what they have in deposits.

That means a $1b loss (which banks are taking left right and centre) means $10b-15b less available to lend out.

Even if buyers wanted to buy, most won't be able to get a mortgage.

My parents just managed to sell a house in Qld, they had 3 signed contracts which fell through because of finance, in the last 6 months.


----------



## singlefished (30 September 2008)

gfresh said:


> Excellent read on the way it will play out.
> 
> http://www.businessspectator.com.au/bs.nsf/Article/Property-will-suffer-JXV9B?OpenDocument&src=mp
> 
> Sorry to property bulls, it involves economics .. you've probably tuned out already.




I'm no ecomomist but it's quite interesting reading... plain, easy to understand english too which may help some people understand the implications of the bigger picture - something a lot of people are quite obviously oblivious to...




refined silver said:


> Even if buyers wanted to buy, most won't be able to get a mortgage.




Sorry, can't say I 100% agree with this. I'm pretty sure that if you already have a good relationship with the bank (ie: solid deposit and demonstrated history of regular savings) you should be able to breeze through the application. I do realise that not everybody will be in this ideal situation but even so, I'd suggest that a large proportion of new applicants will have been saving hard for a few years now getting themselves into position to purchase.... as long as they're not trying to punch above their weight however!

I can't justify with numbers but the "water-cooler" chit-chat in my workplace would suggest that prospective first time homeowners are making hay whilst the sun is shining and banging as much cash as possible into high interest savings accounts.


----------



## theasxgorilla (1 October 2008)

MrBurns said:


> Stiff cheese, your property is now worth $340,000 also.
> 
> Who would pay $400,000 ? no one.




It's a hypothetical.  The point is that in this instance people are trading money for time and it's due to reasons other than pure market forces.



MrBurns said:


> If the bank decided to value youyr property it would come in at $340,000 because that's what similar peoperties in your street sold for and if you happen to owe $350,000 the bank are within their rights to ask you to tip in $50,000 or so otherwise they may sell you up as you are in breach of your mortgage conditions.




You reckon banks will do this and create unnecessary defaults?  Not to mention the PR impact.  I reckon you're living in fairyland.



MrBurns said:


> The market has already supported the lower prices what it wont support is $400,000 for a house thats worth $340,000.




I managed to really get the point right past you didn't I.

"Hey I have a 400k apartment and I need to sell it in a hurry, will anyone give me 340k for it this weekend?".  All other apartments in the block are now 340k right?  All the best with that philosophy.


----------



## motion (1 October 2008)

pepperoni said:


> The "market has turned and is turning"?  Turning up from falls?  Not sure I get this.
> 
> Inner west has always been undervalued and I dont think it has recently fallen much.
> 
> ...




Well  we are not hopping they are going lower..We are spot on now having a number of properties in the lower north show and inner west already we know the market very well... we are looking in the 950k to 1.2 million... all the places have gone over 15% - 20% what the agent or the market has placed them..... I believe this is due to the shortage of houses on the market..

Now for the lower north shore...Well I have seen a lot of old unrenovated 3 bedroom places go around the $780k on 250sqm and parking around the crows nest area. And with 60k - 100k to fix it up I can tell you it will be a little rocket once completed.

So I think we are spot on about the market.. I think there are to many people just talking it down without being on the ground... 

Also I'm not talking it up I'm just saying there is a turn in the wind.. 

As for getting finance I get all my finance through the NAB and have not had a problem buying or selling places. If you have a the equity and right income u will never have a problem...


----------



## lakemac (1 October 2008)

motion, with those loans what is your LVR (loan to valuation ratio for the newbies)?

Again for the newbies:
In other words how much of your own equity are you having to stump up to keep the bank happy as a function of the total loan?

Second question: are your places positively geared (ie. more rent coming in than interest and outgoings) or negatively geared (ie. rent does not cover interest and outgoings)?

Third question: what level of yield / loss are your getting with your new properties?

Fourth question: If you are negatively geared, what is the source of your funding (other properties, job, business, own equity)?

These are the sort of questions you need to ask in order to understand how other (hopefully) successful people make a success of their investments.

Sorry to pry so much motion, but thought your answers might help those who are still learning the investment ropes.


----------



## Beej (1 October 2008)

motion said:


> ........




Interesting posts motion! I'm glad that I am not the only one that has noticed this same level of activity in the same/similar area's and price ranges. 

Maybe more people reading this thread would be prepared to post their own experiences, even if they go against the tide of negative opinion here?

Cheers,

Beej


----------



## Beej (1 October 2008)

gfresh said:


> Excellent read on the way it will play out.
> 
> http://www.businessspectator.com.au/bs.nsf/Article/Property-will-suffer-JXV9B?OpenDocument&src=mp
> 
> Sorry to property bulls, it involves economics .. you've probably tuned out already.




This guys is wrong - he states: 



> "The property market is governed by two forces – the availability of borrowings to buy property and the cost of buildings".




He is MISSING a 3rd and perhaps most important factor - the willingness of owners of existing property to sell. The cost of building pales into insignificance compared to this factor in established area's where few new houses can not be built. If the **** drops out of the market for a while, only the most distressed owners will sell - when those are all gone (by definition you can't create any more distressed owners in this situation!), there is nothing left to buy - a price "crash" isn't much good if no-one is offering to sell the thing you want at the "crashed" price now is it?? Pepperoni - this is YOUR situation right now where you are looking. Most owners of prestige property are not forced to sell at low prices, so if buyers aren't buying, the volume simply dries right up. The odd distressed sale (divorce, financial problems) can result in some real bargains - if you get one of those you will do very well in the longer term, but those sales will not be representative of the market "opportunity" as a whole for the masses due to anemic volumes.

This is why house prices tend to stagnate/stay flat for a while rather than crash during downturns.

Cheers,

Beej


----------



## CamKawa (1 October 2008)

Beej, you are looking at this from the wrong way around.


Beej said:


> He is MISSING a 3rd and perhaps most important factor - the willingness of owners of existing property to sell.



How about the willingness of buyers to buy? It's now near impossible for vendors to find a bigger fools than themselves to pay more than what they did.


Beej said:


> If the **** drops out of the market for a while, only the most distressed owners will sell



Only the dumbest of buyers will buy.


Beej said:


> This is why house prices tend to stagnate/stay flat for a while rather than crash during downturns.



I think we many continue to see house prices fall in Australia in the years ahead.


----------



## robots (1 October 2008)

hello,

yeah lets keep the truth and honesty from the masses

thankyou
robots


----------



## robots (1 October 2008)

hello,

wow, interest rate cut coming up fantastic news

anyone got a letter from the landlord with a reduction in rent?

and with Mark Bouris taking the title as the new "we'll save you" you can be sure to be sure its going down,

life keeps getting rosier and rosier

thankyou thankyou
robots


----------



## xoa (1 October 2008)

Property prices fell 5.7% in Perth in last month alone. Resources boom, where art thou? 

http://www.watoday.com.au/wa-news/p...silient-despite-price-fall-20080930-4ra8.html

Real estate agents insist the market is still "remarkably resilient" despite the massive fall.


----------



## lakemac (1 October 2008)

banks are not stupid (well mostly  )
the old 20% loan to valuation ratio here in Aus still is valid.

basically the banks know from (lots of) experience that house prices rarely drop more than 20% (that's why they will normally give you a mortgage with 80% LVR - keeps them safe).

It can be used (along with auction clearance rates) as a BUY marker in a given area when prices have dropped by 20%. Even better if you can find an area with a 30% drop.


----------



## pepperoni (1 October 2008)

motion said:


> all the places have gone over 15% - 20% what the agent or the market has placed them




The agents are treating you like a fool to get some buzz at their auction.  Id be offended and if you are seriously that into real estate you should know this is an offence for them to underquote that is easily and often reported.

I have never seen any quote even 10% out in recent years ... its not rocket science for them to get within 10%.

If you want to buy go right ahead nobody it trying to stop you ... but the majority of people in this thread buy and sell on fundamentals "not changes in the wind."

Im out there every week and its a bloodbath for owners ... your view might be tainted by the fact you have put alot into property, just as mine is by the fact that I thank god I dont have money trapped in illiquid investment properties.

Here is my red hot suburb in better times than now ...
Mosman		
6 mths to Aug 08
$000 median
% Change
-14%

Here is yours 
Leichhardt
6 mths to Aug 08
% Change
-4%

Conditions are way worse now in my fairly well advised area ... no question .... but happy buying all the same.


----------



## pepperoni (1 October 2008)

xoa said:


> Property prices fell 5.7% in Perth in last month alone. Resources boom, where art thou?
> 
> http://www.watoday.com.au/wa-news/p...silient-despite-price-fall-20080930-4ra8.html
> 
> Real estate agents insist the market is still "remarkably resilient" despite the massive fall.




WOW!

As for spruikers, makes you wonder if we ever get them on this thread really.


----------



## pepperoni (1 October 2008)

Some more red hotness from the suburb that started the last boom ... the all telling auction clearance rates 

6 mths to Feb 08 56% 
6 mths to Aug 08 40%


----------



## CamKawa (2 October 2008)

Here's some interesting reading.

Bank of Queensland chief executive David Liddy said pressure was on most banks to lift rates because global credit markets were frozen and they were now having to pay more to attract deposits. 

"I can only see pricing going up," he said. "Access to international credit markets is closed, and I doubt that banks will be able to pass on the full cash rate reduction." 

Source: http://www.news.com.au/business/story/0,27753,24434215-462,00.html


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## Glen48 (2 October 2008)

From Patrick.net

Prices are still falling. This is due to tighter lending standards and the fact that current salaries still cannot cover current house prices in most places. A safe mortgage is a maximum of 3 times the buyer's yearly income, but mortgages have been 5 to 10 times incomes in the last few years. Anyone who buys now will suffer losses immediately, and for the next several years at least, as prices fall into line with tighter lending and stagnant salaries. 

It's still much cheaper to rent than to own the same thing. On the coasts, yearly rents are less than 3% of purchase price and mortgage rates are 6.5%, so it costs more than twice as much to borrow money to buy a house than it does to rent the same kind of house. Worse, total owner costs including taxes, maintenance, and insurance are about 9%, which is three times the cost of renting. Buying a house is still a very bad deal for the buyer on the coasts, but it may make sense to buy in Michigan and some other places where prices have fallen into line with salaries. Check whether you should rent or buy in your own area with this NY Times calculator. 

Prices disconnected from Gross Domestic Product. The value of housing in the US depends a lot on the value of what the US actually produces. 

Buyers borrowed too much money and cannot pay the interest. Now there are mass foreclosures, and senators want to take $700B your money to pay for Wall Street bonuses for banker friends of Henry Paulson. The Senate's plan is to overpay the banks for bad mortgages, claiming that this will support the housing market. It will not work. Worse, the Senate is trying to keep housing unaffordable. 
To prevent a justified foreclosure is also to prevent a deserving family from buying that house at a reasonable price. The housing bailout bill is designed to keep deserving families OUT of houses, and keep undeserving gamblers in houses they cannot really afford! 

Should taxes and inflation be forced to rise to cover the debts of irresponsible people, no matter how much they over-borrowed or overpaid for a house? Should we cry and pay the debts of people being forced from "their homes" no matter what price they paid or how far it is beyond their actual financial means? If so, go buy the most expensive house you can right now! Borrow as much as you possibly can, knowing that Congress and Bush will force the real repayment obligation onto others, onto people who are living within their means. All you have to do is look sad when threatened with foreclosure and you can keep a more luxurious house than you can really afford! 

Banks happily loaned whatever amount borrowers wanted as long as the banks could then sell the loan, pushing the default risk onto Fannie Mae (taxpayers) or onto buyers of mortgage-backed bonds. Now that it has become clear that a trillion dollars in foolish mortgage loans will not be repaid, Fannie Mae is under pressure not to buy risky loans and investors do not want mortgage-backed bonds. This means that the money available for mortgages is falling, and house prices will keep falling, probably for 5 years or more. This is not just a subprime problem. All mortgages will be harder to get. 

A return to traditional lending standards means a return to traditional prices, which are far below current prices. 


Interest rates increases. When rates go from 5% to 7%, that's a 40% increase in the amount of interest a buyer has to pay. House prices must drop proportionately to compensate. The housing bust still has a very long way to go. 
For example, if interest rates are 5%, then $1000 per month ($12,000 per year) pays for an interest-only loan of $240,000. If interest rates rise to 7%, then that same $1000 per month pays for an interest-only loan of only $171,428. 

Recent lower Fed inter-bank lending rates do not directly affect mortgages rates, nor do extra Fannie or FHA guarantees. The 30-year fixed mortgage rate actually went up after the Fed's rate cut, because rate cuts cause higher inflation. 


Extreme use of leverage. Leverage means using debt to amplify gain. Most people forget that losses get amplified as well. If a buyer puts 10% down and the house goes down 10%, he has lost 100% of his money on paper. If he has to sell due to job loss or an interest rate hike, he's bankrupt in the real world. 
It's worse than that. House prices do not even have to fall to cause big losses. The cost of selling a house is 6%. On a $300,000 house, that's $18,000 lost even if prices just stay flat. So a 4% decline in housing prices bankrupts all those with 10% equity or less. 


Shortage of first-time buyers. High house prices have been very unfair to new families, especially those with children. It is literally impossible for them to buy at current prices, yet government leaders never talk about how lower house prices are good for pretty much everyone, instead preferring to sacrifice American families to make sure bankers have plenty of debt to earn interest on. If you own a house and ever want to upgrade, you benefit from falling prices because you'll save more on your next house than you'll lose in selling your current house. Every "affordability" program drives prices higher by pushing buyers deeper into debt. To really help Americans, Fannie Mae and Freddie Mac should be completely eliminated, along with the mortgage interest deduction. Canada has no mortgage-interest deduction at all, and has a more affordable housing market because of that. 
The government keeps house prices unaffordable through programs that increase buyer debt, and then pretends to be interested in affordable housing. No one in government except Ron Paul ever talks about the obvious solution: less debt and lower house prices. The real result of every "affordability" program is to keep you in debt for the rest of your life so that you have to keep working. Lower house prices would liberate millions of people from decades of labor each. 


Surplus of speculators. Nationally, 25% of houses bought the last few years were pure speculation, not houses to live in, and the speculators are going into foreclosure in large numbers now. Even the National Association of House Builders admits that "Investor-driven price appreciation looms over some housing markets." 

Fraud. It has become common for speculators take out a loan for up to 50% more than the price of the house he intends to buy. The appraiser goes along with the inflated price, or he does not ever get called back to do another appraisal. The speculator then pays the seller his asking price (much less than the loan amount), and uses the extra money to make mortgage payments on the unreasonably large mortgage until he can find a buyer to take the house off his hands for more than he paid. Worked great during the boom. Now it doesn't work at all, unless the speculator simply skips town with the extra money. 

Baby boomers retiring. There are 77 million Americans born between 1946-1964. One-third have zero retirement savings. The oldest are 62. The only money they have is equity in a house, so they must sell. 

Huge glut of empty housing. Builders are being forced to drop prices even faster than owners. Builders have huge excess inventory that they cannot sell, and more houses are completed each day, making the housing slump worse. 

The best summary explanation, from Business Week: "Today's housing prices are predicated on an impossible combination: the strong growth in income and asset values of a strong economy, plus the ultra-low interest rates of a weak economy. Either the economy's long-term prospects will get worse or rates will rise. In either scenario, housing will weaken."


----------



## motion (2 October 2008)

lakemac said:


> motion, with those loans what is your LVR (loan to valuation ratio for the newbies)?




lakemac - Thank you for your questions..  I will write my numbers up and post. sorry I should do this more often. 



pepperoni said:


> The agents are treating you like a fool to get some buzz at their auction.  Id be offended and if you are seriously that into real estate you should know this is an offence for them to underquote that is easily and often reported.
> 
> I have never seen any quote even 10% out in recent years ... its not rocket science for them to get within 10%.
> 
> .




pepperoni, here is a example of place we looked at buying which was way out by over 20%. now just so you know we where in the last 3 bidders and 8k - 10k of the final selling price out of 8 bidders from start to finish. 

This was marketed for around 550k - 600k, but it  sold for 124k over the reserve.
This house still needed about 100k to put this place on the market for rent...This is a good example of how I think the innerwest is still doing well and auctions we have been attending are outperforming what the general market.

http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=29862901&s=nsw&tm=1222913114

Just to compare this house to another one so you did not think the agent was under pricing it here. 

a comparable house a couple of doors up which was liveable  great floor boards big rooms and could have been rented the next day for around $600pw  went for  $670k around 6 months ago...

Now thats a big difference.... so I guess realestate agents are doing this and this is not the only example around...


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## theasxgorilla (2 October 2008)

motion said:


> This was marketed for around 550k - 600k, but it  sold for 124k over the reserve.
> This house still needed about 100k to put this place on the market for rent...This is a good example of how I think the innerwest is still doing well and auctions we have been attending are outperforming what the general market.
> 
> http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=29862901&s=nsw&tm=1222913114




Very interesting motion.

Where is Glebe btw?   I don't know Sydney that well...what is the status/demographic of the suburb?


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## aleckara (2 October 2008)

theasxgorilla said:


> Very interesting motion.
> 
> Where is Glebe btw?   I don't know Sydney that well...what is the status/demographic of the suburb?




Glebe is very close to the Sydney CBD, at the university end of town. You have USYD and UTS nearby, and you are walking distance to the city.

These areas will always be the absolute last areas to be really affected by the downturn. Poorer homes (i.e Western Sydney) will be affected first. After a number of foreclosures due to the loans at the start of the boom, and if the housing sector causes banks pain only them IMO will we see any real pain near the CBD, and even then not by much unless we have debt deflation occuring (and while it may be a chance I don't see it nearly as likely in Australia as the US - at this stage the mining boom still has some legs). With petrol prices high, and travel times minimised these areas will always be at a premium.

Not a reflection of the market as a whole. It is all about location with real estate.


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## pepperoni (2 October 2008)

motion said:


> l
> This was marketed for around 550k - 600k, but it  sold for 124k over the reserve.




550 - 600 when one down the road just went for $670???? 

Even 670 is absurd ... christ you have a similar property to those in paddington with easily comparable amenity for 30% less??????!!!!!  Christ my friend in glebe walks to the cbd every morning in around 12 mins!!!!!!!

In fact Id say 670 was a rare bargain ... in this sort of market they come up from time to time (not every time) and you need to be ready to buy when they do ... as i say Ill buy tomorrow id the bargain comes up on a place I like.

I had a friend with a semi type place behind the morgue with no parking that was worth not much less than 500k ten years ago!

IMO all this proves is that inner west is absurdly cheap for the convenience and you and your agent need to be more realistic with your valuations.


----------



## pepperoni (2 October 2008)

Just one other thing .... if the place has historic charm potential (federation/victorian) add at least 10%.  A property with a federation face in mosman will go MUCH higher than the same house with a 70s facade.

I saw a true derelict but large federation and a decent block go for $5m in the boom.

Also land size ... an extra 10% land can sometimes mean 10% extra price.

Im sure you know all this but thats a nice historic home with "good bones" layout and a huge rear yard!!!


----------



## pepperoni (2 October 2008)

.... and just because Im intrigued and not up to date with the area ... dont you think after spending your 100k that the place would be worth 1m???  Any man and his dog would do this reno for 20% return.

If not how much would a modernised revamp of it be worth?

And finally ... that place doesnt need a DA or structural just a reno ... Ive done that to a whole house with a pool for 20k.

50k self managed should get the whole place nice with new bathrooms and kitchen!


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## gfresh (2 October 2008)

lol, pepper is pissed he missed out  

Looks nice, plenty of character, good location, worst house in a good street, yada. Looks only needs a repaint and some basic maintenance (from the photos anyhow).


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## pepperoni (2 October 2008)

aleckara said:


> These areas will always be the absolute last areas to be really affected by the downturn. Poorer homes (i.e Western Sydney) will be affected first. After a number of foreclosures due to the loans at the start of the boom, and if the housing sector causes banks pain only them IMO will we see any real pain near the CBD, and even then not by much unless we have debt deflation occuring (and while it may be a chance I don't see it nearly as likely in Australia as the US - at this stage the mining boom still has some legs). With petrol prices high, and travel times minimised these areas will always be at a premium.




Agree 100%.

And if 600k terraces are the glebe market now Id say it cannot go down from there.  $600k is a 2 bedroom unit in many places including some places 30 mins from the city!!!!!


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## pepperoni (2 October 2008)

gfresh said:


> lol, pepper is pissed he missed out
> 
> Looks nice, plenty of character, good location, worst house in a good street, yada. Looks only needs a repaint and some basic maintenance (from the photos anyhow).




Gutted is more the word  ... I wanna see this place for 670!!!

Seriously going onto domain now and moving to glebe if I can rent a tearrace for $600 pw.


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## YChromozome (2 October 2008)

xoa said:


> Property prices fell 5.7% in Perth in last month alone. Resources boom, where art thou?
> 
> http://www.watoday.com.au/wa-news/p...silient-despite-price-fall-20080930-4ra8.html




It's interesting that the above article states "Perth was one of just two state capitals - along with Sydney - to record a fall in prices in August." So according to the article average house prices in Perth fell 6.53%.

The ABC runs the following article Property prices slump which states "House prices in Hobart fell 7.8 per cent for the month[August], with the median price dropping to $300,000"

Quite possibly house prices have turned and turned quite dramatically in many states.


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## chops_a_must (2 October 2008)

YChromozome said:


> It's interesting that the above article states "Perth was one of just two state capitals - along with Sydney - to record a fall in prices in August." So according to the article average house prices in Perth fell 6.53%.



A lot of stuff on the market that can't sell in Perth seemingly...


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## wayneL (2 October 2008)

Latest figures out in the UK prove that house prices only ever go up</sarcasm>



> UK house prices fall most on record
> House prices are falling at the fastest annual rate on record, according to the latest survey from the Nationwide Building Society.
> 
> By Jamie Dunkley
> ...


----------



## robots (2 October 2008)

hello,

http://www.theage.com.au/articles/2008/10/02/1222651222638.html

i hope she got an uzi, armoured humvee, sniper rifle, 9mm with lazer, a couple of pitt bull's in the yard because you need them in that wak country

kids rollin with 45's in their pockets

thankyou
robots


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## dhukka (2 October 2008)

wayneL said:


> Latest figures out in the UK prove that house prices only ever go up</sarcasm>




Picture tells a thousand words. It shold be noted that prices have only returned back to early 2006 levels which indicates there is a lot more to come.


----------



## pepperoni (2 October 2008)

robots said:


> hello,
> 
> http://www.theage.com.au/articles/2008/10/02/1222651222638.html
> 
> ...




Im expecting to see these $1 houses around inner sydney soon .. Im gonna buy a few thousand of them and sell them when they get back to the $1.20 mark for a tidy profit. :


----------



## motion (2 October 2008)

pepperoni said:


> 550 - 600 when one down the road just went for $670????
> 
> Even 670 is absurd ... christ you have a similar property to those in paddington with easily comparable amenity for 30% less??????!!!!!  Christ my friend in glebe walks to the cbd every morning in around 12 mins!!!!!!!
> 
> ...




I think you need to do your home work the same place in paddington is around 1.3 million... I know cause I have been to many auctions... 

The house sold for $698k which was still a good price but with 150k to get it up to scratch you are well into a reno house which will give you a quicker return on your money.... which I sure you understand..

pepperoni I guess you do not know the inner west market as this was not a steal... as there are many places like this.. Just get into the market and I will see you at the auctions...

But back to the point to this chat, this was over 10%- 20% of what it was valued at ... and this is something you said would never happen...


----------



## Glen48 (2 October 2008)

A lot of money to out lay for a long term return and a lot of risk as well better of with Starbucks shares


----------



## motion (2 October 2008)

theasxgorilla said:


> Very interesting motion.
> 
> Where is Glebe btw?   I don't know Sydney that well...what is the status/demographic of the suburb?




Glebe is 5km from the harbor bridge... 3km from the city I nice walk if you got 40 minutes... It's middle class... which some nice $ 2 - $ 5 million homes around... it's changed a lot over the last 5 years but well worth a look for it's next to the UNI... great rental return....


----------



## pepperoni (2 October 2008)

motion said:


> I think you need to do your home work the same place in paddington is around 1.3 million... I know cause I have been to many auctions...
> 
> The house sold for $698k which was still a good price but with 150k to get it up to scratch you are well into a reno house which will give you a quicker return on your money.... which I sure you understand..
> 
> ...




No i said you and your agents were valuing too low and everything you have said since confirms it.  You are talking redfern prices in glebe.

150k will just about build a terrace ... you must be extending out back with that money.

But whatever ... back to my question, what would it be worth after you did your reno?


----------



## motion (2 October 2008)

pepperoni said:


> Just one other thing .... if the place has historic charm potential (federation/victorian) add at least 10%.  A property with a federation face in mosman will go MUCH higher than the same house with a 70s facade.
> 
> I saw a true derelict but large federation and a decent block go for $5m in the boom.
> 
> ...




The thing I look for is return I do not want to borrow or have to pay this off... I want the return on the place.... hence the reason I want a 3-4 bedroom near a uni near the city... which people can afford... with not much over head for me...

I'm very handy and this is how I make my money.... 

Plus I love old places... I love something with a story... Mosman is very different to the inner west.... thats like talking about apples and oranges...Hence the reason I'm giving you examples.. so you can understand...


----------



## theasxgorilla (2 October 2008)

motion said:


> But back to the point to this chat, this was over 10%- 20% of what it was valued at ... and this is something you said would never happen...




Ties in with my earlier point about why it's impractical and ridiculous to mark property to market based on valuations.


----------



## motion (2 October 2008)

pepperoni said:


> No i said you and your agents were valuing too low and everything you have said since confirms it.  You are talking redfern prices in glebe.
> 
> 150k will just about build a terrace ... you must be extending out back with that money.
> 
> But whatever ... back to my question, what would it be worth after you did your reno?




it's a catch 22, the agents might value to low,But I think they where spot on but due the the limited housing for good return people are jumping on these places to make some money during the boom... 

After all our research an asking an independent agent for a value once we did the renos, it would be about 900k-950k... and about $650-$700 per week in rent... 

And just if it as a boom I'm sure you would hit the million mark give the size of the house and it's location... but that's just my thoughts...


----------



## motion (2 October 2008)

theasxgorilla said:


> Ties in with my earlier point about why it's impractical and ridiculous to mark property to market based on valuations.




And this is a good point and why most banks want to send a valuer out to a place once you have bought it... because they think that's market value...


----------



## pepperoni (2 October 2008)

motion said:


> The thing I look for is return I do not want to borrow or have to pay this off... I want the return on the place.... hence the reason I want a 3-4 bedroom near a uni near the city... which people can afford... with not much over head for me...
> 
> I'm very handy and this is how I make my money....
> 
> Plus I love old places... I love something with a story... Mosman is very different to the inner west.... thats like talking about apples and oranges...Hence the reason I'm giving you examples.. so you can understand...




????

How can you compete then????   The median price for the area is 850 down 2% in 6 months ... It must be worth alot more than that with your rolls royce reno and extension?  You are bound to get smoked by potential owner occupiers and developers with your approach.

But you could have done a smart simple reno for 20k and got OVER 4% return at 700k.

So again your valuations dont ring true which could lead to alot of wasted time as an auction rent a crowd.


----------



## motion (2 October 2008)

pepperoni said:


> ????
> 
> How can you compete then????   The median price for the area is 850 down 2% in 6 months ... It must be worth alot more than that with your rolls royce reno and extension?  You are bound to get smoked by potential owner occupiers and developers with your approach.
> 
> ...




You are welcome to your thoughts but do not piss in my pot, I gave you examples and the correct info.. to show you what I was referring to.............If you think you can do it better and cheaper then go for it... but do not judge me or my reno designs without knowing what you are going on about....


----------



## pepperoni (2 October 2008)

motion said:


> You are welcome to your thoughts but do not piss in my pot, I gave you examples and the correct info.. to show you what I was referring to.............If you think you can do it better and cheaper then go for it... but do not judge me or my reno designs without knowing what you are going on about....




No, you said this was a high price but it wasnt ... it was 150k below area median that has already fallen 2% in the last 6 months. 

Then you said you have no idea what its worth renovated as you buy for rent return which disqualifies you from calling prices cheap or exy really. 

Its also absurdly flawed buying practice (ie why buy over market for good yeild as you will get nailed if you want or need to sell short term AT MARKET).

Lastly, that place will rent for well over 700k renovated which would beat most rent returns... so the fact you didnt buy and are saying its exy becomes bizzare. 

And if you feel like you pocket is being pissed in, its only to the extend you have pissed in ours by doing a chicken little calling property price surges on the basis of this nonsensical example, and in the face of all reports showing falls!


----------



## robots (3 October 2008)

hello,
<deleted>
thankyou
robots


----------



## Mofra (3 October 2008)

gfresh said:


> Excellent read on the way it will play out.
> 
> http://www.businessspectator.com.au/bs.nsf/Article/Property-will-suffer-JXV9B?OpenDocument&src=mp
> 
> *Sorry to property bulls, it involves economics .. you've probably tuned out already.*



Hmmm... thought troll posts were being deleted from this thread...


----------



## pepperoni (3 October 2008)

motion said:


> After all our research an asking an independent agent for a value once we did the renos, it would be about 900k-950k... and about $650-$700 per week in rent...




I must have missed this post ... but a 100k gross profit on a terrace reno is not a bad little profit.

Rent with a good yield and sell whenever you want for a profit.  

Sound cheap to me but I guess this quarters' numbers will be the best indication of boom or bust.


----------



## robots (3 October 2008)

hello,

just caught on the news the decreases on the BRW rich list,

twiggy down 4bil,

packer down 900mil

and guess what, Mr Lowy down 500mil, yes Mr Lowy the new colonel of australia

how can that be? isnt all property on a massive downward trend, valuations been smashed, commercial all fallen by the wayside

good things doing well,  

clearly the results are showing how well RE is holding up

thankyou thankyou
robots


----------



## numbercruncher (3 October 2008)

> good things doing well





Hi Robi ....


examples please .....

All I can find these days is Bear food !


----------



## robots (3 October 2008)

hello,

everywhere man, go and get the SRO from the state government, the ABS has stats on how well things travelling,

beej and motion posted results here, very selective reading as usual

thankyou
robots


----------



## robots (3 October 2008)

robots said:


> hello,
> 
> just caught on the news the decreases on the BRW rich list,
> 
> ...




hello,

also check the highlighted parts

thankyou
robots


----------



## numbercruncher (3 October 2008)

So just for the record, amoungst this global economic turmoil, you are saying that on Average RE in Australia is still appreciating at a decent clip ??


----------



## robots (3 October 2008)

hello,

wanted properties are doing well, lets say 4-5% minimum for the record

thankyou
robots


----------



## Pommiegranite (4 October 2008)

robots said:


> hello,
> 
> wanted properties are doing well, lets say 4-5% minimum for the record
> 
> ...




and unwanted properties are now doing terribly. The thing is, more and more properties are becoming unwanted


----------



## theasxgorilla (4 October 2008)

http://news.theage.com.au/national/agent-fined-20000-for-underquoting-20081004-4tnj.html

Maybe you still can't believe those artificially low prices on realestate.com.au after all.


----------



## Pommiegranite (4 October 2008)

theasxgorilla said:


> http://news.theage.com.au/national/agent-fined-20000-for-underquoting-20081004-4tnj.html
> 
> Maybe you still can't believe those artificially low prices on realestate.com.au after all.




I would say it tells us more about the desperate measures that RE agents are now resorting to.

It reminds me of stories I've heard in the UK about RE agents putting 'Sold' boards up outside their PPORs!


----------



## Aussiejeff (4 October 2008)

theasxgorilla said:


> http://news.theage.com.au/national/agent-fined-20000-for-underquoting-20081004-4tnj.html
> 
> Maybe you still can't believe those artificially low prices on realestate.com.au after all.




Could also be an indication that agents are finding it hard to shift properties at the inflated price ranges that VENDOR'S want - rather than at what they believe to be reasonable BUYER'S price ranges that might eventuate in an an actual sale.

This one got caught out. I wonder how many others are getting by with this tactic under the current economic conditions?

Let's face it - RE agents rely totally on turnover. If turnover drops, it is no surprise to me that some will try just about anything to bump it up for their own benefit.

Haha Pommiegranite - you beat me to the key....


----------



## robots (4 October 2008)

hello,

yes yes what another great day in australia today,

express delivery,

fantastic 68% clearance rate for melb auctions, once again the strength of RE is prevalent, through all the turmoil and doom and gloom that goes on day to day 

no fancy companies, no fancy people running companies just plain old vanilla bricks and mortar killing it as usual, ha ha

and you read it all here 18mths ago, ha ha

by tuesday re owners will also get the letter saying the costs just got cheaper as well

hang on to those properties people, take them off the market, sit tight and hang on for the ride man

thankyou
robots


----------



## pepperoni (4 October 2008)

In sydneys north at least, there is no such underquoting.

If savy buyers dont report offenders other agents ALWAYS get wind of it and ALWAYS report it, and the underquoters have all been taught their lessons.


----------



## theasxgorilla (4 October 2008)

pepperoni said:


> In sydneys north at least, there is no such underquoting.
> 
> If savy buyers dont report offenders other agents ALWAYS get wind of it and ALWAYS report it, and the underquoters have all been taught their lessons.




It's the way it ought to be.  No fun for anybody with such intentional deception.  I agree with the others, a sign of desperation.  But to extrapolate that to the market as opposed to assuming that this particular real estate shop could have been poorly operated, is a bit presumptuous.

Who were desperate to sell, the vendors or the agents???


----------



## CamKawa (5 October 2008)

Looks like the media are starting to do a U-turn on migration.

"Budget projections for a big rise in migration would also have to be reviewed"

Source: http://www.news.com.au/business/money/story/0,25479,24447707-5016110,00.html


----------



## gfresh (5 October 2008)

robots said:


> fantastic 68% clearance rate for melb auctions, once again the strength of RE is prevalent, through all the turmoil and doom and gloom that goes on day to day




Not so pretty up here, Brisbane last week, 32.6% (86 total)
Perth also: 7.7% (13 auctions, only 1 sale!)
Sydney: 49.8%

Melbourne is actually best in the country at the moment.



> A SHOCK earnings downgrade from industry leader Stockland Group, issued only two months after its latest full-year result, has sparked fears of a second round of profit warnings from the troubled listed property trust sector as it staggers under the global financial meltdown.




Listed property trusts starting to profit downgrade..

http://business.theage.com.au/business/stockland-downgrade-chills-sector-20081003-4tjr.html?page=1


----------



## pepperoni (5 October 2008)

gfresh said:


> Melbourne is actually best in the country at the moment.




Ive said before melb probably will do better due to migration.

Just about the only migrants coming with money and an ability to support house prices are the poms.  

Go on to a pom expat forum ... by and large the poms WITH AN INTENTION TO BUY are heading for melb due to its better prices, good climate by pom standards, and beaches (esp geelong way).

You only need a couple of hundred of this type of migrant to give some support to prices.

And I cant argue with their reasoning for heading to melb  ... in fact I think the ones that dont do it and stay in the UK are mad!


----------



## Mofra (5 October 2008)

robots said:


> fantastic 68% clearance rate for melb auctions, once again the strength of RE is prevalent, through all the turmoil and doom and gloom that goes on day to day



2% below a "reasonable" clearance rate. Inner suburbs all above 70%, but some fudged results out there as per REIV's "withdrawn" pile which even their representatives can't quantify ("a variety of reasons" was the best excuse they gave me). 

Would hate to be holding anything further away from the CBD


----------



## CamKawa (5 October 2008)

gfresh said:


> Melbourne is actually best in the country at the moment.



Says who, the REIV? Enzo re-jigged the clearance rate figures 2-3 weeks ago in order to give a more favourable results. I think we have to be careful when comparing Melbourne to the rest of the country. If Melbourne could export Enzo to NSW who knows how high Western Sydney prices might be now?


----------



## CamKawa (5 October 2008)

pepperoni said:


> Ive said before melb probably will do better due to migration.



Victoria's migration rate ending March this year was only 1.7%, it's hardly leading the Migration charge, but maybe there's more specuvestors in that than say WA's 2.6%? 
Source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/3101.0

Remember Melbourne has one little character that may make all the difference.


----------



## gfresh (5 October 2008)

lol.. enzo



			
				camkawa said:
			
		

> Says who, the REIV?




RP data.. no more credible I guess, but if we're going to use anything  (attached)..

Should be mentioned: Grand Final weekend in Melbourne last weekend, not too many auctions going on.


----------



## robots (5 October 2008)

hello,

what a hard nut, 

yeah great results, the spring season warming up with people not putting the properties on market

sit tight everyone, great how nothing is credible but everything out of others mouth is the word,

thankyou
robots


----------



## pepperoni (5 October 2008)

CamKawa said:


> Victoria's migration rate ending March this year was only 1.7%, it's hardly leading the Migration charge, but maybe there's more specuvestors in that than say WA's 2.6%?




Its not the rate but quality of migrants.

As I said LOTS of those with (a) MONEY and (b) INTENTION TO BUY seem to be heading straight for melb.

Has everything including big city professional job market but for much less money than syd. 

Lots of threads on buying in melb/geelong on the british expat forum.

I said it about 3 months ago ... seems to be the only credible explanation for the huge clearance discrepancy?


----------



## Knobby22 (5 October 2008)

pepperoni said:


> Its not the rate but quality of migrants.
> 
> As I said LOTS of those with (a) MONEY and (b) INTENTION TO BUY seem to be heading straight for melb.
> 
> ...




I agree however if we do go onto recession and unemployment rises, the first thing that will be reduced will be immigration.


----------



## Aussiejeff (6 October 2008)

Having sort of weathered the last couple of plummets in the share market, the RE Index (XPJ) is now having it's turn to be smashed - down 6.3% across the board today at 1.30pm.... I guess rumours of cuts to immigration must be getting factored in??

Cheers,

aj


----------



## Lucky_Country (6 October 2008)

Young are going overseas,Temp visas expiring, unhappy migrants going home.
Housing unaffordable unemployment rising, fixed rate mortgages expiring banks tightening lending.
Downtime and a period of consolidation for housing imo.


----------



## robots (6 October 2008)

hello,

gee amazing the bears colonel Mr Steven Keen is calling for 0% interest rates,

man that would be fantastic, even less to keep a roof over my head,

some people need to rein in there opinions,

thankyou
robots


----------



## MrBurns (6 October 2008)

robots said:


> hello,
> 
> gee amazing the bears colonel Mr Steven Keen is calling for 0% interest rates,
> 
> ...




0% + bank margin 8% + fees 3% = 11%


----------



## robots (6 October 2008)

hello,

http://www.theage.com.au/national/auction-clearance-rates-healthy-reiv-20081006-4uso.html

the man from Melbourne, life just keeps rollin' on

fantastic

thankyou
robots


----------



## skyQuake (6 October 2008)

MrBurns said:


> 0% + bank margin 8% + fees 3% = 11%




rofl


----------



## Mofra (6 October 2008)

robots said:


> http://www.theage.com.au/national/auction-clearance-rates-healthy-reiv-20081006-4uso.html






> Melbourne recorded the strongest growth in property prices in the June quarter compared to other capital cities, *with the median up 4.9%* to $451,000, according to the REIV.
> 
> The median dropped by 2.1% in Sydney for the second quarter in a row.



Seem to be a few Melbourne property owners feeling ok about the market, Sydney bears/observers avoiding property. 

Looks like for all the hundreds of posts of conjecture on this (and other) threads, both groups have been right so far


----------



## numbercruncher (7 October 2008)

See the final bastion of the Australian RE permabull is going down the gurgler ......




> AUSTRALIA has experienced its biggest annual exodus on record with 76,923 people leaving the country permanently in 2007-08, a new report shows.
> And it appears the skills crisis is only set to worsen with the report showing almost half of those who left Australia permanently were in skilled jobs.




http://www.news.com.au/travel/story/0,26058,24458448-5014090,00.html

So boring being right all the time !!


----------



## robots (7 October 2008)

numbercruncher said:


> See the final bastion of the Australian RE permabull is going down the gurgler ......
> 
> 
> 
> ...




hello,

what a laugh number, 

even more great news for current skilled workers then Number

here we go again lads, BANG BANG on the shock exchange

thankyou
robots


----------



## numbercruncher (7 October 2008)

Morning Robi !

Yes carnage on the X change ! gotta be good for house prices ?

Hard to dodge all the forsale signs in QLD these days ...... quite an eyesaw, these sellers should have to compensate us hard working tax payers for the inconvienience !


Cheers.


----------



## theasxgorilla (7 October 2008)

numbercruncher said:


> See the final bastion of the Australian RE permabull is going down the gurgler .....




For me it's starting to look mighty cheap!

Based on currency movements alone house prices have fallen about 10%...and if I can get one of those nifty ex-pat loans financed in EUR at ECB rates I reckon I'll be positively geared from day one.

Australia is _on sale_.


----------



## CamKawa (7 October 2008)

numbercruncher said:


> See the final bastion of the Australian RE permabull is going down the gurgler ......
> 
> http://www.news.com.au/travel/story/...014090,00.html



The last delusional saving grace for the permabulls has come to end. Where to now for them?


----------



## pepperoni (7 October 2008)

Has anyone else notices robots spam monopost has changed from "house prices will never fall" to "house prices wont fall as much as the shock market".

This is all the evidence I need that the property outlook in Aus is decidedly less than it was .


----------



## pepperoni (7 October 2008)

theasxgorilla said:


> For me it's starting to look mighty cheap!
> 
> Based on currency movements alone house prices have fallen about 10%...and if I can get one of those nifty ex-pat loans financed in EUR at ECB rates I reckon I'll be positively geared from day one.
> 
> Australia is _on sale_.




Just wait - if they slash our rates its gonna be a 2 for 1 sale.


----------



## pepperoni (7 October 2008)

numbercruncher said:


> See the final bastion of the Australian RE permabull is going down the gurgler ......
> 
> 
> 
> ...




Cant blame them either ... these are the smart ones that realise there is more to life than spending nearly every last cent to buy a roof over your head.

What crisis?


----------



## Temjin (7 October 2008)

pepperoni said:


> Has anyone else notices robots spam monopost has changed from "house prices will never fall" to "house prices wont fall as much as the shock market".
> 
> This is all the evidence I need that the property outlook in Aus is decidedly less than it was .




This is all the evidence I need that we are close to pass the "denial" stage of the cycle.  What's the next stage? Anger right?


----------



## CamKawa (7 October 2008)

Temjin said:


> This is all the evidence I need that we are close to pass the "denial" stage of the cycle.  What's the next stage? Anger right?



According to this chart it's fear.


----------



## gfresh (7 October 2008)

Temjin said:


> This is all the evidence I need that we are close to pass the "denial" stage of the cycle.  What's the next stage? Anger right?




Aren't we already touching on that stage? blaming the RBA for not lowering rates, or not fast enough. Blaming the banks seems super popular at the moment.


----------



## Tysonboss1 (7 October 2008)

Well afters years of commentary on ASF predicting Massive property price falls, It seems to be the share market that is shot to pieces.

I for one am glad that I never listened to the Mob and sold all my property and ploughed the proceeds into my share portfolio.

My share portfolio is looking a bit like bonnie and clydes get away car, shot to pieces and ozzing red.


----------



## pepperoni (7 October 2008)

1% rate cut ... should suck a few more people into 30 year mortgages based on 30 full years of bountiful hay making.


----------



## Temjin (7 October 2008)

Tysonboss1 said:


> Well afters years of commentary on ASF predicting Massive property price falls, It seems to be the share market that is shot to pieces.
> 
> I for one am glad that I never listened to the Mob and sold all my property and ploughed the proceeds into my share portfolio.
> 
> My share portfolio is looking a bit like bonnie and clydes get away car, shot to pieces and ozzing red.




That's strange. I don't recall "the Mob" telling you to sell all your properties AND put it ALL into the share market. You must be referring to a different mob I presumed.


----------



## Mofra (7 October 2008)

Temjin said:


> That's strange. I don't recall "the Mob" telling you to sell all your properties AND put it ALL into the share market. You must be referring to a different mob I presumed.



Probably referring to the mob that was telling everyone just to panic sell ASAP(even if you hold a positively geared property & even if you would trigger a massive CGT event by doing so) 

100 points, smiles all round


----------



## gfresh (7 October 2008)

Mofra said:


> 100 points, smiles all round




For some  I'm peeved I'm about to earn a big whack on the interest I earn each week, hassle free. 

May have to consider the property merry-go-round myself soon than I thought.. sigh. 

Woohoo! house prices to $1m each! party party party! :


----------



## Mofra (7 October 2008)

gfresh said:


> I'm peeved I'm about to earn a big whack on the interest I earn each week, hassle free.



The government is hell-bent on punishing savers (ie responsible people), annoyed the hell out of me for a long time until I joined the dark side or (ahem) "responsible gearers".

Still rent though - paying non-deductable interest is just stupid.


----------



## pepperoni (7 October 2008)

Mofra said:


> Still rent though - paying non-deductable interest is just stupid.




Interest on PPOR isnt really deductable.

On top of that you need to find properties you want to own forever ... if you can great for you .... otherwise rent is a fraction of interest and transaction cost.


----------



## Mofra (7 October 2008)

pepperoni said:


> *Interest on PPOR isnt really deductable.*



That is also my understanding; I rent where I live but hold investment properties (actually, I like living in older places that have higher maintenance bills, so having a landlord/property manager a phone call away comes in quite handy sometimes). Put simply, the cost of renting my home is cheaper than renting the money (and paying for maintenance) to pay for it. 



pepperoni said:


> *On top of that you need to find properties you want to own forever* ... if you can great for you .... otherwise rent is a fraction of interest and transaction cost.



Again, totally agree. When you consider how long most people hold property, rushing just to "get into the market" is just plain silly, as would selling into a panic if you can comfortably hold/are positively geared.


----------



## pepperoni (7 October 2008)

Mofra said:


> That is also my understanding; I rent where I live but hold investment properties (actually, I like living in older places that have higher maintenance bills, so having a landlord/property manager a phone call away comes in quite handy sometimes). Put simply, the cost of renting my home is cheaper than renting the money (and paying for maintenance) to pay for it.
> 
> 
> Again, totally agree. When you consider how long most people hold property, rushing just to "get into the market" is just plain silly, as would selling into a panic if you can comfortably hold/are positively geared.




My last owned house had a leaky tap that I put off sorting for months ... this house they get sorted in 24hrs with one email.  And free which was nice when hot waer went.

As for buying, last place I bought to live in I hated within days ... lucky it was a reno project certain to make money or it would have been long term misery.

Last house I almost bought was near the zoo .. it was a tranquil cul de sac  all week and then a parking lot from early sat and sun  Only found out later but was glad I missed it.

I always joke how you get a better chance to check out a 12k car with long lonely test drives than you do with the best house being rushed by other buyers and agents.

Next place I buy Im camping in the front yard for a week.


----------



## Mofra (7 October 2008)

pepperoni said:


> I always joke how you get a better chance to check out a 12k car with long lonely test drives than you do with the best house being rushed by other buyers and agents.
> 
> Next place I buy Im camping in the front yard for a week.



Reminds me of the couple that bought a "shell" penthouse in Eureka Tower (Melbourne Southbank) for $6m. They actually slept in the shell overnight to see if they liked it first. Amazing how many people buy a house only to find little "quirks" after they move in.

And agents used to look at me funny when I turned every light in the house on


----------



## robots (7 October 2008)

hello,

yes yes crew here we go, what another fantastic day in australia,

had to pull the ironhorse up when i heard the news just to double check what the RBA done,

so far we have:

high unemployment - nowhere to be seen

high interest rates - just been smashed by 100 basis pts, man another nail in the coffin,

any questions fire away homies

thankyou
robots


----------



## robots (7 October 2008)

hello,

here we go , here we go:

http://www.news.com.au/heraldsun/story/0,21985,24459893-661,00.html

westpac already out there with 80 basis point cut, man what a day

automatic rent reduction just for getting up and enjoying the day

aussie to move 75 pts as well,

what a day, nirvana

thankyou
robots


----------



## Go Nuke (7 October 2008)

Yay 1% drop in rates from the Reserve Bank!

Shame those greedy bastards at the banks wont pass the full rate on.

Though no matter what the interest rate is, housing prices still need to fall to a more affordable level for first home buyers and those on a "average" income.
Ah well,using the tight labour market will help lower income earners negotiate for better pay in order to get into their own home...or the employer can risk losing an experienced worker for failing to negotiate.

Its simple maths really, just take the average income to look at what people can safely afford and i beleive house prices are still well out of reach.


----------



## pepperoni (7 October 2008)

robots said:


> automatic rent reduction just for getting up and enjoying the day




ok that was pretty funny I guess.


----------



## MrBurns (7 October 2008)

Interest rates may be down but you'd have to be an idiot to buy into this market.


----------



## singlefished (8 October 2008)

gfresh said:


> For some  I'm peeved I'm about to earn a big whack on the interest I earn each week, hassle free.




Yup - I'm none too impressed at the income I'll be missing out on too....

However, might not be so bad - Lateline Business had some guy from Westpac on talking about how the deposit market is very competitive at this time so it's unlikely they will be slashing deposit rates by the same amount as mortgage rates.

I'm guessing they'll drop deposit rates by 0.5%.

Guvmnt should be taxing savers less to encourage more into saving. This would benefit the banks 3 fold - initially, by current savers retaining more in the saving account by paying less tax, secondly, by the subsequent flow of new funds/depositors swelling their coffers, and thirdly, more deposits at home means less borrowing from the international markets (30% of banking funds are sourced from the global market)

Todays rate cut is slightly worrying though - certainly paints a grim picture of the future by highlighting the RBA's lack of confidence in avoiding recession. Certainly not good for house prices when things do turn down....


----------



## gfresh (8 October 2008)

I think the RBA would have definitely been looking at advanced figures for the latest ABS housing finance, as one of the justifications for a full 1% cut... They are out today. 



> http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0?OpenDocument
> 
> NUMBER OF DWELLING COMMITMENTS
> 
> ...




If people aren't borrowing to fund the banks largest sources of revenue, then we're going to see problems. I don't think anybody will be whining about "record bank profits" when they see the profit figures next year. They're likely to be cut quite significantly. 

I've whipped up a quick and dirty chart below based on the data. Each of the heavy falls in finance commitments has been accompanied soon after by periods of falling, or otherwise very flat housing markets (on average) - early 80's, early 90's, mid 90's, and smaller periods in late 1999 and in 2004.

I mentioned this last month, but this is the first time we've actually seen a lower-low, this is quite significant. Even in the worst periods, we've seen a higher-low. 

It may even be possible to overlay a bank's share price on top, I can bet you they will correspond to bank profitability as well.


----------



## pepperoni (8 October 2008)

gfresh said:


> I think the RBA would have definitely been looking at advanced figures for the latest ABS housing finance, as one of the justifications for a full 1% cut... They are out today.
> 
> 
> 
> ...




Interesting stuff!


----------



## xoa (8 October 2008)

More bad news for permabulls - commodity prices are plummeting. The spot iron ore price has fallen 38% in a single month. Coal, zinc, copper and nickel have taken a hammering too. 

"China will save us!"


----------



## robots (8 October 2008)

hello,

thanks for reminding us of those stats XAO, so the prop data is looking even more fantastic,

is there anything else that can be brought up as to support the ridiculous claims you get on the RE threads,

the shock exchange, commodities falling to pieces, and RE all the way to the top,

the rich vs. the poor on and on, now its on against the banks, keep it coming 

thankyou
robots


----------



## Knobby22 (8 October 2008)

gfresh said:


> I think the RBA would have definitely been looking at advanced figures for the latest ABS housing finance, as one of the justifications for a full 1% cut... They are out today.
> 
> 
> 
> ...




Amazing chart gfresh.
You should sell it to Alan Kohler.


----------



## robots (8 October 2008)

hello,

this is the great thing, 

no loans being taken up, new construction is being smashed

i hope it stays low as, wonderful times ahead in this country with those holding real assets that have real returns going to kill it,

with a IR drop of say 1% over the past 2-months and MASSIVE RENT INCREAES all of a sudden those holding have had a huge bonus,

any questions fire away

another day in utopia 

thankyou
robots


----------



## chops_a_must (8 October 2008)

robots said:


> i hope it stays low as, wonderful times ahead in this country with those holding real assets that have real returns going to kill it,
> 
> with a IR drop of say 1% over the past 2-months and MASSIVE RENT INCREAES all of a sudden those holding have had a huge bonus,



Lol, and yeah, go ahead and raise rents on the increasingly unemployed and those with lowering wages and see how you go.

What a crack up.


----------



## xoa (8 October 2008)

robots said:


> hello,
> 
> this is the great thing,
> 
> ...




You think a collapse in loan approvals is good for specuvestors? Your robot relatives in the UK and USA would beg to differ.

We've got 840,000 vacant homes in this country. Now the fabled mining boom is falling to pieces, credit is drying up, and record numbers of Aussies are leaving. Me thinks construction (and prices) could be smashed for a long time to come. All great stuff for ordinary hard working Aussies.


----------



## MrBurns (8 October 2008)

I just saw some absolute brainless tosser from the REINSW (real estate institute) saying that house prices would start their revival this weekend.

The main stream media are useless as well , thank goodness for the ABC.


----------



## Mofra (8 October 2008)

MrBurns said:


> I just saw some absolute brainless tosser from the REINSW (real estate institute) saying that house prices would start their revival this weekend.



I assume he/she has the moral uprightness of our friend Enzo at REIV?


----------



## Glen48 (8 October 2008)

Rents like IR will come down as home owner suckers move in with their parents and rent their houses out or decode to sell before forecloser and putting more homes on the market which will depress the RE prices which put more people under stress who will move in with others and rent a room or like the 80's live in a Caravan in the back yard. 
Then the CDS will have an impact which will put house prices 1970 's level as long as the houses have not been gutted over night for the contents. Home owners will start suing the council over rub down building. the good news XMAS will be here soon


----------



## MrBurns (8 October 2008)

Mofra said:


> I assume he/she has the moral uprightness of our friend Enzo at REIV?




A clone of same, it's a great time to buy real estate no matter whats going on.


----------



## Go Nuke (8 October 2008)

It could just be me but the way Robots posts read sometimes, I think he just gets his kicks out of sounding like some stuck up immigrant who loves rubbing it into hard working "average" people who are helping him on his way to wealth through his investments  

Bring on changes to negative gearing to stop the rich investors getting richer I say! 

While I think of it,what happened to house prices during the last recession?

Agree with u Must a Chops

+1 XOA

Thank you


----------



## robots (8 October 2008)

Go Nuke said:


> It could just be me but the way Robots posts read sometimes, I think he just gets his kicks out of sounding like some stuck up immigrant who loves rubbing it into hard working "average" people who are helping him on his way to wealth through his investments
> 
> *Bring on changes to negative gearing to stop the rich investors getting richer I say! *
> 
> ...




hello,

thanks for the kind words go nuke, just reality man

yes can people give us there personal experiences with RE through the last recession,

thankyou
robots


----------



## MrBurns (8 October 2008)

I hope the interest rate drop yesterday doesn't drag too many people back into the property market, this is the property equivalent of a sucker rally.


----------



## MrBurns (8 October 2008)

robots said:


> hello,
> 
> thanks for the kind words go nuke, just reality man
> 
> ...




Just under 40% in the early 90's ? prestige inner city property Melbourne -  this is far far worse.


----------



## robots (8 October 2008)

MrBurns said:


> I hope the interest rate drop yesterday doesn't drag too many people back into the property market, this is the property equivalent of a sucker rally.




hello,

yes, same here Mr Burns

i hope investors en masse stay right out of property, 

thankyou
robots


----------



## robots (8 October 2008)

hello,

my girlfriend had property in Elsternwick and things went quite well, although areas like Mt Eliza got smacked,

did you have property Mr Burns?

thankyou
robots


----------



## MrBurns (8 October 2008)

robots said:


> hello,
> 
> my girlfriend had property in Elsternwick and things went quite well, although areas like Mt Eliza got smacked,
> 
> ...





Just under 40% in the early 90's ? prestige inner city property Melbourne - this is far far worse.

Also had commercial property interests, I got out my partners went bankrupt.


----------



## awg (8 October 2008)

robots said:


> hello,
> 
> this is the great thing,
> 
> ...






dude, I admire your perseverance!

I disclose owning investment property, and I wont be selling.( I hope)

but if you are negative geared things are FAR from rosy.

if you dont mind me asking a personal question, are you (neg geared)?

If you think rent hikes are coming, I would have to disagree.

maybe in the short term, but if the economic **** hits the fan, the capacity to pay will be diminuished.

have you seen how Koreans live in Sydney? hint 8 per unit, brother.

check Rent Assistance rates from Centrelink

best regards


----------



## robots (8 October 2008)

hello,

oh good, what suburb were you in?

thankyou
robots


----------



## Aussiejeff (8 October 2008)

MrBurns said:


> I just saw some *absolute brainless tosser from the REINSW (real estate institute) saying that house prices would start their revival this weekend*.
> 
> The main stream media are useless as well , thank goodness for the ABC.




Shhhh! Be vewwy vewwy quiet, Mr Burns.... that was Wobots Big Bwuvver....

:hide:


----------



## explod (8 October 2008)

MrBurns said:


> I hope the interest rate drop yesterday doesn't drag too many people back into the property market, this is the property equivalent of a sucker rally.




Spot on, I have always known it as a "mugs rally"  It is created to allow the so called wealthy smart money to get out because they missed the first one due to having such a good time on the ealier ones.

I would not want to be holding the bag from about next March next year though, so for all of you who missed the bus earlier in the year there is some time but it will not last long.   

Sorry Robots but I have been down this track a few times before.  However do not dispair, in three years time there is going to be some great property bargains around on the Peninsula for both of us.   I'd keep away from the sea level area though, Greenland in particular is going down the pipe in more ways than one.

Give my regards to your old mate Enzo, a most wonderful ramper he is.

Love it.   Cheers IM very HO of course...Explod

And as they say at Safeway, have a good day


----------



## robots (8 October 2008)

hello,

good to here from explod, hope everybody has a good day 

live in 1 unit and rent 1 unit which is negative geared, i am just a humble building worker just plodding along in life thanks awg,

i was talking about previous rent increases, 

i am sorry explod dear friend but havent we heard all those predictions before, 3 solid years on the previous thread which closed because it go so damn embarrassing for many,

have a good day

thankyou
robots


----------



## MrBurns (8 October 2008)

Let me put it this way, if you are too geared to handle a 50% drop get out while you can.

Just saw Keane on the ABC he also agrees with my view on interest rates.


----------



## pepperoni (8 October 2008)

robots said:


> hello,
> 
> live in 1 unit and rent 1 unit which is negative geared, i am just a humble building worker just plodding along in life thanks awg,




2 Units!?  Building worker?? You would be miles ahead TODAY with 1 if not none.  Have you ever done the math??

Plus those rate hikes must have hurt for the last year or so!

Its quite ironic that this is exactly the sort of speculation that has lead to so many US and now european banks folding and going under!


----------



## pepperoni (8 October 2008)

MrBurns said:


> Let me put it this way, if you are too geared to handle a 50% drop get out while you can.
> 
> Just saw Keane on the ABC he also agrees with my view on interest rates.




Was going to say this to robots ... sell one before the rose coloured glasses stop working!


----------



## MrBurns (8 October 2008)

pepperoni said:


> 2 Units!?  Building worker?? You would be miles ahead TODAY with 1 if not none.  Have you ever done the math??
> 
> Plus those rate hikes must have hurt for the last year or so!
> 
> Its quite ironic that this is exactly the sort of speculation that has lead to so many US and now european banks folding and going under!




Buying 2 units is a great way to go, at the moment though if the gearing is high dont hang around, if not ride it out.


----------



## robots (8 October 2008)

pepperoni said:


> 2 Units!?  Building worker?? You would be miles ahead TODAY with 1 if not none.  Have you ever done the math??
> 
> *Plus those rate hikes must have hurt for the last year or so!*
> 
> Its quite ironic that this is exactly the sort of speculation that has lead to so many US and now european banks folding and going under!




hello,

great posts keep them coming,

and the smacking the shock exchange is receiving must be making many from the rent and invest crowd real happy as well,

i will enjoy the ride and the roof over my head in 30 yrs time as I walk the streets 

thankyou
robots


----------



## Kauri (8 October 2008)

Nearly one in six US homeowners owe more on a mortgage than the home is 
worth, according to the Wall Street Journal.

 n  sobering
...............Kauri


----------



## Lucky_Country (8 October 2008)

Kauri said:


> Nearly one in six US homeowners owe more on a mortgage than the home is
> worth, according to the Wall Street Journal.
> 
> n  sobering
> ...............Kauri




How many australians are in that position or will be soon ?


----------



## Mofra (9 October 2008)

MrBurns said:


> I hope the interest rate drop yesterday doesn't drag too many people back into the property market, this is the property equivalent of a sucker rally.



Doubt it - more likely just save a few of the residents of the outer-suburban back-waters that McMansion fanciers seem to gravitate towards. Who would have thought buy now, pay later Harvey Norman/GE schemes could be so damaging?

Actually drove out to one in NW Melbourne a couple of weeks ago - depressing areas, don't know how people live there.


----------



## robots (9 October 2008)

hello,

good evening fellow australians,

howzat, Aussie Loan is dropping 90 basis pts and Nab has smashed its fixed rate loans,

markets reckon another 75 basis pts coming soon as well, Fantastic

any questions fire away

thankyou
robots


----------



## chops_a_must (9 October 2008)

robots said:


> any questions fire away



How you think no doc, no deposit loans and all other substrates will fair without a MBS and insurance market?


----------



## robots (9 October 2008)

hello,

what a great first up question chops,

most likely they will be tweaked around the edges, I hope that answers your question

thankyou
robots


----------



## awg (9 October 2008)

chops_a_must said:


> How you think no doc, no deposit loans and all other substrates will fair without a MBS and insurance market?




I just asked a similar question in another thread.

who will offer Mortgage Insurance for the less than 20% deposit crew?

with the distinct possibility of 20%+ falls in many areas, my opinion, is that that option will dry up completely.

would you risk it!!  say AIG please. 

for the life of me, I just cant see that as being a risk management winner...and thats what insurance companies do!

So dont need to sell, cause any buyer with funds, who can wait a bit will be saying "maybe I can pick up a REAL bargain in 12 months"


----------



## pepperoni (9 October 2008)

robots said:


> any questions fire away
> 
> thankyou
> robots




1. O seer of st kilda:

Do you think it might be possible that the RBA has seen recent falls in house prices and home loans and is resorting to cuts to soften even larger falls they expect to hit the property market?

2. O buffet of bicycledom:

Do you think the RBA is worried that we may be headed for the same negative equity hell that the IMF has commented on in "advanced markets" like the US and UK?

A correct answer to either of these will be required before futher questions can be asked


----------



## nunthewiser (9 October 2008)

robots said:


> hello,
> 
> good evening fellow australians,
> 
> ...




HI in all honesty do you think that this carrot will encourage a new wave of homebuyers or merely just help bailout those that are doing it tough.

in your own opinion of course
thanks in advance 
a subdividing nun with land for sale to hopefully a brighteyedbushytailed new investor thinking the realestate market is all sunshine and lollipops


----------



## robots (9 October 2008)

pepperoni said:


> 1. O seer of st kilda:
> 
> Do you think it might be possible that the RBA has seen recent falls in house prices and home loans and is resorting to cuts to soften even larger falls they expect to hit the property market?
> 
> ...




hello,

wow looks like its going to be busy night but i dont mind doing it for ASF and fellow ASF members

1. no, aus plodding along nicely and RBA is only concerned about jobs zip else

2. no, we lead the world and are way ahead of US, UK or any other mediocre country that is on this planet

3. answer for nunthewiser: for people looking to buy a home then yesterday, today, last year or any other day is perfect for purchasing

apologies to nunthewiser for including the answer in this super response, trying to get through as many as possible

thankyou
robots


----------



## chops_a_must (9 October 2008)

robots said:


> hello,
> 
> what a great first up question chops,
> 
> ...



Lol.

O RLY?


----------



## nunthewiser (9 October 2008)

robots said:


> hello,
> 
> 
> 3. answer for nunthewiser: for people looking to buy a home then yesterday, today, last year or any other day is perfect for purchasing
> ...





thankyou. i do understand this maybe a busy time for you here.

there is no need to apologise 

have a great evening


----------



## robots (9 October 2008)

hello,

and dont forget, 

if you see people in the street friday remind them all is well, the sun is still shining, the kids are kicking the footy in the street, the coffee still brewing, life in all its glory continue's on

good evening

thankyou
robots


----------



## Glen48 (9 October 2008)

Un employment is starting to go up first sign of a recession.
Aussie owe more than yanks do and are deeper in debt.
Get out of debt now.


----------



## pepperoni (9 October 2008)

Glen48 said:


> Un employment is starting to go up first sign of a recession.
> Aussie owe more than yanks do and are deeper in debt.
> Get out of debt now.




hello

yes imminent strife but "the sun is still shining, the kids are kicking the footy in the street, the coffee still brewing, life in all its glory continue's on"

we should all proceed in ignorant bliss

thank you

*rides off on mongoose bmx*


----------



## Kauri (9 October 2008)

Cheltenham & Gloucester, the home-loans arm of Lloyds TSB, yesterday withdrew some of its mortgage "tracker" deals linked to UK Bank Rate in the wake of the 50bp Bank Rate cut to 4.5%, according to The Times. The newspaper says Nationwide and Abbey are understood to be planning similar moves. ...  mmm.. they are only offered to the punters when rates are rising??  Lets throw them a few more Blns in appreciation  of thier generosity..

Cheers
..........Kauri


----------



## Aussiejeff (10 October 2008)

Hmm.

Valad property developer slammed - shares slump 50% and Gold Coast RE projects mothballed.

Question: If rate cuts give average mortgage holders say, $200mth back in pocket, but plummeting $AUBananBuck causes prices of ALL imported goods (food especially) to rocket over coming weeks so that monthly household shopping bill increases by $300, banks don't cut credit card rates but cut savings rates - how in hell will that make everyone better off?  

Why is everyone dancing in the street over this?


----------



## Glen48 (10 October 2008)

Monday 13/10 night ABC  4 corners has Paul Barry on again over in USA looking at housing. He did a story about 12 mths ago so we can see how things have gone (down) since then.

With 2 million OZ small ans medium business on the edge some thing has to happen with in weeks I think another 1% could be on the cards.


----------



## pepperoni (10 October 2008)

hello

what happens when the value of the loans start to fall 

esp given that they were was the sole fuel for house price increases 

charts courtesy of dhukkas excellent blog

thank you


----------



## jonojpsg (10 October 2008)

Aussiejeff said:


> Hmm.
> 
> Valad property developer slammed - shares slump 50% and Gold Coast RE projects mothballed.
> 
> ...




Aussie I'm not sure why you think we import food??  Doesn't Oz produce about three times what we consume?  Sure there are tins of Thai tuna or Chinese tomato paste, but there are very few products we don't make here.

Besides which, coming into sprin/summer growing season so grow your own


----------



## Aussiejeff (10 October 2008)

jonojpsg said:


> Aussie I'm not sure why you think we import food??  Doesn't Oz produce about three times what we consume?  Sure there are tins of Thai tuna or Chinese tomato paste, but there are very few products we don't make here.
> 
> Besides which, coming into sprin/summer growing season so grow your own




Apart from the Californian Potatoes and grapes?

How about the miriad of "Australian" packaged foods that have on the label

_"PACKED or MANUFACTURED in AUSTRALIA from AUSTRALIAN and IMPORTED PRODUCT"_ Funny how we the consumer are usually never told the percentage of that "imported product". My guess is that it is pretty high in many instances because it is CHEAPER.

Have alook next time around the shelves of you local Woolies or Coles. You'll be amazed at what packeted foods contain that is IMPORTED - either wholly or as an unknown percentage of that so-called "Australian" product.


----------



## N1Spec (10 October 2008)

can someone enlighten me on what usually happens to property prices during a depression?? im guessing it will be savaged just like all other asset classes correct??


----------



## ROE (10 October 2008)

N1Spec said:


> can someone enlighten me on what usually happens to property prices during a depression?? im guessing it will be savaged just like all other asset classes correct??




Dont know what future will hold but looking at historic data will give you some idea.

http://www.whocrashedtheeconomy.com/

but very simple economic can explain it.
to sell something for higher someone need to take on bigger debt
so you buy a house 300K and want to sell for 400K that person has to borrow more, 400K to 500K again more debt.

in depression you get an effect called debt deflation that mean you can no longer borrow more, banks just wont lend you so u have a negative effective
less money available so people aint willing to pay more for asset 
so down it goes until, debt expand again.. How long it go for who knows
but Japan has been in that period for the last 20 years, the US in year number 2 ... just keep counting... Australia just about to go into that cycle

Understand what you buy and you dont worry about the cycle. Ignore
the jingle stronger for longer mining boom bull**** and lack of housing cause price to rise etc... that sort of jingle don't follow economic model.
UK right now has shortage of rental properties yet price plummet on a monthly basis.. that because they are in a debt deflation phase.. no more money, no more price rise.


----------



## robots (10 October 2008)

hello,

woo hoo, the Shock Exchange on another great run 8% smashing in one day

16% for the week, here we go here we go

man what a day here in Melbourne the sun is shining beautiful 23 degrees,

direct property bonanza, no board, no management, no middle management, no employee's, just you and a paint brush creating a masterpiece for yourself and others,

real assets and real returns will keep people coming through the door,

what a country

any questions fire away

thankyou
robots


----------



## chops_a_must (10 October 2008)

Lol. Just lol.

How long before these mortgage houses have to foreclose on a fair chunk of their clients to get capital back?

Does a massive systemic asset deflation not include home prices?


----------



## robots (10 October 2008)

hello,

a. things wont close when debt is getting cheaper, *yes thats right debt* is getting cheaper, down 1% in past couple of months and most likely more reductions to come

b. thats right, does not include house prices as its just a roof over your head not some whiz bang company

thankyou
robots


----------



## chops_a_must (10 October 2008)

robots said:


> hello,
> 
> a. things wont close when debt is getting cheaper, *yes thats right debt* is getting cheaper, down 1% in past couple of months and most likely more reductions to come



Seriously.

Now that is funny.

Tell GE or GM that.

When things inflate, debt becomes relatively cheaper, when we deflate like what is happening, the opposite is true.


----------



## Aussiejeff (10 October 2008)

robots said:


> hello,
> 
> a. things wont close when debt is getting cheaper, *yes thats right debt* is getting cheaper, down 1% in past couple of months and most likely more reductions to come
> 
> ...




Let's hope you don't have to sell either of your two assets during a deep recession. You just never know, do you? You might get a big, sad surprise if that comes to pass.

For all we and you know, you just might be squatting in the future Balmoral Down Slopes...

So, I hope for your sake, you aren't forced to sell in the short to medium/long term into a dead RE market.

Keep well Rob-it.


----------



## Go Nuke (10 October 2008)

thanks for that insight ROE!

Hey thanks for the insight on your position too Robots. I now realise you aren't much different from th rest of us commoners

Though as for "Sun is shining ,kids are in the streets..." not sure I can agree sorry.My girlfriend and I cant afford a house in Brisbane,therefore cant really afford to have those kids in the street.And I think thats becoming a familiar story amongest people even younger than myself.

Not sure of your age,but perhaps when I was enjoying my youth with cars and girls, you were investing in property? Or recieved a leg up from your family to get started.

Perhaps another negative/positive, with the Aussie falling will this bring more foreign investment in RE?

Personaly i hope not.


----------



## robots (10 October 2008)

hello,

fantastic discussion so far tonite,

last time I checked my bank statement the interest rate has dropped 1% yes thats right 1%,

with indications more drops on way, fantastic for holders of the humble house or unit,

thankyou
robots


----------



## Glen48 (10 October 2008)

With retired Australians now running out of money the next step will be to sell up for any price putting more houses on the market. GM and Ford in USA must just about ready to fold for good. Some of China's steel mills have stopped working more Aussies out of work soon selling up their houses putting more on the market.  ABC 4 corners will give you an insight why you don't own a house unless you think they will keep going up in OZ but not any where else in the World and have never increased in  price unless its replacement cost driving them up.
Owning a house and finding a buyer are not even on the same page.


----------



## robots (10 October 2008)

Go Nuke said:


> thanks for that insight ROE!
> 
> *Hey thanks for the insight on your position too Robots. I now realise you aren't much different from th rest of us commoners*
> 
> ...




hello,

thanks GoNuke, thats right much like all the other commoners around

never owned new car, 15yr old push bike with 21 gears, same Stussy t-shirts from 17 yrs ago (good quality back then),

just saved and saved from an early age, everybody different and very much accepted,

nothing wrong with renting man just save the difference, 

thankyou
robots


----------



## pepperoni (10 October 2008)

Errr ... we all know robots is lieing about living on balmoral slopes right?

He lives in a 50sqm unit in st kilda.  Those cramped conditions, and the pushbike, are the sort of sacrifices the average joe needs to make to own a second unit.

He would be better off with one property or none but he doesnt want to admit the losses on his properties.

Worse still he is fast approacing negative equity on at least on property.

So the old "me thinks he dost protest too much" very much applies in this case.

Ill now turn you back to the spam but I thought it important to clear up the lies.

Look at the facts, ignore the liars and spruikers, and take your time as it is usually the biggest investment/purchase you will make.

Especially with prices falling and credit demand falls pointing to further falls.


----------



## robots (10 October 2008)

hello,

yes good advice Token Multimillionaire, 

many can really use the info in your posts, a fine contributor and I hope the day has brought you and your family much happiness

thankyou
robots


----------



## robots (11 October 2008)

hello,

woo hoo, just got home from sipping latte's on chapel st (ps. i hope thats okay with pepperoni)

what a day, beautiful 25 degrees

express delivery, check this:

http://www.reiv.com.au/home/inside.asp?ID=142&pnav=141

results in line with stable market, yes I will repeat a stable market

great results, any questions fire away

thankyou
robots


----------



## chops_a_must (11 October 2008)

Right...

So when homes are reported to be flooding the market here in Perth, with people likely to be laid off from BHP in the coming weeks, it's all well and good?


----------



## robots (11 October 2008)

hello,

what a participant, every night the participation has been fantastic from chops,

A: good time to clear out some dead wood, I just hope people have saved some money, many posts over the past 12-18mths I have been "encouraging" people to save and save

20-30% of gross income is good start on savings plan,

thankyou
robots


----------



## Beej (11 October 2008)

I thought there was a chance folks in Sydney might have got a bit spooked by last weeks events - seems not! Auction clearance rate a quite reasonable 55% on good volume (150 properties sold): http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf.

I was out looking in the $1.5M-ish price ranges on the North Shore and I was far from alone - LOT's of people looking at all the same places we were. Several properties I have inspected in the last few weeks have sold now as well. Found a couple of good ones today too...... 

Cheers,

Beej


----------



## robots (11 October 2008)

hello,

great news Beej, didnt get a chance to go walkabout as i was out doing my bit for the economy spending  a few $ which will hopefully keep the jobs going,

had a great laugh over this:

http://www.abc.net.au/stateline/vic/content/2006/s2387929.htm

surely they could get a joint in Carlton , 15 in the house, $70-80 bucks each would be nothing, they all like the communal living (maybe only if its free?)

thankyou
robots


----------



## pepperoni (11 October 2008)

News reports were of auction clearance rate of 50%.

I was out - only one sale in my bunch ... weak 1.43m in northbridge rear north etc etc.  Sub peak of boom price as usual and "good buying" in property denialist terms..

All other properties still sitting there some discounted almost 20% from inital asking prices.  Also with a HUGE number (like another 10% properties) listed this week.

Most importantly there were far fewer people than expected.  Only person at a few viewings and maybe 5 groups though a first week prime listing.  To put that in context I had 30 groups through my last property first week during the good old days.

Market wont dive but stay ok for another 6 months min while specuvestor money comes off the stock market and debt suckers are drawn into slavery by promise of cheap rates (until otherwise notified over 30 years )

Also looking for rentals near train line for next contract - cheap cheap cheap as usual.  Last great bargain in the world.  No competition for properties and both good properties discounted (5% and 15%) due to lack of demand.

Interesting times indeed.

For me a good month with no stock market or property loss ... living in lifetime dream property for most of the year (*pinches self*) ... and another 10k gross interest.


----------



## robots (11 October 2008)

hello,

you can sure tell "its the internet"

thankyou
robots


----------



## chops_a_must (11 October 2008)

robots said:


> had a great laugh over this:
> 
> http://www.abc.net.au/stateline/vic/content/2006/s2387929.htm
> 
> surely they could get a joint in Carlton , 15 in the house, $70-80 bucks each would be nothing, they all like the communal living (maybe only if its free?)



What's so funny about that?

In 01 and 02 I knew heaps of students that were squatting. And it will happen again as well. Young people wont pay rent if it's outlandish.

There are a heap of homes around me, vacant from a development that hasn't been able to sell in the last 18 months, close to a Uni in Perth, that I expect to be occupied in quick time by squatters if **** hits the fan.


----------



## robots (11 October 2008)

hello,

bunch of freeloaders, if they like the "cheap" communal living go and rent a joint and get all you're mates in the place,

now now, thats a lease and responsibility

joint in Carlton like similar would be around $800-1000pw, get 15 in and its cheap as isnt it, ah yes but not FREE

bludgers of others in society, no wonder the pensioners who built the best country in the world cant get an increase

thankyou
robots


----------



## chops_a_must (11 October 2008)

robots said:


> hello,
> 
> bunch of freeloaders, if they like the "cheap" communal living go and rent a joint and get all you're mates in the place,
> 
> ...



WTF are you on about Robots?

I find that mighty offensive.

I share a house, along with most young people who don't live at home.

Our demographic have been hit probably harder than any other when it comes to this housing "boom".

And if you want to get into talk about free loading and housing, well, pensioners would be higher up on that list than youth or austudy recipients.

Especially considering pensioners generally receive more than the austudy counterparts, and seem to abjectly refuse to get into share housing.

The problem for most my age hasn't been finding a house to share, it's been finding a house that they can afford to share! Or allowing anyone under 25 to rent off them at all!!!

You clearly have no idea.


----------



## robots (11 October 2008)

hello,

good cop it on the chin brother, 

on the 7.30 report a fantastic segment about how pensioners are living together,

so why cant they rent a place?

great to see people recognize the boom is surviving

thankyou
robots


----------



## pepperoni (11 October 2008)

chops_a_must said:


> You clearly have no idea.




When did that occur to you?

What is more bizzare is people trying to argue with him in full sentences .


----------



## robots (11 October 2008)

pepperoni said:


> When did that occur to you?
> 
> What is more bizzare is people trying to *argue *with him in full sentences .




hello,

how soon people forget the great teachings of our dearly departed colonel of ASF,

its dicsussion and debate, dont get upset or defensive man, its opinion

we all walk out as friends man

thankyou
robots


----------



## chops_a_must (11 October 2008)

robots said:


> hello,
> 
> good cop it on the chin brother,
> 
> ...



Because a) students are smarter than paying obscene amounts in rent, b) no-one (or next to no-one) is actually prepared to rent anything out to young people or c) thrift.

And so Pensioners should share house. Young people and students have been doing it for eons.


pepperoni said:


> When did that occur to you?
> 
> What is more bizzare is people trying to argue with him in full sentences .



Lol.


----------



## robots (11 October 2008)

hello,

obscene rents? how can that be, pepp's is continually informing us rents are cheap as chips

the excuse page is mighty long now

thankyou
robots


----------



## pepperoni (11 October 2008)

robots said:


> hello,
> 
> how soon people forget the great teachings of our dearly departed colonel of ASF,
> 
> ...




There is debating and then there is trolling for attention.

You believe the lies you post just as much as you believe that you are my neighbour.

And no its not personal just saying it how it is .... or "keeping it real" in your lingo.


----------



## chops_a_must (11 October 2008)

robots said:


> obscene rents? how can that be, pepp's is continually informing us rents are cheap as chips



In terms of what?

Compared to the price of the house, they are. Compared to wages and as a percentage of the cost of living, they certainly aren't.

That's the problem.


----------



## pepperoni (11 October 2008)

chops_a_must said:


> Compared to the price of the house, they are. Compared to wages and as a percentage of the cost of living, they certainly aren't.




Good point and well put.

Im only saying its cheap compared to the price of the houses (ie 3% return or less) but by international standards the houses themselves are overpriced.

It would certainly explain all the stagnant rental properties and discounts Im seeing.


----------



## Beej (11 October 2008)

pepperoni said:


> News reports were of auction clearance rate of 50%.




Well I posted a link with the ACTUAL results, all listed individually. Says 55% and shows good volume with 150 sold.



> Most importantly there were far fewer people than expected.  Only person at a few viewings and maybe 5 groups though a first week prime listing.  To put that in context I had 30 groups through my last property first week during the good old days.




I had one of mine open today (selling to fund next purchase), only been advertised on internet for 2 days and no other advertising as yet - 21 groups through already, one contract already requested. Trust me I won't be selling for a low price (I'll just hold it if that happens), but all indications so far are that I will get a good price and therefore will be selling.

I think you are playing in the most depresseed segment of the market Pepperoni - but I guarantee you it won't last for too long, I've seen it all before.....

Anyway, I'm just providing some facts here - I've made my views clear before and I'm currently acting based upon them. I've certainly given up trying to make any money from the stock market at the moment 

Cheers,

Beej


----------



## singlefished (11 October 2008)

House, unit sales plummet in Qld

Saturday October 11, 2008, 6:08 pm




There has been a 40 per cent slump in house and units sales in Queensland.

Tim Lawless from RP Data says there were more than 48,000 transactions to June compared with 80,000 for the corresponding period last year.

He says it is uncertain times with the global financial crisis.

"With the decrease in volumes the prices in the short term won't do very much," he said. 

"But certainly once there are some signs the worst is behind us in terms of the global crisis and some confidence returns."

Dan Molloy from the Real Estate Institute of Queensland says there has been a levelling out of price growth in the last six months.

"The movement, not just by the Reserve Bank as far as upward pressure on interest rates, but also the banks earlier this year acting independently of the Reserve, that really bit into the market and consequently had this really significant impact on the volume of sales," he said.


http://au.biz.yahoo.com/081011/31/1zrhs.html



The volumes quoted are only to June and I'm guessing the volume would have dropped off even more since then. Not been too much increase in the number of new landed properties coming onto the market either, especially on the north side (where I'm looking to buy).


----------



## pepperoni (11 October 2008)

Beej said:


> Well I posted a link with the ACTUAL results, all listed individually. Says 55% and shows good volume with 150 sold.
> 
> 
> 
> ...




Your link shows reported not actual clearance ... including withdrawn properties Im confident its well under 50% ATM.

You have a biased view as you wish to iminently sell.  I can guarantee it will get much worse at some time.

21 groups is good but you will either meet the market (ie sell in 6 weeks for best offer) or not sell for eons.

And internet ads only = poor market ... a few extra K advertising can mean tens of Ks sale price.

Or maybe not, but these are the real nuts and bolts of banking (as opposed to dreaming about) property profits.

Make sure to factor in those transaction costs, and interest costs. Then factor in the opportunity cost of not investing your money a 6%-8%.

Ill even spot you your time running around after the properties which even at $10 an hour is alot.

Then we can talk about profits. :shake:


----------



## pepperoni (11 October 2008)

singlefished said:


> House, unit sales plummet in Qld
> 
> Saturday October 11, 2008, 6:08 pm
> 
> ...





Same in syd.  

In reality the world is running out of suckers that think 30 year stretch mortgages are a good idea.

I know 15 year olds that can work this out ...The pyramid scheme is collapsing and its all downhill from here.


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## Beej (11 October 2008)

pepperoni said:


> 21 groups is good but you will either meet the market (ie sell in 6 weeks for best offer) or not sell for eons.
> 
> And internet ads only = poor market ... a few extra K advertising can mean tens of Ks sale price.




The internet ad is just the first phase - the marketing campaign goes into full swing from this week. I will sell (or not) by Nov 8th as that's the auction date; if my expectation and the market do not meet then I will not be selling, and I don't have to, so no languishing for me. I think I will be selling though - I've been researching and watching the market in this area closely lately and of course also for many years - I know it pretty well and I know what is happenning right now.



> Or maybe not, but these are the real nuts and bolts of banking (as opposed to dreaming about) property profits.
> 
> Make sure to factor in those transaction costs, and interest costs. Then factor in the opportunity cost of not investing your money a 6%-8%.
> 
> ...




You are telling me how to suck eggs - I've been in the game directly for nearly 20 years now. My current plans have more to do with personal lifesyle choices than chasing profits - more about chasing opportunity. Inflation protection and potential profit is just icing on the cake.

Cheers,

Beej


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## pepperoni (11 October 2008)

Beej said:


> The internet ad is just the first phase - the marketing campaign goes into full swing from this week. I will sell (or not) by Nov 8th as that's the auction date; if my expectation and the market do not meet then I will not be selling,




In which case you add that good money to your already enormous transaction costs.

But this is a mistake ... you either get comfortable with meeting the market at the lowest price it may offer (requires taking off the rosy glasses) or dont put up for sale.

Ive been in the market for over 10, have built and renoed, and have the $$$ to prove I know exactly how it works.


----------



## theasxgorilla (12 October 2008)

pepperoni said:


> But this is a mistake ... you either get comfortable with meeting the market at the lowest price it may offer (requires taking off the rosy glasses) or dont put up for sale.
> 
> Ive been in the market for over 10, have built and renoed, and have the $$$ to prove I know exactly how it works.




I could say the same things Peps, and in my case staring the market down has worked.  I've got the asset, they (the market) haven't got the money...the problem is theirs.

It's simple sales theory...if your prospect wants/needs what you're selling but can't afford it, they're not a good prospect, don't waste time and move along.  Selling is a numbers game.


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## theasxgorilla (12 October 2008)

pepperoni said:


> Or maybe not, but these are the real nuts and bolts of banking (as opposed to dreaming about) property profits.
> 
> Make sure to factor in those transaction costs, and interest costs. Then factor in the opportunity cost of not investing your money a 6%-8%.
> 
> ...




As usual pepperoni what you say is 100% accurate.

The thing is that most people, when they factor in their net hourly rate from wages it's usually much, much lower than the gross rate that they boast about to all their friends.  I'm not just talking about taxes either...I'm talking about all the time and money that people spend just to front up each day and cope with having a job.

For some reason the people who do all this inefficient leg work and pay all these transaction and holding costs still seem to come out on top of the social scale eventually.

And lets also face it, some people get as much of a kick out of doing all this inefficient leg work as the property bears on this thread get out of trying to kick the bulls when they're down.  *I love chasing, evaluating, transacting, living in and improving property...LOVE IT!*


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## CamKawa (12 October 2008)

This is a fairly flat report on the Melbourne property market. I laughed when I read this "Among the sluggish results yesterday, the auction of a four-bedroom house in Frankston South was cancelled after only a handful of neighbours turned up."
Source: Credit crisis douses bidders' confidence


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## CamKawa (12 October 2008)

The Age has quite clearly forgotten who is advertisers are with this little ripper. 

"THE property market yesterday endured one of its worst days this year as buyers — stunned by the global sharemarket meltdown and growing fears of a local recession — decided their best bet was to hang on to their cash."
Source: Bad day for house sales as jitters spread

If I was Enzo I'd be on the phone straight away!


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## pepperoni (12 October 2008)

Not really surprising with the credit and stock market woes eroding peoples ability to pay (not to mention confidence).

Even land banking will take a hit if K Rudd can work out that he needs to gtee bank deposits.

Judging from dhukkas credit charts it will take a miracle for the rest of the year do any better.


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## Glen48 (12 October 2008)

Ch 7 news did a report on 1 house which was sold for 680K some Bronco player did the business the other houses are still for sale.
The next problem will be when pensioner start selling for what ever they can get to buy food and flood the market.
The next boom will be the parasites moving in with deals for pensioners to use their homes equity for money to survive.


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## Mofra (12 October 2008)

Glen48 said:


> The next boom will be the parasites moving in with deals for pensioners to use their homes equity for money to survive.



Seniors equity loans - 30-35% LVR max lends (dependant on age), interest capitalises, property is sold upon death with funds taken from the estate to cover the mortgage & costs. All ther banks and a number of NBLs offer them, and I wont argue the merits of the term "parasites" as both sides of the fence could raise some valid points there 

Proportionally they are highly profitable for lenders (and the interest rates are usually higher than standard mortgages, so margins are protected) however the market is winding back so the peak in this type of lending appears to have passed.


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## robots (12 October 2008)

hello,

I hope people enjoy this article:

http://www.theage.com.au/national/b...-as-market-crumbles-20081011-4ysl.html?page=2

have a great evening

thankyou
robots


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## Pommiegranite (12 October 2008)

robots said:


> hello,
> 
> I hope people enjoy this article:
> 
> ...




Could read past the first paragraph due to the tears of laughter blurring my vision:

"Welcome to the first day of a new economic cycle. Everything else can go wrong but this property will be here in 10, 20 years. You can't go wrong with bricks and mortar,"


I can see who you model yourself on Robot.


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## Pommiegranite (12 October 2008)

Great annoucement from Rudd today (bank deposits being guaranteed).

It should see even more specuvestors rushing for the sanctity of a 8%+ term deposit


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## pepperoni (12 October 2008)

"Last week's interest rate cuts spurred her and her husband, a steel fixer in the construction industry, to raise their buying price from $300,000 to $335,000. Part way through the auction, they decided to bid higher still. "

Up to 375k!  How prudent of them 

The time when you could grossly overpay and squeeze by are over

Its always been survival of the fittest ... these poor souls are and will increasingly be a dying breed.


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## pepperoni (12 October 2008)

Pommiegranite said:


> It should see even more specuvestors rushing for the sanctity of a 8%+ term deposit




Sure will.

In fact they will probably borrow at 9% and invest at 8% ... ya see they pay less tax that way


----------



## robots (12 October 2008)

Pommiegranite said:


> Great annoucement from Rudd today (bank deposits being guaranteed).
> 
> It should see even more specuvestors rushing for the sanctity of a 8%+ term deposit




hello,

that would be great pommie, and let the wealthy hold onto the genuine real assets with real returns,

while the "traders" bang the CBA money box on a CFD, future or spi move

oh the nasty landlord put the rent up Again,

oh how grand things are as debt is getting cheaper

thankyou
robots


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## Pommiegranite (12 October 2008)

pepperoni said:


> Sure will.
> 
> In fact they will probably borrow at 9% and invest at 8% ... ya see they pay less tax that way





That's that 'negurtiv gearin' thing I've heard about. Apparently, it's all the rage. The more money you lose, the more you make. Amazing!!


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## pepperoni (12 October 2008)

Pommiegranite said:


> That's that 'negurtiv gearin' thing I've heard about. Apparently, it's all the rage. The more money you lose, the more you make. Amazing!!




Ha ha 

Cash really is king now ... nobody gteeing house values are they

The saying "safe as houses" now means "safe, but subject to price falls and not as safe as govt gteed cash!"

So really safe is now "safe as cash".


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## robots (12 October 2008)

hello,

oh yeah man, and nothing is being built right as supported by all the stats (care to re-post that data if you like)

thankyou
robots


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## chops_a_must (12 October 2008)

robots said:


> hello,
> 
> oh yeah man, and nothing is being built right as supported by all the stats (care to re-post that data if you like)
> 
> ...




Because there are no margins in it.

Land prices are at a disequilibrium with what people can actually afford to, and are willing to pay.


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## pepperoni (12 October 2008)

robots said:


> oh how grand things are as debt is getting cheaper




How grand you borrowers are gteeing our profits with your toil.

And good old k rudd himself in gteeing us lenders will get paid.  Expect a visit from the ALP if you fall behind in your payments,

Now get back to work and bring us money for another few decades ... we are getting ready to retire.


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## theasxgorilla (12 October 2008)

pepperoni said:


> Cash really is king now ... nobody gteeing house values are they




Actually in Sweden, the land where you can insure yourself against just about anything!  You can take out house price depreciation insurance.  What a farce that is going to be in reality.  Still, I'm sure the heads of these smoke and mirror companies got their bonuses and exercised their options while the going was good...so what the fig do they care.


----------



## pepperoni (12 October 2008)

theasxgorilla said:


> Actually in Sweden, the land where you can insure yourself against just about anything!  You can take out house price depreciation insurance.  What a farce that is going to be in reality.  Still, I'm sure the heads of these smoke and mirror companies got their bonuses and exercised their options while the going was good...so what the fig do they care.




Good idea ... I might introduce this insurance for aussies.

This years premium - 10% of market value! It would be mad to provide cover for any less.


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## pepperoni (12 October 2008)

http://business.smh.com.au/business/prepare-for-job-losses-rudd-20081012-4z1m.html

First UNLIMITED FREE deposit insurance.

Now dire warnings of job losses and a :new danderous phase".

Borrow big at your peril and against your PMs advice specuvestors!

10/10 for Rudd today.  Cant wait for CGT rates on bank deposits coming soon to underpin the absurd lending levels out ther now.


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## Santoro (12 October 2008)

Lowest clearance rates this weekend...as unemployment rises we will start seeing defaults as people are squeezed out. I think some folks are gonna be dissappointed in a few months time.....and really pissed in about a year..I hope it goes the other way but I think most people are catching on to whats ahead.......no one wants to believe it.....you don't have to.......but at some point in the future you won't have any choice....


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## Glen48 (12 October 2008)

Ch7 to night Kochie tells us they will job loss 300-500 K House, prices to go down no recession,


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## pepperoni (12 October 2008)

More good news

http://www.theage.com.au/national/b...s-as-jitters-spread-20081011-4ysj.html?page=2

http://www.news.com.au/dailytelegraph/story/0,22049,24482785-5013110,00.html


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## Santoro (12 October 2008)

I like the references to immigration....if it becomes clear that unemployment is rising due to a global slow down, I think immigrants may reconsider there options....houses are cheaper in the US with similar job prospects....and the government may reduce the number of immigrants to assist those the jobless alrady here....

What about inflation...I would think that the pumping of countless billions would cause prices to rise but this capital is only replacing capital that was vapourised...same prices just more debt owned by citizens??? Any thoughts??


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## kotim (12 October 2008)

The reason the gov't are rushing to guarantee depositors funds is not for the borrower themselves.  In real bank institutions in Australia, your money as a depositer is effectively guaranteed by the RBA anyway.  

The real reason they want to guarantee deposits is due to our fractional reserve banking system.For every one dollar on deposit a bank can lend out multiples of that money.  NOw think of the reverse, for every dollar on deposit that is removed from the bank it means that the multiple amount of money based on that dollar has to be retrieved or covered in another way.

So if tomorrow enough depositors with SUNcorp went to the bank and dmanded back their money on deposit, it means that whatever money they have to give to the depositors in return it means that they have to somehow recover/cover the number of multiples that they lent out against those deposits. 

I tell you something most people don't know, when you go to the bank and take out a mortgage say for 200 grand, you actually as part of the contract sign over power of attorney that allows them to create a promisory note for the 200 grand.  A promissory note is CASH.  So that 200 grand promissory note now also becomes a deposit and guess what, they can then lend out multiples of that money.

Why do you think that 5% mortgage/loan failure rates cause banks to fall over.

That is why their was talk of SUNCORP falling over.

Loans are so highly leveredged that it does not take to many in the scheme of things to fall over to cause a financial instituion to fall over.

We have just gone through a time when we effectively had full employment of about 4%, so now imagine if we go back to say 8%, well a substantial number of those will result in the loss of homes due to failure and inability to repay the home loan.

Just go back over history and see what has happened before, if the average loss of value is say 25%  in a property drop then without doubt we can expect the same again.

I am like everyone else, nobody realy wants to believe tehy will llose on the deal, but hisotry says if you get in at the wrong time then you lose big time.


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## Lucky_Country (12 October 2008)

Things are not looking good for property, there will be alot of people out there that will end up owing more on there house than what its worth.

Immigration will drop  and temp workers will be sent home packing whilst trying to save Aussie jobs.

Investors will be ruing the ammount of negative gearing they have acheived on their investments as all prices drop leaving them down bigtime.

To be fair its about time first home buyers got a chance in the housing market and the next 2 years could be their opportunity.


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## algis (12 October 2008)

Just a little reminder for those that compare Australia's high cost of property relative to the world market:

House prices have already effectively fallen 30% throughout the Australian market relative to the American market in the past month and 20% against the Euro market in the same period.


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## pepperoni (12 October 2008)

Santoro said:


> What about inflation...I would think that the pumping of countless billions would cause prices to rise but this capital is only replacing capital that was vapourised




... or potentially more capital vaporised than money printed, so deflation, which Ive seen at least one economist say is the case.

Personally I think falling spending alone will kill inflation.


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## pepperoni (12 October 2008)

algis said:


> Just a little reminder for those that compare Australia's high cost of property relative to the world market




Its actually aussie property relative to aussie salaries which is exy relative to us and uk.

On this basis it hasnt quite fallen 20-30% ... yet.


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## chops_a_must (12 October 2008)

Lucky_Country said:


> Investors will be ruing the ammount of negative gearing they have acheived on their investments as all prices drop leaving them down bigtime.



I've really never understood this. The whole point in investing is to make money. I just can't compute it.



algis said:


> Just a little reminder for those that compare Australia's high cost of property relative to the world market:
> 
> House prices have already effectively fallen 30% throughout the Australian market relative to the American market in the past month and 20% against the Euro market in the same period.



Lol.

Try telling that to someone looking to buy.

AFAIK there are some peculiarities when looking to buy here if you aren't a citizen or permanent resident, that make it prohibitive for foreigners to even make a meaningful dent.


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## grace (12 October 2008)

Glen48 said:


> Ch7 to night Kochie tells us they will job loss 300-500 K House, prices to go down no recession,




I noticed the guy Kochie was interviewing said we will see house prices in Australia go down by as much as in the US.  Kochie said "why?".  Reply was "because we have much higher household debt compared to the Americans (in relation to household earnings I would gather). 

Interesting times ahead for the property market.


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## chops_a_must (12 October 2008)

Lol... the fade Kochie play is in order.

You can add it to the following list:

The Fade Krudlow play.
The fade Bush play.
The fade Paulson play.
The fade Bernanke play.

They've been mighty effective.


----------



## singlefished (12 October 2008)

chops_a_must said:


> AFAIK there are some peculiarities when looking to buy here if you aren't a citizen or permanent resident, that make it prohibitive for foreigners to even make a meaningful dent.




Tell me about it.... couldn't even get a credit card as a temporary resident. Fat chance of getting a mortgage!!!

Upon getting the telephone call from Immigration a few years back telling me that the permanent residency had been approved, I dashed up there at lunchtime, stopped in at the pub on the way back to work for a quick celebratory beer, then straight to the bank with passport in hand and got the visa card application in straight away.... a few short days later, bingo!

Haven't payed a penny in interest on it since I got it 3 years ago and the usage has been enough to have the annual fees waived each year.... The bank must love me 

I believe there are ways new immigrants can get some sort of mortgage sorted out however but I never persued them. It was hard enough getting into a rental property without any previous Aussie rental history....


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## Julia (12 October 2008)

chops_a_must said:


> I've really never understood this. The whole point in investing is to make money. I just can't compute it.



You do make money by negative gearing on property if you are paying a high rate of tax.  The negativity on the investment property offsets your tax bill.


----------



## YChromozome (12 October 2008)

grace said:


> I noticed the guy Kochie was interviewing said we will see house prices in Australia go down by as much as in the US.  Kochie said "why?".  Reply was "because we have much higher household debt compared to the Americans (in relation to household earnings I would gather).




That is correct. It would be Household Debt as a percentage of Household Disposable Income.



> Interesting times ahead for the property market.




It certainly is. There is a  prediction thread running GHPC.


----------



## chops_a_must (12 October 2008)

Julia said:


> You do make money by negative gearing on property if you are paying a high rate of tax.  The negativity on the investment property offsets your tax bill.




I understand that. But it's not actively making you more than what you could get by other means with the same money, is it?

It's not something I've explored, so wouldn't know. It just doesn't appear to be something I would consider. It's like not clearing margin interest in a margin account, purely to cut tax. In my mind anyway.


----------



## theasxgorilla (13 October 2008)

chops_a_must said:


> I understand that. But it's not actively making you more than what you could get by other means with the same money, is it?




It used to be a very tax-advantaged way to hold property.  Particularly when used together with depreciation.  When netted out you could hold a property at cashflow neutral.  Yes your outgoings were greater than the income earned from the rent, but the tax break offset that.  Given that tax used to be most peoples largest single monthly expense it was well worthwhile trying getting some back.

Now Aussies pay much less tax but stupendous amounts of interest.


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## Temjin (13 October 2008)

Julia said:


> You do make money by negative gearing on property if you are paying a high rate of tax.  The negativity on the investment property offsets your tax bill.




That does not compete either. It's amazing how one could purchase a DEPRECIATING asset that usually generates a negative cash flow (yes, after tax deduction and depreciation) and hope to make a profit through holding and reselling it to another person. And historically and fundamentally, this asset should never rise faster than wage/inflation growth because it is not a "value-adding" asset, unlike production factories, mines, etc. Of course, people tend to treat it much more valuable than mines/factories for reasons like there is more demand than supply of available land. And then you consider the irony of Australia is one of the most sparse populated land in the world....


----------



## robots (13 October 2008)

hello,

investment with leverage is always for those who can afford it, remember negative gearing has been around for 20+ years, yes 20+ years

there wasnt the hype back then with all the handout crew was there, just now when you can plonk yourself on the internet read a blog and you an expert,

why get rid of debt now as many are advising to do? if I dont have a job how can I pay mortgage or rent

how we going? still at 7x income, what a grand country we live in

play it fair

thankyou
robots


----------



## Santoro (13 October 2008)

algis said:


> Just a little reminder for those that compare Australia's high cost of property relative to the world market:
> 
> House prices have already effectively fallen 30% throughout the Australian market relative to the American market in the past month and 20% against the Euro market in the same period.




Don't expect that strong dollar to last too long with all that debt they have recently added. The USD is in line for a big fall effectively wiping out the middle class in the US. If I held large USD reserves I'd be looking to buy things with them ....esp resources. If or once this starts the value will plummet...


----------



## Mofra (13 October 2008)

Temjin said:


> And historically and fundamentally, this asset should never rise faster than wage/inflation growth because it is not a "value-adding" asset, unlike production factories, mines, etc. Of course, people tend to treat it much more valuable than mines/factories for reasons like there is more demand than supply of available land. And then you consider the irony of Australia is one of the most sparse populated land in the world....



In theory what you're saying makes perfect sense.
In practice, despite the sparcity of our nation we have one of the most urbanised settlement patterns on the planet, and these cities are based on a single transport hub/CBD, where proximity to this hub is at a premium. Given the rising pressure of transportation costs (both personal & goods) and time taken to travel to/from employers, this proximity will (IMO) continue to attract a premium in excess of inflation over a longer timeframe.


----------



## gfresh (13 October 2008)

Well, well, we're now starting to see "prime time" (channel 7) telling us now is not the right time to buy a property. Amazing. How things have so quickly changed in the space of 6 months. 

Fear it seems is even ruling the property market.. These things have a habit of being self-fulfilling. 



> Property market takes another hammering
> 
> October 13, 2008
> 
> ...


----------



## Temjin (13 October 2008)

Mofra said:


> In theory what you're saying makes perfect sense.
> In practice, despite the sparcity of our nation we have one of the most urbanised settlement patterns on the planet, and these cities are based on a single transport hub/CBD, where proximity to this hub is at a premium. Given the rising pressure of transportation costs (both personal & goods) and time taken to travel to/from employers, this proximity will (IMO) continue to *attract a premium in excess of inflation over a longer timeframe.*




That is the biggest flaw there. How is it possible for house prices to attract a premium in excess of inflation over a long time frame? How long are you projecting? 100 years? You should be fully aware of your recency biases in that past performance is no indicator of future return. Just because the average return of properties from 1980 to 2008 is approximately 6-7% p.a., it does not automatically mean that the next 30ish years will produce the same return.

I don't think I need to explain the reason why house prices CANNOT increase above wage/inflation rate over a long time frame due to the affordability issue. If this continue to occur indefinitely, an average priced house will eventually require a repayment of more than 100% of an average income earner. Some people seem to think this is possible forever by making assumptions that perhaps we will have sustainable lower interest over the long term or multi-generational mortgage loan. 

By the way, I agree your point with how our cities are urbanised based on a central business hub with surrounding suburbs. This type of "unsustainable" living pattern will have to cease one day and one day people will have to start getting used to living in apartments and not mansions with a big background. The reason why we are still following such a pattern is because of political and social reasons, that is, everybody love to own a big nice house with a backyard.


----------



## Uncle Festivus (13 October 2008)

Trends - some tightly held historic buildings, all asking $1m plus, are showing up in the local property guide, something I haven't seen for several decades. It is usual to get the odd one go up for sale, but there are now several pages full of 'prestige' properties for sale now. It's hurting the rich too?


----------



## robots (13 October 2008)

hello,

hope you have had a great day,

http://business.theage.com.au/business/big-banks-cut-fixed-rates-20081013-4zmg.html

nuffsaid!

thankyou
robots


----------



## pepperoni (13 October 2008)

Temjin said:


> That is the biggest flaw there. How is it possible for house prices to attract a premium in excess of inflation over a long time frame? How long are you projecting? 100 years? You should be fully aware of your recency biases in that past performance is no indicator of future return. Just because the average return of properties from 1980 to 2008 is approximately 6-7% p.a., it does not automatically mean that the next 30ish years will produce the same return.
> 
> I don't think I need to explain the reason why house prices CANNOT increase above wage/inflation rate over a long time frame due to the affordability issue. If this continue to occur indefinitely, an average priced house will eventually require a repayment of more than 100% of an average income earner. Some people seem to think this is possible forever by making assumptions that perhaps we will have sustainable lower interest over the long term or multi-generational mortgage loan.
> 
> By the way, I agree your point with how our cities are urbanised based on a central business hub with surrounding suburbs. This type of "unsustainable" living pattern will have to cease one day and one day people will have to start getting used to living in apartments and not mansions with a big background. The reason why we are still following such a pattern is because of political and social reasons, that is, everybody love to own a big nice house with a backyard.




This is so simple and fundamentally obvious that the sheeple seem to reject it.

They are drawn more to things that they dont understand and that dont implicitly make sense (ie 10% average returns with 4% wage growth because ... well ...  just because).

I guess there was the eternal boom theory that might have supported their thinking but thats well and truly myth busted!


----------



## robots (13 October 2008)

hello,

for a bit of a laugh check ABC 4-corners tonite 8.30pm,

paul barry in the good ol' US of A, if you want to see one "sick" country check it,

down down down they go, thank the lord we here in Australia

thankyou
robots


----------



## robots (13 October 2008)

hello,

just reality token multimillionaire, the sort of talk that goes around the water cooler in most office blocks, 

does anybody know if we still at 7x income to house prices?

have a great evening

thankyou
robots


----------



## IFocus (13 October 2008)

Julia said:


> You do make money by negative gearing on property if you are paying a high rate of tax.  The negativity on the investment property offsets your tax bill.




Julia I was always taught an investment has to stand up on its own before negative gearing is taken into account.

Negative gearing allows you to hold the investment for capital gain nothing more.

Negative gearing for the sake of tax relief alone is bad advice


----------



## YChromozome (13 October 2008)

robots said:


> does anybody know if we still at 7x income to house prices?







The above table has the number of Wage Years based on RP data and APM data.



> Hugh Pavletich, co-author of the Demographia International Housing Affordability Survey says the Sydney multiple is now about nine (ie. average Sydney house prices are nine times average annual household income). This is just about the highest multiple in the world. Other countries with high multiples have seen drops in house prices recently. Pavletich agrees with Keen's figure of 40 per cent drop, saying, ``I think what we've really got to look at is California to get some indication of what's likely to happen in Australia but at a slightly slower pace, I would imagine. California got up to the same sort of multiples that Australia is sitting at now, which is quite unsustainable. ... I would expect [the drop in prices] to play out over probably a two to three-year period.'', ``California has really led the way with at least a 40% drop in the past 12 months,''


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## Mofra (13 October 2008)

Temjin said:


> That is the biggest flaw there. How is it possible for house prices to attract a premium in excess of inflation over a long time frame? How long are you projecting? 100 years? You should be fully aware of your recency biases in that past performance is no indicator of future return. Just because the average return of properties from 1980 to 2008 is approximately 6-7% p.a., it does not automatically mean that the next 30ish years will produce the same return.



In no way am I suggesting that the broader market will attarct a premium higher than inflation/wage growth, anymore than you can suggest that the _entire_ property market moves at the same rate. There are different tiers within the market and that is a concept that is rarely discussed (or even acknowledged) here. 
It should also be noted that recency biases also take into account demographic shifts that are unique over the past century: the percentage gain in dual income households. Whilst this isn't the predominately driving trend, it is a contributing factor to price growth.



Temjin said:


> I don't think I need to explain the reason why house prices CANNOT increase above wage/inflation rate over a long time frame due to the affordability issue. If this continue to occur indefinitely, an average priced house will eventually require a repayment of more than 100% of an average income earner. Some people seem to think this is possible forever by making assumptions that perhaps we will have sustainable lower interest over the long term or multi-generational mortgage loan.



Again, yes house prices cannot increase exponentially in the median sector of the market. Prices can rise in desirable areas where single income, average earnings households are as common unicorns.



Temjin said:


> By the way, I agree your point with how our cities are urbanised based on a central business hub with surrounding suburbs. This type of "unsustainable" living pattern will have to cease one day and one day people will have to start getting used to living in apartments and not mansions with a big background. The reason why we are still following such a pattern is because of political and social reasons, that is, everybody love to own a big nice house with a backyard.



There halt in urbanisation is not a phenominan I would dare suggest is likely in the forseeable future, although there is a rise in niche self-sufficiency that I have to admit grows more tempting by the day  
The pattern IMO is driven as much by a desire to spend less (both money & time) in the pursuit of employment as it is by a desire to have a large house & backyard. If anything, a desire for space will drive some to the McMansion wastelands of new developments that lack the basic infrastructure to remain desireable places to live without further investment.


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## nunthewiser (13 October 2008)

Mofra said:


> Good to see you back NC, hope the leg is healing quickly.
> 
> I have bumped into nunthewiser on another forum - he's on a different side of the country for a start, and at a guess I'd list his "likes" as steak, bourbon and undervalued iron ore stocks . If I had to choose one to stay, well, sorry to robots, but it's not a difficult decision




 gday mofra and yeah nothing wrong with a bourbon or 3 to go with my steak .perhaps i need typing lessons and reply to posts in a disrespectful manner that some here use just to not confuse some of the more slow witted here ...... lol ive been accused of many things for all the right reasons plenny of times down the track but this one kinda getting a lil tedious 

trust all is well m8


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## wallyt99 (13 October 2008)

Excellent post. You really summed it up well.  


Good property in good areas (which also naturally have a lower debt to income ratio) will continue to rise due to strong demand and limited supply.

Overcapitalised propertys in areas which have poor infrastracture and higher than average debt to income ratio will suffer these significant drops.


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## Indie (13 October 2008)

Denial is a very powerful coping mechanism. 

Robots, good luck to you. Even if there is a prolonged property downturn there will still be a few winners. I hope you're one of them.


My 2c:

Those still geared heavily into property are in for a rude awakening. This will play out like a slow motion car crash.


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## nunthewiser (13 October 2008)

And for what its worth as posted before i think property in for some major carnage and SOME property will return to PRE 03 prices if not less ... i do not agree with robots sunshine and lollipop view on property but i still like to hear his side of the fence


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## numbercruncher (13 October 2008)

Mofra said:


> Good to see you back NC, hope the leg is healing quickly.
> 
> I have bumped into nunthewiser on another forum - he's on a different side of the country for a start, and at a guess I'd list his "likes" as steak, bourbon and undervalued iron ore stocks . If I had to choose one to stay, well, sorry to robots, but it's not a difficult decision





heya Mofra - thanks !


These house price threads over the last cple years always turn into ****fights - by now considering the current financial climate a reasonable person would concude that price falls are by far the most likely situation ....


Considering the title of this thread it should be more bearish posts here and the more irrational (permabull) stuff in the other thread ! in my humble opinion that is !




ps - leg is pretty mangy im laying in hospital typing this !


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## doctorj (13 October 2008)

Bickering, multi-nicking and everything else that happened in the last 15 or so of posts that have been deleted are a waste of everyone's time.  Can we get back on topic please.

One use has been banned for multinicking - but it wasn't nunthewiser or robots.


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## steve999 (14 October 2008)

I've seen various predictions of house prices crashing anywhere from 40%-90% of current values.

I guess at the extremes range many houses would be valued well under replacement costs...

Does anybody have graphs of what the average construction costs vs average wages are?


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## chops_a_must (14 October 2008)

steve999 said:


> I've seen various predictions of house prices crashing anywhere from 40%-90% of current values.
> 
> I guess at the extremes range many houses would be valued well under replacement costs...
> 
> Does anybody have graphs of what the average construction costs vs average wages are?



Construction costs aren't the problem.

From what I've seen, it's the land costs.


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## theasxgorilla (14 October 2008)

IFocus said:


> Julia I was always taught an investment has to stand up on its own before negative gearing is taken into account.
> 
> Negative gearing allows you to hold the investment for capital gain nothing more.
> 
> Negative gearing for the sake of tax relief alone is bad advice




What about negative gearing to hold an asset until it becomes cash flow positive, either through rent increases, outgoing decreases and/or debt reduction?  Sometimes its such a shame to miss out on an opportunity to hold a particular asset at a particular price.


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## YChromozome (14 October 2008)

Construction costs have inflated a little due to increased labour and material costs.

The good news is, material costs are now coming down and as construction gets more quiet or almost grinds to a halt in some areas, so is labour costs.


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## moXJO (14 October 2008)

Is this sensible? Suppose it will help hold the housing market up. Seems like throwing fuel on the fire to me. But meh





> A SPECIAL Federal Cabinet meeting has signed off on a stimulus plan that is expected to include an increase in the first homebuyers grant.




http://www.news.com.au/story/0,23599,24493851-29277,00.html


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## gfresh (14 October 2008)

First home buyers don't make up a large proportion of the market, it's not going to be enough to stimulate demand on it's own.

In fact, doing nothing and letting the market fall however much is probably the best possible thing that could happen to first home buyers. 

Providing incentives and the ability to pay higher prices, only supports present prices, further discouraging affordability in the long run.


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## stock_man (14 October 2008)

If house prices fall (especially 40% as some predict), will rent prices follow?
If people are not buying, then they are renting, thus placing pressure on the rental market? Or will these houses that can not be sold turn into rentals, thus adding extra supply to the market and dropping the current rental values?

As I see it, if values dropped 40% and rent stayed the same, we would have cash flow positive properties popping up everywhere. 

Take Sydney's average house:
Current value: $540K
New value: $324K
80% LVR: $260K
I/O Repayments @ 7.84%: $390/week
Average Rent: $440+

And if Sydney becomes cashflow positive, I can only imagine the opportunities in regional areas. Time to start some serious savings.........


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## YChromozome (14 October 2008)

stock_man said:


> If house prices fall (especially 40% as some predict), will rent prices follow?







Rents have until the last year or two remained in line with inflation. Long term history shows this is the trend, otherwise renters would be unable to afford to rent. 

Interestedly enough, long term history also shows house prices only go up in line with inflation, otherwise home owners in later generations would be unable to buy. Just imagine if house prices did double every 7 to 10 years, like the Real Estate agents portray. In generations to come, the power of compound interest would mean houses would be hundreds, if not thousand times wages. At that stage, even the most wealthy would have trouble affording a house. It should be clear that such trends are not sustainable.

So in a normal market, houses go up with inflation and investors make money out of yield, not capital gains. However in this speculative bubble, investors believed they make money out of capital gains, and didn't bother with yields. In fact, some investors brought houses and apartments purely for capital gain and left them empty - tenants would cause wear and tear, you couldn't have that!

So when this bubble corrects and things get back to normal trends, houses should fall quite a bit, actually I think 40 percent is a bit conservative. For arguments sake, Sydney houses are now 9.1 times wages. The historic trend is three times wages (when the economy is doing well). This means Sydney would have to fall 67.1% just to get back to normal trends. Some argue that if the economy is not doing well, 3x wages might actually be high! Just wait for unemployment to kick up about.

I would expect rents to fall a very small amount. Rent prices are not at bubble proportions, and it's only been really the last year that landlords have attempted to put rents up faster than wage growth/inflation. As such, some landlords are finding it hard to get tenants, so rents may stagnate for one or two years, then continue to increase in line with CPI.


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## deadset (14 October 2008)

I just saw a breaking announcement from Kevin Rudd.

The Government are going to increase the first home owners grant to $14000 and to $21000 if its a new home.  I'm still thinking over the effect of the other details.


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## Temjin (14 October 2008)

deadset said:


> I just saw a breaking announcement from Kevin Rudd.
> 
> The Government are going to increase the first home owners grant to $14000 and to $21000 if its a new home. I'm still thinking over the effect of the other details.




This is crazy! I'm in the live blog right now and almost everyone is happy with the payout...naturally! ...crazy ppls really!


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## aleckara (14 October 2008)

Temjin said:


> This is crazy! I'm in the live blog right now and almost everyone is happy with the payout...naturally! ...crazy ppls really!




I am planning to buy my first house in the next yr or two hopefully and I don't see this as a positive announcement at all.

When they introduced negative gearing they should of only allowed it on new homes. Then there would be enough supply for a lot of people.

More money to support the construction/tradies rather than help first home buyers to have a more affordable house.


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## Temjin (14 October 2008)

aleckara said:


> I am planning to buy my first house in the next yr or two hopefully and I don't see this as a positive announcement at all.
> 
> When they introduced negative gearing they should of only allowed it on new homes. Then there would be enough supply for a lot of people.
> 
> More money to support the construction/tradies rather than help first home buyers to have a more affordable house.




Yes, more money to support the developers/tradies to lower overall construction cost. (only if they pass it on) But this is only PART of the equation. The biggest is the amount of credit being flown into the residential properties, and these are NON-PRODUCTIVE ASSETS. The government is trying to prevent a bubble from popping when similar bubbles in other countries have already popped. (i.e. US/UK/Spain, etc) 

The government is very afraid that if there is a downturn in property in Australia, everyone will suffer. Unfortunately, this will just prolong the inevitable. I'm anger that my tax money is being wasted to save a sinking ship.


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## steve999 (14 October 2008)

chops_a_must said:


> Construction costs aren't the problem.
> 
> From what I've seen, it's the land costs.




I agree that land costs are the major cause of price increases but I'm wondering if people expect house prices to actually fall below replacement costs?
Also, are rents currently covering construction costs?
So a house that costs say $200k to build on a $50k block (assuming land prices went down). $250k @ 9% = $432 a week to cover interest.

I'm not saying any of this will stop prices falling... Just wondering about the relationships between rent, price & construction costs.

I can't say I'd buy an investment property where the rent didn't at least cover the building cost.


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## Mofra (14 October 2008)

deadset said:


> I just saw a breaking announcement from Kevin Rudd.
> 
> The Government are going to increase the first home owners grant to $14000 and to $21000 if its a new home.  I'm still thinking over the effect of the other details.



This plan (whilst on a personal level, only owning investment properties & never a PPOR before so could benefit me in the future if I chose to buy a PPOR) strikes me a ill thought-out and a little desperate.

a.  It could kick-start the "no savings" lending segment again, especially considering the grant at $14k covers a small, single bedder in a poorer area to 10% in many cases. Given the high level of banking regulation in Australia (relative to other markets), surely it wouldn't be too hard to set a national minimum standard of savings (or equity) for purchases?

b.  For anything approaching a median dwelling purchase, $14k wouldn't cover transaction costs, the majority of which is the State Government stamp duty of the land. Surely reducing state government stamp duties for properties below median value (ie where first home buyers are likely to be entering the market) would be a better use of funds?


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## stock_man (14 October 2008)

YChromozome said:


> The historic trend is three times wages (when the economy is doing well). This means Sydney would have to fall 67.1% just to get back to normal trends. Some argue that if the economy is not doing well, 3x wages might actually be high![/QUOTE]
> 
> Assuming prices fall to 3x wages, and credit is obtainable, the weekly p&i repayment on an average Sydney house would be $300 @ 100%! Given that we expect rents to at least stay the same, its clearly in the positive territory.
> 
> ...


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## gav (14 October 2008)

stock_man said:


> Assuming prices fall to 3x wages, and credit is obtainable, the weekly p&i repayment on an average Sydney house would be $300 @ 100%! Given that we expect rents to at least stay the same, its clearly in the positive territory.
> 
> Weekly Rent: $440
> Yearly Rent: $22,800
> ...




I would expect the cost of rent would drop significantly if that situation occurred.


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## YChromozome (14 October 2008)

The most common mistake the investor makes is ignoring the costs in yield calculations.

Council Rates, Strata Fees, Water Rates, Property Management Fees, On going Maintenance - painting, major appliances replacement schedules, termite inspections, advertising costs, insurance, even lost rent due to vacancy. Do you think you will have a tenant paying rent every day of the year for the entire time you own the place? Occupancy rates might be tight now, but not in a normal market.

These costs are not insignificant. 

There has also been a trend of late to run the properties into the ground. The tenants will pay anything - who gives a stuff. Regrettably, any capital costs ignored will come back a bite.


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## gfresh (14 October 2008)

Mofra said:


> Surely reducing state government stamp duties for properties below median value (ie where first home buyers are likely to be entering the market) would be a better use of funds?




This is the case in QLD, discount for PPOR, and nearly $9k benefit for FHB'ers under $500k. So now QLD first home buyers can get close to $30k in discounts if they buy a brand new home. They can't really complain. 

I believe NSW has introduced a similar reduction in stamp duty. 




			
				YChromozome said:
			
		

> There has also been a trend of late to run the properties into the ground. The tenants will pay anything - who gives a stuff. Regrettably, any capital costs ignored will come back a bite.




True, lot of pretty poor properties trying to attract the same price as "the market" when they're a heap of @##$ and haven't had a cent spent on them for years. It's surprising many find any tenants at all, but I guess there are those out there with atrocious rental histories and/or those that can't even rub 5 cents together. 

Vacancy rates on the Goldcoast are now at 3.3%, hardly a shortage going on here. Vacancy rates are around 2.5% for Brisbane.. except for inner-city Brisbane (1.5%), where nobody *has* to live anyhow. 

http://www.oesr.qld.gov.au/queensla...d/rental-housing-vacancy-rates-qld-200809.pdf


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## YChromozome (14 October 2008)

gfresh said:


> True, lot of pretty poor properties trying to attract the same price as "the market" when they're a heap of @##$ and haven't had a cent spent on them for years. It's surprising many find any tenants at all, but I guess there are those out there with atrocious rental histories and/or those that can't even rub 5 cents together. Vacancy rates on the Goldcoast are now at 3.3%, hardly a shortage going on here.




Yeah, I suspect it's predatory landlords/property managers that are now targeting Asian students and the like. If they move to a new country, and couple this with "rental shortage", the students will take anything.

I'm unemployed and secured my first choice of rentals at the Northern Beaches (Sydney) about two months ago. At the time there were heaps of places advertised as "available now" which was a dead give-a-way that they empty. This was at the same time the press was running stories about the worst rental shortage. 

There is no endless stories in papers about people moving into share accommodation or moving back with the parents to save. I suspect living costs along with rent increases larger than inflation has helped with this.

The big problem now I see is some property investors will be faced with falling prices and having to spend a bit of money to bring their places up to scratch (to compete for tenants). I did look at some apartment buildings about 6 months ago, and while the buildings were only about 6 years old, they had rotting carpet, walls needed attention etc. It was probably someone that brought of the plan 8 years ago, and has never spent a cent on the place since. A lot of it was probably tenants faults, but as they left, the landlord probably pocketed the bonds and never did fix the breakage up.


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## Ageo (14 October 2008)

Hmm its interesting this property market, i believe even with the Home Owners Grant increasing, property prices will eventually fall due to lesser lending (lesser wages etc..). Its funny thow as my cousin bought a house 3 weeks ago and got 6 months of premium rent (which is high for the property) upfront!, they had 100 applications in the 1st week and rented it by the weeks end.

I believe some good country properties would be interesting for cash flow..... like this 1

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007347763
2 bedroom cottage, which you can pick up for $74,000 and with 20% down that would mean you would have to come up with $14,800.....

The expected rents are $150 p/w so gross rent annual would be $7800, lets say $1500 went to expenses and your left with $6000 before interest and tax. $59,200 (your loan) @ 7% interest would = $4144 in interest.

$6000 - $4144 = $1856p/a

Cash on cash return (cash outlayed to cash earnt) would = roughly 13%p/a

Theres always money to be made in any market


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## Pommiegranite (14 October 2008)

I posted this on another thread, but with hindsight think its just as appropriate here:

This 'plan' to increase the FHOG is nothing but a con.

All the government is doing is shifting one asset(cash) to another asset class (property) albeit indirectly. Any accountants will know that this is a balance sheet reclass, and BS reclasses have no bearing on the P&L.

To take it in microcosm, many people are losing value on their investment properties and would be loathe to spend cash on those properties. So what makes the goverment's plan any different?

This is just expensive campaign by the government to protect banks loans and the building industry (jobs). Those sucked into buying overvalued assets will lose out.


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## robots (14 October 2008)

Pommiegranite said:


> I posted this on another thread, but with hindsight think its just as appropriate here:
> 
> This 'plan' to increase the FHOG is nothing but a con.
> 
> ...




hello,

man the industry has been going down for years down (ie. construction) yet it is still name your price out there for good tradespeople, name your price

ask Tech, we always looking for good workers

man the government just "given" you another 8k or so and the whine is one,

anybody have negative equity on the share portfolio at the moment?

good luck to the hard workers I hope you do well in this fine country

thankyou
robots


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## Santoro (14 October 2008)

House prices down 10% in Perth since December....gotta be some negative equity in that. Hitting the boom and will radiate out.....

The Govt wouldn't hand out the money via the FHOG if they thought all would be well they would be spending it where its actually needed and we wouldn'y see Kevin Rudd on TV in a Prime Ministers address to the nation telling us he doesn't want to gild the lily if its not going to be bad, he must be wondering how he's gonna win the next election.


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## numbercruncher (14 October 2008)

10pc drops can actually be quite misleading ........

If you bought last year in Perth and on paper lose 10pc, its more like 20 to 30pc when factoring duties, fees, interest , re fee to sell etc ....


Gov is obviously getting desperate to pump the RE market, seems the Gen Ys just arnt buying it with a measly 5pc ownership rate in the 18 to 28 yr old age group ....


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## Glen48 (14 October 2008)

Will the Banks lend under the same rules, Will FHO qualify for a loan, I read were insurance premiums are up, Will FHO be game to buy in this market with partners loosing jobs.
Will they buy in this market if prices are going down or wait, Won't be cheaper to buy an established home rather than new. Which way will house prices go and for how long.


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## MrDamage (14 October 2008)

Hi - newbie here. 
I am a home owner & currently considering my options - I have friends in UK that have recently lost big on their property etc.

I have read this thread extensively & have concluded at this stage that people are looking at this too simplicitly.

Comparing average earnings to house prices is a factor that could be used to determine if property is over-valued but I don't think it should be the only factor that is considered.

Firstly, absolutely no-one is going to sell a property for 40%, 30%, 20% or even 10% less then what they paid for it unless they have to. I believe a rise of 1 - 1.5% in unemployment coupled with tougher lending criteria could do the trick but this is speculative. The key thing is a significant economic event would need to trigger any large drop in house prices.

...Perhaps the current environment could result in peoples hands being forced

Secondly, since the 1990's alot has changed in wider Australian society. Society obviously started recovering from a recession from the mid 1990s so it is not suprising to find flat growth in the housing market in the early 90s. 

Participation rates in the labour market have increased significantly - probably to the point where instead of looking at the multiplier of average wage to house price we should perhaps be looking at average household income compared to house price. 

When I grew up (i am gen y) only my father worked and my mother was a full time housewife. This was consistant with most of my school friends. There has been a significant social change in this respect and as a percentage there are more dual income households in this country than ever before. This fact alone must play a large bearing in house price values.

Thirdly, there is a supply problem.

Do I think house prices will fall? I don't know...

What I do know is this - this is now more complex than simply multiplying the average wage by 3.


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## YChromozome (15 October 2008)

Welcome aboard Mr Damage. I agree, there are many factors that need to be considered.

There is a thread on Global House Price Crash.com titled Prediction of the bottom for Australian house prices which may be worth discussing your thoughts there.

Yes, normally bubbles need a trigger to pop. In the case of the US it was a couple of Subprime loans which triggered the crash of the housing markets. 

There is still some debate about if we are heading for a recession or not. My opinion is that there is no question. We have been spending more than we earn for a number of years now, and using debt to do so. At a household level, even if we decide to spend the same than last year, we still need credit to do it. It's not sustainable and has to contract.

Credit is also tightening which will not help sustain prices at giddy heights.

However if you want a more significant financial event, I would say credit derivatives such as CDS. If you though credit markets were in a bad way, wait until these start exploding.

The two income households is quite valid, this is talked about in the above thread. There is also a book on the two income trap. In a nutshell, when two wage earners per family started out, it was seen as a way to diversify risk. If one wage earner lost their job, they could depend on the 2nd. However in reality, all it did was push house prices up and make them even more riskier. 

Today, in many cases, it is mandatory to have two wage earners to afford the size of the mortgage. However now if any one of the two wage earners lose there job, the likelihood of default is high. 

The probability of either one of the two wage earners losing their job is higher than just one wage earner losing their job. Or it has done is exposed households to more risk.

The supply problem is a common myth used to put a floor under house prices. The USA had a shortage of houses and the UK also had a shortage of houses prior to their spectacular crashes. For example :

UK house prices to rise 40% by 2012  - 7th August 2007.



> LONDON: UK house prices will increase 40% over the next five years because of a shortage of properties, a report by the National Housing Federation said.




14 months on and house prices there are down 12.4% for the year, the steepest fall in 25 years.

Data released today show Perth house prices are down 10% from December last year. It's possible come December this year, yoy falls for Perth exceed that of 12.4%. I'm sure Perth complained there was a shortage of houses too.

I have plenty of examples of a shortage of houses within a couple of streets here at Narrabeen in Sydney. There is a penthouse built 5 years ago, which the developers are still trying to sell. No one has ever lived in it. Around the corner is 18 townhouses which was finished at the start of this year. All 18 are empty. Down the road is a development of 63 units completed three years ago. As the developers have struggled to sell them all, they have applied to council to turn 40 of the units into short term hotel accommodation.


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## Temjin (15 October 2008)

First of all, excellent response there YChromozome. 

And hi MrDamage, welcome to the forum. I'm glad you took an interest to investigate this further. Take your time to read what we have post so far, do some research on the internet and avoid media information as much as possible, especially from sources where they have a vested interest in seeing property prices rise. (i.e. mortgage industry, real estate bodies, etc, they all have been praising the increase in FHG)



MrDamage said:


> Hi - newbie here.
> I am a home owner & currently considering my options - I have friends in UK that have recently lost big on their property etc.
> 
> I have read this thread extensively & have concluded at this stage that people are looking at this too simplicitly.




Unfortunately, it is the same goes for those who are in denial of the bubble we are in. They used simplistic assumptions as well.



> Comparing average earnings to house prices is a factor that could be used to determine if property is over-valued but I don't think it should be the only factor that is considered.




Definitely, it's not the only factor that are being considered. It merely shows you how "far" in value it has increased but does not tell you exactly if it can go higher. 



> Firstly, absolutely no-one is going to sell a property for 40%, 30%, 20% or even 10% less then what they paid for it unless they have to. I believe a rise of 1 - 1.5% in unemployment coupled with tougher lending criteria could do the trick but this is speculative. The key thing is a significant economic event would need to trigger any large drop in house prices.
> 
> ...Perhaps the current environment could result in peoples hands being forced




This is what YChromozone or we think as the biggest risk right now. Do you think Australia will go into a recession? Do you trust the mainstream economists view and the government who have a vested interest in being a cheerleader? The risk of a serious recession in Australia has increased significantly, and even these permabull politicians are predicting times will be tough.

Like you said, people will not sell their house until they are forced to. They will spend every last cent of saving and use up every credit available to stay in their house. When unemployment rise, and personally, it will be way more than 1-1.5% (talking about 10%+ here), all our personal debt would have to be unwinded quite aggressively. 



> Secondly, since the 1990's alot has changed in wider Australian society. Society obviously started recovering from a recession from the mid 1990s so it is not suprising to find flat growth in the housing market in the early 90s.




You need to realise that the growth in the housing market from the 1980s to present was fueled by massive credit growth with few obstacle in between. This credit boom is about to end unfortunately. 



> Participation rates in the labour market have increased significantly - probably to the point where instead of looking at the multiplier of average wage to house price we should perhaps be looking at average household income compared to house price.




What's the difference between average SINGLE wage and average HOUSHOLD income (which is really two person working...) verse house price?? One has a higher ratio than the other, but if you compare these same value to other countries, you will see how overvalued we are from this perspective. 

This is no difference than distorting the data and interpret it your way. 



> When I grew up (i am gen y) only my father worked and my mother was a full time housewife. This was consistant with most of my school friends. There has been a significant social change in this respect and as a percentage there are more dual income households in this country than ever before. This fact alone must play a large bearing in house price values.




So why it was easier to afford a house on a single income before and now you can't? What makes housing more expensive than before? So the cost of building and maintaining a house has risen despite an increase in technology to make things more efficient? Or has the cost of materials risen more than inflation rate? No, the rise in house price is an illusion based on the massive increase supply of money, or rather credit. More money chasing the same product would lead to inflation. This is same as if you have $10 and there is only 10 apples in this world. If you have $100, you would be willing to pay $10 each instead of $1, thus, making the apples seemingly more "expensive". 



> Thirdly, there is a supply problem.




This is a myth, please read the following links.  

http://cij.inspiriting.com/?p=314
http://cij.inspiriting.com/?p=458

http://cij.inspiriting.com/?page_id=295 has more links to other articles.

You need to ask yourself where did you learn about all this "supply problem" issue. Have you investigated yourself? Or you only hear about it from your friends and from the media?


----------



## robots (15 October 2008)

hello,

welcome Mr Damage,

be very careful of people with vested interests who want RE prices to fall (typically the handout crew, whinners, bloggers, ghpc members, bludgers, free loaders, the guy out the front of Coles who wants a $1 of your hard earned)

sit tight man, in 20-30yrs when you have a roof over your head and you sitting back on easy street you will be high-fiving yourself while enjoying nirvana,

debt is on the way down so it will get easy and easy to keep that roof over your head,

thankyou
robots


----------



## numbercruncher (15 October 2008)

is that your Guys life plan ?


Have a roof over your head within 20 to 30 years ?


What a sad waste ......


but if it makes you happy , whom am I to judge !


----------



## nunthewiser (15 October 2008)

robots said:


> hello,
> 
> welcome Mr Damage,
> 
> ...





Good mornin robots 

just a quick question , um do you think that this new gift of 14k/21k combined with these intrest rate cuts will help my mission to sell a few blocks and 2 investment properties to some bushy tailed new investors in the near future?

thankyou


----------



## MrBurns (15 October 2008)

MrDamage said:


> Do I think house prices will fall? I don't know...
> 
> What I do know is this - this is now more complex than simply multiplying the average wage by 3.




I've seen it all before in the early 90's prices dropped by 30% and the bubble this time is many times worse so it will drop and drop substantially.It's already started, houses that would have sold at auction are still sitting there weeks after, and this is in an inner suburb of Melbourne.
I think prices have come off 15% at least so far and it hasn't really started to kick in yet. No vested interest here I own 2 properties worth a lot........but less than 6 months ago. No debt so when it tanks I might buy more.
Give it 12 to 18 months.


----------



## MrBurns (15 October 2008)

nunthewiser said:


> Good mornin robots
> 
> just a quick question , um do you think that this new gift of 14k/21k combined with these intrest rate cuts will help my mission to sell a few blocks and 2 investment properties to some bushy tailed new investors in the near future?
> 
> thankyou




Yes Krudd has made it easier for you to sucker the poor unsuspecting first home buyers in.

Good to see he isn't "gilding the lilly" a term he borrowed from Paul Keating and has been parroting about in recent days when in actual fact thats all he's been doing.


----------



## nunthewiser (15 October 2008)

MrBurns said:


> Yes Krudd has made it easier for you to sucker the poor unsuspecting first home buyers in.
> .




um , me personally am not "sucker" playing anyone actually , i have property , i want to sell property , they want to buy property 

gawd bless a free market 

gawd bless the goverment in stimulating the property market be it all maybe briefly .

oh also gawd bless captalism


----------



## MrBurns (15 October 2008)

nunthewiser said:


> um , me personally am not "sucker" playing anyone actually , i have property , i want to sell property , they want to buy property
> 
> gawd bless a free market
> 
> ...




Wasn't meant to be personal, just that Rudd has done this and I cant understand the logic, I dont think he does either.


----------



## numbercruncher (15 October 2008)

wrong thread


----------



## nunthewiser (15 October 2008)

MrBurns said:


> Wasn't meant to be personal, just that Rudd has done this and I cant understand the logic, I dont think he does either.




totally agree m8 , hardly gunna fix the problem  lol quite funny actually .give em more money to buy a bigger house that they STILL cant afford  blessim


----------



## robots (15 October 2008)

nunthewiser said:


> Good mornin robots
> 
> just a quick question , um do you think that this new gift of 14k/21k combined with these intrest rate cuts will help my mission to sell a few blocks and 2 investment properties to some bushy tailed new investors in the near future?
> 
> thankyou




hello,

not sure really, property has still been selling over the last couple of years, 

jobs is the man issue and I think thats all the RBA is concerned about full stop so if the jobs keep up and the items you mentioned are on the fringes with a little bit of incentive,

number, dont they still say "your house is your biggest investment", this will still ring true in 20,30, 50 or 100yrs i would say

thankyou
robots


----------



## nunthewiser (15 October 2008)

robots said:


> hello,
> 
> not sure really, property has still been selling over the last couple of years,
> 
> ...




cheers, yes a few worrys regarding unemployment seem to be popping up these days. who knows eh might get lucky 




thanks for your response


----------



## Kauri (15 October 2008)

The UK Times is reporting that according to David Miles, chief UK 
economist at Morgan Stanley a further 50 BP rate cut by the BOE could result in the UK housing slump ending as soon as next year. Miles said that if the BOE failed to cut, house prices could fall another 5% to 10% before bottoming out next year. The Times also reports that in a separate report, Andrew Clare, Professor of Asset Management at Cass Business School, gave a more dismal prediction, saying that house prices would slide by 40% and that property values would not rise to 2007 levels again until 2023. .....  _so much for relying on the experts..._

Cheers
..........Kauri


----------



## Mofra (15 October 2008)

YChromozome said:


> The USA had a shortage of houses and the UK also had a shortage of houses prior to their spectacular crashes. For example



The UK shortages were never qualified though were they? I haven't seen any links to articles that state actual numbers that are beliveable (the link provided doesn't state numbers) rather than broad estimates at best.

One of the bear videos available on You Tude mentions that in the US in 2006 there was enough construction activity to house almost 50% of the then population - ridiculous oversupply, especially considering the nature of demographic settlement is less tied to population centres than in many other Western countries.


----------



## robots (15 October 2008)

hello,

http://www.tradingroom.com.au/apps/...shed/2008/10/289/catf_081015_103600_5549.html

another dropping, fantastic news

its on brothers with more on the way

thankyou
robots


----------



## MrBurns (15 October 2008)

> The Federal Housing Minister, Jenny Macklin, says doubling the first home buyers grant will not push up the cost of housing.
> 
> First home buyers will now receive $14,000 to buy an established home until the end of the financial year.
> 
> ...




What a freeking scandal, come on in young people, come on in just as we are about to go into the worst financial crises in our history, she ought to be locked up somewhere. It's disgraceful.


----------



## gfresh (15 October 2008)

Yes, will get sucked in hook line and sinker, to overpriced stock, and the dregs that haven't been able to be shifted for months. Then they'll see the value of their pride and joy gradually slide soon after purchase, especially in the outer suburbs where they're more likely to be buying. 


Hello, 

Stkilda development shelved.

http://www.theage.com.au/national/m...cuppered-st-kilda-triangle-20081014-50n9.html



> REDEVELOPMENT of St Kilda's prized triangle could be the next victim of global economic turmoil, with the $400 million project apparently on the brink of collapse.
> 
> The project, led by the Citta Group, has sought and won an extension to the start date for work from the Port Phillip Council. The Age understands that no tenants have yet been signed for the project's 160 shops, restaurants and bars.




Wonderful news! Couldn't be better!

thankyou.


----------



## finnsk (15 October 2008)

Maybe this is in the wrong thread.
My understanding is that we are to a degree relaying on China to keep our economy going, one thing I do not understand is that in China they have been building all these new houses for all there people, but if they are only earning $100 per week how can they afford to buy/rent and i am sure the companies that build them wants a return on there investment. 
Will that not put a stopper on there imports of iron ore? and therefor cool down our economy?


----------



## MrBurns (15 October 2008)

gfresh said:


> Yes, will get sucked in hook line and sinker, to overpriced stock, and the dregs that haven't been able to be shifted for months. Then they'll see the value of their pride and joy gradually slide soon after purchase, especially in the outer suburbs where they're more likely to be buying.
> 
> 
> Hello,
> ...




Agree on all fronts.


----------



## MrBurns (15 October 2008)

finnsk said:


> Maybe this is in the wrong thread.
> My understanding is that we are to a degree relaying on China to keep our economy going, one thing I do not understand is that in China they have been building all these new houses for all there people, but if they are only earning $100 per week how can they afford to buy/rent and i am sure the companies that build them wants a return on there investment.
> Will that not put a stopper on there imports of iron ore? and therefor cool down our economy?




I dont trust China anyway, they'll take our iron ore then make a bomb and drop it on us while the US is trying to squeeze more cash out of their exhausted Gold Amex.


----------



## Beej (15 October 2008)

numbercruncher said:


> is that your Guys life plan ?
> 
> Have a roof over your head within 20 to 30 years ?
> 
> ...




How about - stating the goal as having a REALLY nice, luxury roof over your head with enough room for your family, lot's of living space, landscaped gardens, pool, entertaining area etc etc, in a quality, wealthy area of one of the best cities in the world where everyone wants to live, with good schools and infrastructure all on hand. Plus own it outright so no rent or interest to pay, and all income earned goes towards investments for other lifestyle desires (sports cars, holidays, hobbies etc), and a financially independent retirement. 

Does that sound better? That's how I see the goal.

Even if you choose to rent and have the discipline to invest in other sectors to achieve the financial benefits that owning your own house will provide, at some point in your life you will have to cash that in and buy a house anyway! Unless you want to still be renting and moving every 6-12 months when you have teenage kids in the local school, or are retired etc etc. And that's the point - everyone needs somewhere to live, and to a large extent where you live defines your lifestyle and quality of life, as you spend a LOT of time there!

PS: To MrDamage - good posts - read some of my posts on this thread for a different view than many of the responses you have got here already. Pay off your mortgage as quickly as you can, in a few years you will look back and realise you own an asset with real value and that you get to live in rent free while all the doom-sayers here will still be paying ever-increasing rent and still whining about how expensive houses are WHERE THEY WANT TO LIVE! There are plenty of cheap houses around of course but the guys here don't want to live in those areas!

PPS: When I heard about the increase in the FHBG I laughed and laughed! Tried not to come and read all the rantings that would produce on this forum but I couldn't resist  Still sick of arguing here and have made all my points before - just add this grant increase to the interest rate reduction cycle and it's not hard to figure out what happens from here for FHBs.

PPPS: I noticed that all the negative mainstream press articles get posted here, but NONE of the more positive ones like this one: http://www.smh.com.au/news/national/sydney-property-buoyant-in-slump/2008/10/08/1223145446496.html, which actually states how Sydney property is actually holding up pretty well. I have stated many times that I think Sydney is near/at the bottom now, but that Perth and other parts of the country etc are a couple of years behind the Sydney cycle. Those looking for 40% falls are living in fantasy land - this property cycle is just like the early 90s downturn and it is playing out exactly the same so far.

Cheers,

Beej


----------



## MrBurns (15 October 2008)

Beej said:


> Those looking for 40% falls are living in fantasy land - this property cycle is just like the early 90s downturn and it is playing out exactly the same so far.
> 
> Cheers,
> 
> Beej




You must be joking there was no global financial crisis in the early 90's and property dropped by30% this will be 40%  or worse .............

I think anyone talking about bargains now is in need of a reality check.


----------



## Junior (15 October 2008)

Beej said:


> How about - stating the goal as having a REALLY nice, luxury roof over your head with enough room for your family, lot's of living space, landscaped gardens, pool, entertaining area etc etc, in a quality, wealthy area of one of the ........




Couldn't you apply the exact same arguments to property markets in the US and the UK?

If property is overvalued, in a bubble and at a record level of unaffordability...then it WILL correct back towards it's long term trend...it's just a question of how far and for how long prices will fall.


----------



## YChromozome (15 October 2008)

Mofra said:


> The UK shortages were never qualified though were they? I haven't seen any links to articles that state actual numbers that are beliveable (the link provided doesn't state numbers) rather than broad estimates at best.




I think that is half the problem isn't it. I can remember earlier this year, there were variations of something like 2800% in the shortage numbers for Australia between the various Real Estate Bodies and Statistic providers. 

One of the problems with this type of data is developments like this. While the markets are going up, the developers would rather hold on to these properties than sell at any price. Of the 18, only three are currently advertised. 

However once the market starts to turn, fear comes in and they then put the entire 18 up for sale at any price just to move them.

There are plenty of these type of developments scattered around.


----------



## Calliope (15 October 2008)

MrBurns said:


> What a freeking scandal, come on in young people, come on in just as we are about to go into the worst financial crises in our history, she ought to be locked up somewhere. It's disgraceful.




This is to encourage people who have never saved any money and probably never paid any taxes to buy a house with a gift of 14 or 21 thousand dollars for a deposit. In other words to buy a house they willl never be able to pay off. Isn't this what caused the sub prime mess that kicked of the world recession? Incidently, there is no limit on the cost of the house. You will get the grant if you are buying your first house for a million bucks. Developers and mortgage brokers are rubbing their hands with glee.

Saving is now a dirty word. There is no incentive to save. The policy is now spend, spend, spend. Never mind that some the taxes that paid for this came came from taxes paid on the interest on your savings and mine.


----------



## Beej (15 October 2008)

MrBurns said:


> You must be joking there was no global financial crisis in the early 90's and property dropped by30% this will be 40%  or worse .............
> 
> I think anyone talking about bargains now is in need of a reality check.




You conveniently forget to remind people that prior to the early 90s property slump, that in the space of 18 MONTHS during 1988/89 that price WENT UP BY 250%!!!! (Ie doubled and then half again) That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.

That's why you are living in fantasy land if you think you will see 40% falls now, financial crisis or not. I'm prepared to bet my house on it. Are you?? 

Beej


----------



## MrBurns (15 October 2008)

Beej said:


> You conveniently forget to remind people that prior to the early 90s property slump, that in the space of 18 MONTHS during 1988/89 that price WENT UP BY 150%!!!! That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.
> 
> That's why you are living in fantasy land if you think you will see 40% falls now, financial crisis or not. I'm prepared to bet my house on it. Are you??
> 
> Beej




I'm debt free but I pity those who aren't , I won't argue with you but time will prove me right


----------



## Temjin (15 October 2008)

Beej said:


> You conveniently forget to remind people that prior to the early 90s property slump, that in the space of 18 MONTHS during 1988/89 that price WENT UP BY 250%!!!! (Ie doubled and then half again) That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.
> 
> That's why you are living in fantasy land if you think you will see 40% falls now, financial crisis or not. I'm prepared to bet my house on it. Are you??
> 
> Beej




You conveniently forget that you are STILL SUFFERING from your recency bias which I probably have mentioned to you a fair number of times from previous posts. 

If I was a real estate agent, I would have easily conned you by using a chart that show the price trend of house prices in Australia from 1990 to 2006 and tell you that this type of growth will continue INDEFINITELY in the future, regardless of what will happen to the economy or the rest of the world. Price crash? No worries, it has always risen back up in the last 20 years! 

Now if I were to show you the same graph but that is from 1950 to 1980, maybe i will have more trouble trying to do the same conning tactic. 

Past performance is no indicator of future return! 

You are living in fantasy land if you are trying to use historic examples to project into the future. It's one of the flawest thinking ever. Read "The Black Swan" book from Nassim Tabel instead. 

You will be pleasently surprised when the "black swan" event do occur. And yes, they will eventually one day. People just don't accept it or prepare for it because it has never happened in their "reality".


----------



## Temjin (15 October 2008)

Yep, we should all buy now! There may be housing bubble in every countries around the world (except Japan/German), but there is none in here! *grin*


----------



## Glen48 (15 October 2008)

In years to come people will look up scams on the net and find the South Seas , Tulips, Dot .Com Enron, Ostrich, Pine tree, and 2000 housing boom all created on Myths, greed, false info and like all scam crash as none can keep going up with out finding more suckers to pay the higher price each time.
WA houses are down 10% which is the Engine for the OZ economy the next lot of figure will show more declines else where in OZ.
Having brought and sold 7 houses the only one I have made money out of is the one I sold this year before the crashed.


----------



## Mofra (15 October 2008)

YChromozome said:


> I think that is half the problem isn't it. I can remember earlier this year, there were variations of something like 2800% in the shortage numbers for Australia between the various Real Estate Bodies and Statistic providers.



Absolutely, and the motives of each body vary by quite a bit as well, purely coincidental of course 



YChromozome said:


> One of the problems with this type of data is developments like this. While the markets are going up, the developers would rather hold on to these properties than sell at any price. Of the 18, only three are currently advertised.



I'm also intersted in what qualifies as a vacant dwelling as well. 
Do share accommodation vacancies count? 
What about dual occupancy dwellings, semi-residential buildings, etc. etc.

Only real way to know is to do leg work in a particular area, and even in those cases the data/observations you'll receive are so localised they aren't applicable anywhere else (and subequently aren't particularly relevant to this thread).


----------



## nunthewiser (15 October 2008)

LOL well done temjin


----------



## aleckara (15 October 2008)

Temjin said:


> Yep, we should all buy now! There may be housing bubble in every countries around the world (except Japan/German), but there is none in here! *grin*




The saddest thing is that I can see this $21000 grant bringing demand up further very easily. The average first home buyer (most are young) has only seen that their parents did not have to work nearly as hard for a house and if they did work hard they paid it off much sooner (on average of course - there is always risk taking ways of making it better for yourself).

Having $21000 injected into the market, a lot of first home buyers will jump because they know if they jump last they will pay the highest price. (i.e better get in now). i.e they are the suckers taking up the previous booms debt. This should cause a speculative trend as the price will confirm they are correct.

Until the defaults come in. Great Rudd - make the problem worse for us.


----------



## robots (15 October 2008)

hello,

yes thanks for pulling up St Kilda Triangle,

infamous Babcock & Brown, one Green has left company after share went from what $30 to $2, yes $2, another Green has been murdered overseas with links to tax avoidance schemes,

the humble truck driving clan will now most likely get a shot and build something worthwhile,

stick with plan old vanilla no frills REAL estate, 

plenty of negative equity around on those share certificates, but we will keep that hush hush here okay

we going three years strong crew, congratulations

thankyou
robots


----------



## MrDamage (15 October 2008)

Thank you for the kind words welcoming me to the threads etc.

One more question I have that someone hopefully can answer is what happened to Sydney property between 1979 & the late ninety's.

My mother tells me that my parents purchased their former house in a working class Sydney suburb in 1979 / 1980 for around $22000.

Even before the most recent housing boom, houses in the same area were selling for between $170K & $220K. Houses in the same area today sell for between $450K - $650.

What did the average earnings to house value look like during this period?

For me, house price values rising ~1000% between late 70's / early 80's up to mid - late 90's represents far bigger movement in pricing than anything we have seen in the last decade.

What were the bears saying back then?


----------



## gfresh (15 October 2008)

Beej said:


> That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.




Well for Brisbane, ABS has house prices going from 110 at the start 2006 to 145 in late 2007 (31% on average, some of course are closer to 40%+). That's only 24 months.

Even a "minor correction" back to 120 or so to early 2007 levels is 17%. All fine if you're well established since the early part of the decade, however such figures would devastate many lenders, overall confidence, and recent buyers in the market who got in the tail-end of the boom. 

Even 10-15% is not nice on something like $400k. Maybe some will see the bigger longer-term picture, but for others I can't imagine it would be a good thought, especially knowing they could have bought bigger and better for same price. 

The last, and fastest rising markets fall first, we've seen that overseas, and we're starting to see it here. WA first, then probably QLD..


----------



## gfresh (15 October 2008)

Here is Sydney.. Looking at this, I'd probably agree with your general thoughts BeeJ, that Sydney has been a lot more subdued recently, and prices may not fall too much.


----------



## CamKawa (15 October 2008)




----------



## Beej (15 October 2008)

MrBurns said:


> I'm debt free but I pity those who aren't , I won't argue with you but time will prove me right




Whilst I usually find it unnecessary to discuss personal financial details on public internet forums, you may be pleased to know that I too am debt free. I am also sick of arguing here and believe time will in fact prove me right! We shall see.

Cheers,

Beej


----------



## Beej (15 October 2008)

gfresh said:


> Here is Sydney.. Looking at this, I'd probably agree with your general thoughts BeeJ, that Sydney has been a lot more subdued recently, and prices may not fall too much.




Thanks for that gfresh - that's a good graph. I would expect to see something similar to the past 4 years in Sydney pan out from here in other markets in Oz, especially so now with the increased FHBG and falling interest rates.

Cheers,

Beej


----------



## Temjin (15 October 2008)

It STARTED GUYS, GO GO GO GO! Beej, I am inviting you to join this discussion too. It's refreshing to hear from both sides.

http://cij.inspiriting.com/?p=562


> *“Property 2009: Crash, Boom or Stagnate?!” debate begins today!*
> 
> Just a reminder to all our readers: the Property 2009: Crash, Boom or Stagnate?! forum debate is starting now.
> Two of our special guest experts will be taking part in this debate. See Interviewing Steve Keen for the upcoming property forum debate and Interviewing Michael Yardney for the upcoming property forum debate.




http://ourfinanceblogs.com/forums/index.php?topic=18.0

*Michael Yardney - Director of Metropole Property Investment Strategists

and

Associate Professor Steve Keen - Oz Debtwatch* 

will be taking part in the discussion, and already have too. It will be an excellent thread with professional opinions.


----------



## MrDamage (15 October 2008)

What do the bears think of these numbers relating to Sydney house prices.

Data shows % change to average house price - 1970 - 2003:

		% change
1970	18,700	
1971	21,200	13
1972	23,700	12
1973	27,400	16
1974	31,800	16
1975	34,300	8
1976	36,800	7
1977	39,200	7
1978	43,200	10
1979	50,700	17
1980	68,850	36
1981	78,900	15
1982	79,425	1
1983	81,425	3
1984	85,900	5
1985	88,350	3
1986	98,325	11
1987	120,025	22
1988	141,000	17
1989	170,850	21
1990	194,000	14
1991	182,000	-6
1992	183,300	1
1993	188,000	3
1994	192,375	2
1995	196,750	2
1996	211,125	7
1997	233,250	10
1998	248,750	7
1999	272,500	10
2000	287,000	5
2001	322,500	12
2002	387,500	20
2003	454,250	17


----------



## CamKawa (15 October 2008)

Temjin said:


> It STARTED GUYS, GO GO GO GO! Beej, I am inviting you to join this discussion too. It's refreshing to hear from both sides.
> 
> http://cij.inspiriting.com/?p=562
> 
> ...



Is that an ad?


----------



## numbercruncher (15 October 2008)

Temjin said:


> Yep, we should all buy now! There may be housing bubble in every countries around the world (except Japan/German), but there is none in here! *grin*






Cracks me up , you can even hear is voice as you read the words lol ..


----------



## robots (15 October 2008)

MrDamage said:


> What do the bears think of these numbers relating to Sydney house prices.
> 
> Data shows % change to average house price - 1970 - 2003:
> 
> ...




hello,

not a bad gig Mr Damage, just for putting the key in the door man

thankyou
robots


----------



## YChromozome (15 October 2008)

MrDamage said:


> What do the bears think of these numbers relating to Sydney house prices.




Sydney reached an equilibrium point in late 2003 where people could no longer afford Sydney houses. Simply put, Sydney house prices reached the ceiling of affordability in 2003.

So the real question is where is the data from 2004 onwards? Anyone worth their weight in gold, knows it corrected a few percent then leveled out. Why is this data missing? Why does it just happen to stop at 2003?


----------



## Temjin (15 October 2008)

CamKawa said:


> Is that an ad?




It's not my business for sure.  

Regardless, Steve Keen is participating the discussion, so this would be interesting.


----------



## robots (15 October 2008)

hello,

i hope steve keen discusses his participation in the greatest credit bubble the world has seen (not my words)

thankyou
robots


----------



## MrDamage (15 October 2008)

YChromozome said:


> Sydney reached an equilibrium point in late 2003 where people could no longer afford Sydney houses. Simply put, Sydney house prices reached the ceiling of affordability in 2003.
> 
> So the real question is where is the data from 2004 onwards? Anyone worth their weight in gold, knows it corrected a few percent then leveled out. Why is this data missing? Why does it just happen to stop at 2003?




I didn't intentionally leave any data out - I just didnt have time to find a more up to date data set.

It could be argued though that we have reached this same point a couple of times before according to the data set - wouldn't you agree? - e.g. 1982 - 1985 & 1991 - 1995.


----------



## robots (16 October 2008)

hello,

http://www.tradingroom.com.au/apps/view_article.ac?articleId=236044

here we go, even Keen is on the bandwagon, cant wait to be just paying the Principal on my loan just to keep the roof over my head,

awesome, word out to token multimillionaire who is having a bit of time out, the views keep pumping along

thankyou
robots


----------



## nunthewiser (16 October 2008)

Gday robots .


any idea when this new home buyers gift comes into effect or is it immediately ?

thanks


----------



## robots (16 October 2008)

hello nunthewiser,

i think it commences around November 2008,

hope you have had a great day

thankyou
robots


----------



## nunthewiser (16 October 2008)

robots said:


> hello nunthewiser,
> 
> i think it commences around November 2008,
> 
> ...




cheers , id better get back to planting some pretty flowers and paintin the fence then, the day was excellent thanks for asking.

cheers for answering 
have a good evening


----------



## SBH (16 October 2008)

Beej said:


> How about - stating the goal as having a REALLY nice, luxury roof over your head with enough room for your family, lot's of living space, landscaped gardens, pool, entertaining area etc etc, in a quality, wealthy area of one of the best cities in the world where everyone wants to live, with good schools and infrastructure all on hand. Plus own it outright so no rent or interest to pay, and all income earned goes towards investments for other lifestyle desires (sports cars, holidays, hobbies etc), and a financially independent retirement.
> 
> Does that sound better? That's how I see the goal.
> 
> ...




So you think bribing young people to buy houses when our economy is on the brink is funny? Well laugh it up. We certainly know where the government stands now dont we! The plan is to do whatever is neccessary to save the price of your houses and to hell with affordability. This is one of the most irresponsible policies ever seen in this country. If FHBs pile in now and it all crashes next year will rudd give an apology to the young people who he has encouraged to financial ruin??

Also did anyone see Tanner on lateline openly telling the country to spend spend spend their government handouts? Now that was funny


----------



## Ruincity (16 October 2008)

So I hear about this extra 7k on the home buyers grant and being in this class and eligable I think great...  Gotta take advantage of this!!  Might be the extra little kickstart I need and face it I don't want to miss out on 14k now!!  What if they abolish it??

And then I think well, at least I can afford it.. 
Have a fair lump sum of cash in the bank and maybe I will even buy a house and keep some spare cash on the side.. 

It then occurs to me a few days later that isn't this a creation of sub prime?

Doesn't this just lead poor first home buying lambs with very little capital and a world possibly on the brink of a recession/depression to the slaughterhouse!?

What if things do go towards increased unemployment and lack of opportunity.. These marginal suspects lured into the "dream" go downhill bankrupt and we have our own little subprime first home buyers governement fuelled crisis... 

VERY VERY dangerous move I think.. 
The more I think of it the more irresponsible it seems.. 

This I read today:

"First home buyers have been coming into our office, which is unusual as it's usually only second and third home buyers who can afford a new home. But the $21,000 is effectively the full 5 per cent deposit on a $420,000 package." 

Sounds familiar.. 

The rest of the trash here: http://www.news.com.au/business/story/0,27753,24504122-5013951,00.html


----------



## YChromozome (16 October 2008)

MrDamage said:


> It could be argued though that we have reached this same point a couple of times before according to the data set - wouldn't you agree? - e.g. 1982 - 1985 & 1991 - 1995.




I don't have data (for Sydney) at the moment to make any definite conclusions, but I can't imagine that was the case. I believe you are purely looking at the price of the asset and seeing it decline. Asset prices always have cycles, they go up, then they go down.

I was talking more about the ability of the owner to service the mortgage. You would have to look at affordability data to determine this. 

When the bank standard lending rate hit 17% in 1989, household debt to disposable income was 47%. RBA data shows the average housing loan repayment [Aust Wide, not Sydney] consisted of 6% of household disposable income.

In December 2007, the bank standard lending rate was only 8.55%. Let, because Australian's houses are worth a lot more (household debt to disposable income is 160.4%), the housing loan repayment now makes up 9.5% of household disposal income.

So households are now paying 58% more in mortgage repayments (inflation adjusted) than they were when interest rates peaked at 17% in 1989. 

To put it another way, if debt stayed the same, we are [Dec 2007] paying the equivalent of 26.8% interest today. Now does any one want to say "in my day, we paid 17% interest. Interest rates have never been lower" ?


----------



## gfresh (16 October 2008)

Ruincity said:


> And then I think well, at least I can afford it..
> Have a fair lump sum of cash in the bank and maybe I will even buy a house and keep some spare cash on the side..




Just because people can get a $14-21k discount, doesn't mean they have to buy just to get the discount. What will happen after June 09 when this short-term subsidy is abolished? 

Might get a bargain well in excess of $14k if you negotiate well with a seller who missed those hoards of FHOB   that are going to flood the market. 

I have concerns too.. Last I checked there weren't too many brand new homes in the inner city, and the outer suburbs are the ones already being hit by falling values more than inner city. So it's indeed leading to potential pain. Estate homes are $400k+ these days anyhow, not quite entry level.


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## Ruincity (16 October 2008)

It's been said and heard by me before that all that is happening is the protection of inflated housing prices.  
I firmly believe this and it is a manufactured and unnatural process that the government is initiating that will/may inevitably lead to an even larger fall than what would probably have more naturally occurred. 

I know first home buyers are only a small percentage but the area's these people typically buy are the area's that are most volatile to rapid price reduction in the event of a housing correction.. 
Seems to have too much of a sub prime ring to me... 

Nevertheless we have mortage insurance and all that sort of stuff here and regardless of that article I posted from my own experience you need a whole lot more than a first home buyers grant to get a loan and a house around here...... 

I just think it's quite a dangerous gamble...


----------



## YChromozome (16 October 2008)

Ruincity said:


> Doesn't this just lead poor first home buying lambs with very little capital and a world possibly on the brink of a recession/depression to the slaughterhouse!?




Rudd has been briefed on the weekend, and now understands about leveraging.

This is great that the government can spend $21k and get $420k worth of value to help keep construction jobs.


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## chops_a_must (17 October 2008)

What was Costello's quote many years back when apartments in Melbourne tanked?

"Property is not a one way bet." ??? Does anyone remember?


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## Temjin (17 October 2008)

Ruincity said:


> I just think it's quite a dangerous gamble...




It's very true because of the "leverage" involved in properties. It's great when it raise, but a huge stab in the back when it drop. I always scare the s**t out of my friends when I told them about the leverage they are getting into. They never thought about it, and then denial it by claiming no one has ever sold a property at a lost. At least they wouldn't anyway. 

People tend to think their job is completely secured and generally leave very little saving behind to cover their expenses in the event of forced redundancy. Just look at the national saving rate would have scared you. 

It was negative in the US for a while, and has since creeped up back to 0% to slightly positive %.


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## MrBurns (17 October 2008)

SBH said:


> So you think bribing young people to buy houses when our economy is on the brink is funny? Well laugh it up. We certainly know where the government stands now dont we! The plan is to do whatever is neccessary to save the price of your houses and to hell with affordability. This is one of the most irresponsible policies ever seen in this country. If FHBs pile in now and it all crashes next year will rudd give an apology to the young people who he has encouraged to financial ruin??




Couldn't agree more, why doesnt the dumb freeking media pick this up ?


----------



## YChromozome (17 October 2008)

Temjin said:


> Just look at the national saving rate would have scared you.
> 
> It was negative in the US for a while, and has since creeped up back to 0% to slightly positive %.




Have you seen the Australian Net Savings rate?


----------



## Warren Buffet II (17 October 2008)

MrDamage said:


> What do the bears think of these numbers relating to Sydney house prices.
> 
> Data shows % change to average house price - 1970 - 2003:
> 
> ...




Those are poor number in my opinion. This just shows a 10% return year on year which is just an average for any investment as shares for example.
But do not forget, if you bought in 1970, how much money have you spend on maintanance, council rates, insurance and bank mortgage interests?.
Well, if you do not know I'll tell you, you have spent much more that the 454,250 you ended up with.

So, can you sell to enjoy that money if that is your place of residence, I bet no, so you will end up living in a poor place without money after your 35 years investment.

WBII


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## Warren Buffet II (17 October 2008)

YChromozome said:


> Have you seen the Australian Net Savings rate?




I understand that for every dollar aussies spend on credit cards banks need to borrow 105% overseas to sustain it.

Aussie saving is much more less that 0%

WBII


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## YChromozome (17 October 2008)

Warren Buffet II said:


> Aussie saving is much more less that 0%
> WBII


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## Aussiejeff (17 October 2008)

YChromozome said:


>




Did we lead the US into a credit trap?


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## Mofra (17 October 2008)

Ruincity said:


> It then occurs to me a few days later that isn't this a creation of sub prime?
> 
> Doesn't this just lead poor first home buying lambs with very little capital and a world possibly on the brink of a recession/depression to the slaughterhouse!?



The sub prime mess was caused by a lack of credit standards, not a one-off payment to a minority segment of the property market. Credit standards (for secured loans at least) are infinately higher in Australia than they are in the US.


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## Mofra (17 October 2008)

Warren Buffet II said:


> Those are poor number in my opinion. This just shows a 10% return year on year which is just an average for any investment as shares for example.
> But do not forget, if you bought in 1970, how much money have you spend on maintanance, council rates, insurance and bank mortgage interests?.
> Well, if you do not know I'll tell you, you have spent much more that the 454,250 you ended up with.



You'd need to calculate your ROI on initial capital, not entire spend as it is very unlikely that you've paid cash for that property, then subtract cumulative interest payments anyway.
Shares are in front IMO because most comparisons I've seen fail to include franking credits into the scenario, which combined with lower overheads make it a much better asset class for accumulation. 
The only real advantage of property for investment is the ease & the cost of credit.


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## stock_man (17 October 2008)

Warren Buffet II said:


> Those are poor number in my opinion. This just shows a 10% return year on year which is just an average for any investment as shares for example.
> But do not forget, if you bought in 1970, how much money have you spend on maintanance, council rates, insurance and bank mortgage interests?.
> Well, if you do not know I'll tell you, you have spent much more that the 454,250 you ended up with.
> WBII




Not sure how you cam up with spending more than $454,250 over the life of the loan?

(Based on $18,200 borrowed - 100%)
Weekly P&I Repayments @10%: $37
Total Repayments P&I: $58K
Rates (average $500/year): $15K
Insurance (average $500/year): $15K
Maintenance (average $2000/year): $60K

Total Spent: $148K

These figures are averaged very high as well. I would estimate that the average for insurance and rates etc would be much lower.

What did he spend the remaining $306K on? ($10K / year)
Probably holidays, swimming pools, cars


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## Temjin (17 October 2008)

MrDamage said:


> I didn't intentionally leave any data out - I just didnt have time to find a more up to date data set.
> 
> It could be argued though that we have reached this same point a couple of times before according to the data set - wouldn't you agree? - e.g. 1982 - 1985 & 1991 - 1995.




The biggest problem that people most have is they are too close to the problem but fail to step back and look at the bigger picture.

If I show you the same price series (based on the same collection method) from 1940 to 1980, the whole picture will be different. 

It is known that house prices (and not just Australia along) has historically track inflation rate from 1900 to 1980s. When the credit super cycle got kick started, every single assets then went into a booming mode. 

Again, on the same other forum, no one has ever answered my question on why house prices can INDEFINITELY rise above wage growth over the very long term. (30+ years) Wouldn't this one day make an average income earner to pay more than 100% of his/her income to service the mortgage loan on an average priced house. Clearly this is unsustainable. But of course, people think boom will last forever because it has done so before. Recency bias again. 

Past performance is no indicator of future return.


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## gfresh (17 October 2008)

Temjin: nice questioning over there. 

What bothers me is belief disconnect between what is happening, or quite likely to happen in the real economy, and the refusal to accept this will have a marked effect on the housing market. Falling values are happening in major markets overseas quite clearly. It has at all other major periods of economic downturn to some extent, yet apparently it can't happen this time  Economists aren't always right, but often they can be close, especially when the big bear is staring them in the face. 

This is the worst financial crisis in 80 years, and yet, no effect can be possible other than seen in the last 20 years??

And in other news, exactly what I was suspecting on the Gold Coast property market a few months back. It doesn't make sense (wages vs prices), and we're now starting to see some reality come back in:

http://www.goldcoast.com.au/article/2008/10/17/17573_gold-coast-top-story.html



> The latest overview of the Gold Coast residential market produced by Bundall-based property valuers LandMark White is not pretty reading.
> 
> "At the moment there is too much volatility in the market and buyers' confidence has definitely taken a hit," said LandMark White Gold Coast director John Muchall.
> 
> ...




More facts here, these are property valuers, it is there job to...value property independently, and they are writing down a very real 5% here. 

Thanks to lovely news ltd journalism I've got a picture of these property sellers standing around in a daze that there are no buyers.. I'm sure they'll find plenty if they drop the price 20%, there are always buyers at the right price. 

One of Bligh's Ministers came out yesterday and let his tongue wag, suggesting Government was stuffed without the stamp duty incoming from house purchases. He was put back in his box, but still, it's been happening in NSW, it is likely here.


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## Warren Buffet II (17 October 2008)

stock_man said:


> Not sure how you cam up with spending more than $454,250 over the life of the loan?
> 
> (Based on $18,200 borrowed - 100%)
> Weekly P&I Repayments @10%: $37
> ...




Have you ever heard about compounding interest? and the word inflation?. I will explain that to you so you can find the rest of your money, I am sure there are more people like you out there that make that kind of calculations and believe that are 306K ahead.
Get each of those values per year and bring them to the present value using an inflation number. check this example:
With your weekly payment in year 0 of $37 do the next calculation with an average inflation number of 5%:
37*(1.05)^33 = $185

Now, do the math for all those numbers and come back. 

WBII


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## MrDamage (17 October 2008)

Temjin said:


> If I show you the same price series (based on the same collection method) from 1940 to 1980, the whole picture will be different.




Please do. I have been trying to find this data.


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## Glen48 (17 October 2008)

ABC news today told of WA house prices going down some loosing 45K and WA is the best place to make a living.
BHP is at $26 a few weeks ago they were $46 I am betting next week or so $15.. and then keep going down 
Would you buy at $15.00 is it a good buy or could they keep going down that is what we are facing.
China is starting to take a dive yet 3 weeks ago they were there to save us.
Why can't this keep going down until the bottom is buy 1 at 10c get 1 free????
Just like 9/11 no one would ever think it could happen now that it has it is 
acceptable.


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## stock_man (17 October 2008)

Warren Buffet II said:


> Have you ever heard about compounding interest? and the word inflation?. I will explain that to you so you can find the rest of your money, I am sure there are more people like you out there that make that kind of calculations and believe that are 306K ahead.
> Get each of those values per year and bring them to the present value using an inflation number. check this example:
> With your weekly payment in year 0 of $37 do the next calculation with an average inflation number of 5%:
> 37*(1.05)^33 = $185
> ...




Ouch!!! No need for the attack!! It might be nicer if you could illustrate to myself (and all the others you placed into the same category) where all the money has gone. It is much nicer to share wisdom and help others as opposed to public ridicule.

Anyhow, true, I was being lazy in my calculations. I took what I perceived was a generous average mean for the rates, insurance etc (being too lazy to work on the inflation adjusted figures).

Does the amount paid on the interest for the loan not change with inflation, as the final amount left is the same as the original amount, ie $18,200.

As I see it, the interest payments become less over time due to inflation. I would appreciate your help into the missing $$$$

Cheers


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## Temjin (17 October 2008)

MrDamage said:


> Please do. I have been trying to find this data.




Here you go. 

http://www.library.unsw.edu.au/~thesis/adt-NUN/public/adt-NUN20071210.120652/index.html

Remember there is no "reliable" housing data that goes back before 1970s. However, Nigel basically used the data series made by BIS Scrapnel from 1965 to onwards. And thus, he applied the same method for data before using other sources. 

Robert Shiller in his Irrational Exuberance book also constructed a similar series based on the same data collection method. 

Most would found it surprising that the real price of house has barely moved beyond above inflation from 1900 to 1970s and has pretty much exploded since the credit super structure began 25 years ago.

For the latest information on this "credit super structure cycle", refer to the following report from Merryll Lynch.

http://cfcr.ml.com/GetDoc.aspx?e=5Q%2fVo0o9XsED%2f8F4M6l%2fyyL4hHiMTF4vtdtjObk2HN7rX25MG5ZD06uznwQl5QNOdWancTQ%2bDVxdjB7oLHoA1Q%3d%3d&ctbDocIDs=10772136&v=1&m=%2b4K0MqQy8Zjr%2frmZ33Uci7rsXXU%3d


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## awg (17 October 2008)

talking to my RE agent who handles my Commercial lease yesterday.

I asked him what prices of residential RE had done in the local area he handles in the last 12 months. (SE coastal Newcastle area)

He told me prices had fallen 20-30%.

i mentioned I believed at least another 10-20% or more to fall.

I was out at a very nice new lakeside residential development last weekend, heaps of brand new places on the market in the $600k+ bracket.

Why would you even think of paying that at the moment?  

You would have to be completely mad


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## robots (17 October 2008)

hello,

here we go property professors!

http://www.news.com.au/heraldsun/story/0,21985,24510915-661,00.html

down they go, fantastic a company many "rent money off" has just sent a nice little reduction through, the money renters on a run again

woo hoo, hope everyone has had a great day

any questions fire away

thankyou
robots


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## gfresh (17 October 2008)

I'll be in at 6.5%, as long as prices seem steady enough 

I thought I heard you on the radio today actually: "Great news for first home buyers, with property prices on the Goldcoast down 5%". 

(note, I am not being sarcastic, this was the lead story on commercial radio)


----------



## gav (17 October 2008)

Did anyone read Steve Keen's "Housing’s day of reckoning delayed" on tonights Eureka Report?  He believes our property bubble burst will be worse than that of the US, and our houses are heading for a 40% fall!


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## MrBurns (17 October 2008)

gav said:


> Did anyone read Steve Keen's "Housing’s day of reckoning delayed" on tonights Eureka Report?  He believes our property bubble burst will be worse than that of the US, and our houses are heading for a 40% fall!




There's no doubt that he's right, except I beieve it will be more like 50%


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## ggumpshots (17 October 2008)

Annual immigration is  240,000    and with an annual shortage of 50,000 houses  yearly.
Rent is pretty tight at between 1 and 3 percent depending  on where you are

Prices wont continue accelerating at the previous ratres which i accept.

can someone show me the math for a 40% or 50% drop in prices?


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## Warren Buffet II (17 October 2008)

stock_man said:


> Ouch!!! No need for the attack!! It might be nicer if you could illustrate to myself (and all the others you placed into the same category) where all the money has gone. It is much nicer to share wisdom and help others as opposed to public ridicule.
> 
> Anyhow, true, I was being lazy in my calculations. I took what I perceived was a generous average mean for the rates, insurance etc (being too lazy to work on the inflation adjusted figures).
> 
> ...




stock_man, I am sorry if I was a bit too hard on you. Please accept my apologies.

WBII


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## CamKawa (18 October 2008)

ggumpshots said:


> Annual immigration is 240,000 with an annual shortage of 50,000 houses yearly.



What about the annual rate of emigration and do think that will pick as the economy slows?



ggumpshots said:


> with an annual shortage of 50,000 houses yearly.



Can you show me the math for that?


----------



## YChromozome (18 October 2008)

The thing I can't understand is why the China Housing Bubble is crashing so fast - Now surely they have a geniune shortage of housing!

(No, really I can understand, prices have just got to a level where no one can afford them. Let's say Australia has a annual wage of $58,000 and a average house price of say 1 Billion dollars. It doesn't matter what immigration rates are, or what the shortage is, who has 1 Billion dollars to spend? It's supply and demand. )


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## arco (18 October 2008)

.
This graph from RPDAta gives an interesting view


----------



## Santoro (18 October 2008)

arco said:


> .
> This graph from RPDAta gives an interesting view




IMHO - The rise over the last two years may be corrected....I'd say prices shouldn't drop by more than 15% according to that chart.  Again depends on speed of recovery.......15% would fall to reasonable levels but a serious downturn which we may not experience would put pressure to fall below 15%, where to....no one knows....desperate people do desperate things.


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## Glen48 (18 October 2008)

You are still better of renting than buy.owning a home at this stage wait until prices drop over the next few years and then look at buying.
See ACA CH 9 report last night although Harry Dent did say to sell all your share but it might be to late.. Selling share I agree I reckon BHP etc will be $20 in no time.


----------



## MrBurns (18 October 2008)

Santoro said:


> IMHO - The rise over the last two years may be corrected....I'd say prices shouldn't drop by more than 15% according to that chart.  Again depends on speed of recovery.......15% would fall to reasonable levels but a serious downturn which we may not experience would put pressure to fall below 15%, where to....no one knows....desperate people do desperate things.




It's already dropped 15%, try and sell something then you'll realise.


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## singlefished (18 October 2008)

ggumpshots said:


> can someone show me the math for a 40% or 50% drop in prices?





Lets say a property 1 year ago used to be valued at $100K.

If the property is forecast to be valued at only $50K in the coming years, then the house will be worth ($50K/$100K), half of it's previous valuation.

If in this case, you express these hypothetical numbers in percentage terms, then the drop in price is calculated at 50%.

The above is actually arithmetic (certainly not pure mathematics) but I don't see any point in being pedantic about the semantics of the terminology of the calculations adopted to arrive at the answer to your question....


----------



## ggumpshots (18 October 2008)

singlefished said:


> Lets say a property 1 year ago used to be valued at $100K.
> 
> If the property is forecast to be valued at only $50K in the coming years, then the house will be worth ($50K/$100K), half of it's previous valuation.
> 
> ...





I can do math.
Show me the  math  to determine the supposed price drop that results in $50000.
 A  far as I can tell only gut  reaction statements are being used in these assertions about market crashes or burst bubbles .  These dont have any validity unless backed up with data to support them


----------



## ggumpshots (18 October 2008)

arco said:


> .
> This graph from RPDAta gives an interesting view




What do  you find interesting?


----------



## Glen48 (18 October 2008)

Selling your house depends one one thing ...finding a buyer ..no buyers its worth Zero...no buyer confidence  you are stuck with a piece of junk..I think the RE market is starting to implode and will snow ball over the next few months. Sadly just like shares but RE will stay flat for yrs while you pay Rates Insurance and maintain which is money you have to get back before you can get a capital gain..shares you can see what is going on at any given time and if they start going up again you should be cashed up and poised...


----------



## ggumpshots (18 October 2008)

CamKawa said:


> What about the annual rate of emigration and do think that will pick as the economy slows?
> 
> Can you show me the math for that?






Glen48 said:


> Selling your house depends one one thing ...finding a buyer ..no buyers its worth Zero...no buyer confidence  you are stuck with a piece of junk..I think the RE market is starting to implode and will snow ball over the next few months. Sadly just like shares but RE will stay flat for yrs while you pay Rates Insurance and maintain which is money you have to get back before you can get a capital gain..shares you can see what is going on at any given time and if they start going up again you should be cashed up and poised...



With  a yearly immigration rate of 240,000 do you think these people will be importing there own hooses  or living in tents?
If affordability  of the housing  is high thenits moe difficult to buy   but they must live somewhere and with tight rental markets the collapse of the housing market is a fantasy.
The credit crises aint a crises unless we are  in the same situation in 3 months time. That wont be the case but ony time will prove who is correct.

A drop of 10 % or 20% is not a collapse  but it also depends what base you are coming off.
 Variations  are to be expected. Keep your eye on the long term. Nobody buys a house for the short  term unless you are in the business of  flipping.

There will always be buyers for property, but perhaps not at the price you want


----------



## CamKawa (18 October 2008)

ggumpshots said:


> With a yearly immigration rate of 240,000 do you think these people will be importing there own hooses or living in tents?



Do you know what emigration is?


----------



## arco (18 October 2008)

.
*Biggest annual exodus from Australia on record*
October 07, 2008
Article from: AAP

AUSTRALIA has experienced its biggest annual exodus on record with *76,923 people leaving the country permanently in 2007-08*, a new report shows.

http://www.news.com.au/story/0,23599,24458448-421,00.html


----------



## IFocus (18 October 2008)

YChromozome said:


> The thing I can't understand is why the China Housing Bubble is crashing so fast - Now surely they have a geniune shortage of housing!
> 
> (No, really I can understand, prices have just got to a level where no one can afford them. Let's say Australia has a annual wage of $58,000 and a average house price of say 1 Billion dollars. It doesn't matter what immigration rates are, or what the shortage is, who has 1 Billion dollars to spend? It's supply and demand. )




I think it was Roe who pointed out its credit expansion that causes house prices to rise.


----------



## robots (18 October 2008)

hello,

yes yes, another fantastic day in Melbourne 

30 degrees, sun shining and a great auction clearance rate of 57%, brilliant

a few vendors hanging out for extra $ knocking the results around but all in all a glorious day, 

still having trouble finding that waterfront block for 1999 prices, hope everyone is enjoying the evening

thankyou
robots


----------



## MrBurns (18 October 2008)

robots said:


> hello,
> 
> yes yes, another fantastic day in Melbourne
> 
> ...




Yes a great day, clearance rate down on last week despite the Rudd bribe so let's see what happens next week, property boom ????? I think not.

The revaluation will continue down as the bubble continues to fracture.


----------



## robots (18 October 2008)

MrBurns said:


> Yes a great day, clearance rate down on last week despite the Rudd bribe so let's see what happens next week, property boom ????? I think not.
> 
> The revaluation will continue down as the bubble continues to fracture.




hello,

are you sure Mr Burns? things are tough with all the sharemarket turmoil (yes sharemarket) and specuvestor traders that are trying to destroy the world

thankyou
robots


----------



## MrBurns (18 October 2008)

robots said:


> hello,
> 
> are you sure Mr Burns?
> 
> ...




Pretty sure robots, the new handouts may slow the decline it may be further delayed by money coming out of shares into property but it will continue.


----------



## nunthewiser (18 October 2008)

Dunno about the rest of oz but geez they still getting snapped up here in the huon valley , as they hit market they seemed to grabbed with vigour!!, there is the odd overpriced /cruddy exception but sure no signs of bubble bursts here as yet , 

blessem all 

ps had 3 ppl out too look at one of my blocks today , amazing what a sunny day can do


----------



## robots (18 October 2008)

hello,

like look at that bloke in the UK who "punted" and made 500k in 2hrs or so apparently, thats not very productive for society is it?

no productivity gains from that what so ever

thankyou
robots


----------



## MrBurns (18 October 2008)

nunthewiser said:


> Dunno about the rest of oz but geez they still getting snapped up here in the huon valley , as they hit market they seemed to grabbed with vigour!!, there is the odd overpriced /cruddy exception but sure no signs of bubble bursts here as yet ,
> 
> blessem all
> 
> ps had 3 ppl out too look at one of my blocks today , amazing what a sunny day can do




Property declines take 18 or so months, not instantaneous like shares.


----------



## Pommiegranite (18 October 2008)

still no spring bounce. Tick....tick...tick...


----------



## robots (18 October 2008)

hello,

you may be spot on there Mr Burns, the infamous "property to stagnate thread" has just passed its 3yr anniversary,

and in those years many have picked up some beautiful gains, 30-40% alone in 2007 in some suburbs, 

ring that bell for us can you when it comes (like at wall street)

word out to token multimillionaire

thankyou
robots


----------



## MrBurns (18 October 2008)

robots said:


> hello,
> 
> you may be spot on there Mr Burns, the infamous "property to stagnate thread" has just passed its 3yr anniversary,
> 
> ...




You must be the last of the property bulls robots, I hope you're not geared because the day of reckoning in nigh.


----------



## robots (18 October 2008)

hello,

up to the eyeballs like every property owner is (aren't they), will just keep bumping up the rent and with DEBT cost coming down, yes thats right interest rates dropping it will be easier to hold on brother

infact, the money renters are laughing all the way when we get another drop next month if not earlier judging by ANZ's move,

and we also helping out the Government as those properties get closer to neutral gearing, we doing our bit for society taking a bit less from the government and providing accommodation for the community

thankyou
robots


----------



## Knobby22 (18 October 2008)

Last time, 1987, this happened money from the stockmarket went into property and the property market didn't fall till two years later,1989.

Property might be good for a bit longer yet.


----------



## chops_a_must (18 October 2008)

Knobby22 said:


> Last time, 1987, this happened money from the stockmarket went into property and the property market didn't fall till two years later,1989.
> 
> Property might be good for a bit longer yet.



Not if the papers are any indication.

Every second ad seems to be for some property in Melbourne, or somewhere else.

God damn, it's getting incredibly annoying. They must be desperate.

Looks to be a big oversupply in Perth's south as it is.


----------



## MrBurns (18 October 2008)

Knobby22 said:


> Last time, 1987, this happened money from the stockmarket went into property and the property market didn't fall till two years later,1989.
> 
> Property might be good for a bit longer yet.




As I said, 18 months before the big fall but it may be different this time we've seen nothing like this before.


----------



## numbercruncher (18 October 2008)

robots said:


> hello,
> 
> up to the eyeballs like every property owner is (aren't they), will just keep bumping up the rent and with DEBT cost coming down, yes thats right interest rates dropping it will be easier to hold on brother
> 
> ...







Pretty cool Robi @!


Those of us that are fiscally responsible get to cop high inflation and low interest on our savings to (attempt to) bail out your guys pyramid scheme !!


----------



## awg (18 October 2008)

robots said:


> hello,
> 
> you may be spot on there Mr Burns, the infamous "property to stagnate thread" has just passed its 3yr anniversary,
> 
> ...





Hi Robots,

A question if I may.

So if you were cashed up right now, would you buy now, or wait, say, 12 months ( or more)  to buy?


----------



## wallyt99 (18 October 2008)

The news today said that 'buyers are rushing back to the market' with the extra home grant on offer.  This is outright bull. I went to 4 Opens and one Auction in 3 (widely) different Melbourne suburbs today.  We were the only ones at most of them.  The auction was passed in 30,000 below the range.

In addition, after a relative quiet period, the market is being bombarded with new properties as people who are worried about the crash, and not being able to get the 'value' of their property back rush to sell, and properties that havent sold continue to sit there.

I know the drops have occurred in many states before now, but Melbourne has been relatively immune.  Not anymore.

The panic selling has began, and the correction will follow.


----------



## PropertyGuy (18 October 2008)

Hi all, 

I have noted some misunderstandings regarding evaluation of the property market which is causing a lot of people to make fundamental errors regarding property performance.

Firstly, median house price can never be used for evaluating property as it leads to hugely inaccurate indications of performance.

The reason why median house price is an irrelevant indicator (especially for medium or long term assessments - it is a somewhat useful for short term IE month to month / quarter to quarter) is due to urban growth and densification.

I suppose densification is similar to stock splits, and medium house price does not any of this into account. What does this mean? If you bought the "median house" in any Melbourne suburb within 10kms of the CBD 20 years ago, your return would be some 200% higher than any attempted return calculation using median house price. You will find this true of any city, time since the 30's.

Everyone looks at their own personal and family experiences and think they did better than the "median house price" because "grandma's house was bought for $200k for 1500m2 in Brighton and we sold it for $2.2m to a developer" - well not to rain on your parade, but you didn't. The very fact the developer put 10 townhouses on the site and sold them for $900k each lowered the median house price even though it may have increased the value of surrounding 1500m2 lots.

Urban growth has the same effect as it is continually adding stock at the bottom of the price range forcing median price down.

Conclusion - median house price is like trying to look at the stock market, but ignoring stock splits - IE when BHP does a 3 for 1 split - the All Ords collapses because they just lost 2/3rds of their share price. Compare apples with apples, not apples with 1/4 of an apple.

On another commonly stated incorrect fact, Melbourne prices have not fallen. Despite a 8 month press onslaught, doomsayers and unknown experts and researchers continually reporting "drops", all credible (IE BIS Shrapnel etc" sources of research have had Melbourne prices as flat and any drops have been within the margin of error. Ive seen research from trash sources after their 15 seconds of fame but its all crap and rubbish.

In the Melbourne market, supply outstrips demand by 7,900 dwellings currently, and if everything with a planning permit is built according to expectation, we will be 9,100 short next year and 10,400 by 1010. I would suggest that given the current credit squeeze, not everything planned will be built, so expect this to under-supply to balloon. 

I don't pretend to know what effect all this stock market melt down will have on the property market, but I wish to pose a question. Given that Consumer Confidence in relation to Melbourne property is at an all time low due to the Press onslaughts, prices are holding within the margin of error, demand outstrips supply and this will increase, interest rates have been cut by 1% and look like being cut again, clearance rates have dropped by less than 9% despite the "worst" melt down of the financial world in history(clearance rate drops should be seen as volume of shares traded - and therefore have the loosest of association, if any, with values), a new first home buyers grant, tightest rental market in recorded history, the Little mentioned fact that our properties have just had there prices slashed by 1/3 to an enormous sector of the investment market (offshore SE Asia investors) and the Fed Government have injected a decent chunk of capital into the non bank mortgage brokers - What will happen when the Consumer Confidence swings and the stock market investors look to property to weather the storm?

You can find the information Ive mentioned above in the BIS Shrapnel 2008 Building in Australia report and associated updates. The report costs some $10,500, so if someone can tell me how to cut and paste the relevant pages, Ill be happy to do so. I cant seem to paste them and when I try to attach them, i got some URL:hppt thing that I don't understand.

Building in Australia, 2008 – 2023 Residential Property Values by Capital City
38  © BIS Shrapnel Pty Limited 2008


----------



## wallyt99 (18 October 2008)

Got a few developments you need to sell ay?


----------



## singlefished (18 October 2008)

ggumpshots said:


> With  a yearly immigration rate of 240,000 do you think these people will be importing there own hooses  or living in tents?




As predicted by the Government, unemployment is beginning to rise and could rise significantly.... I imagine as things get worse the Government will focus on retraining and redeployment rather than maintaining their high levels of migration - this basically goes without saying. Expect immigration to drop as unemployment rises. On a side note, if the Australian Government can't do the math on the prospective worst case unemployment figures then *PLEASE* don't expect anybody on this forum to satisfy your urge to see numerical evidence.... 

What has also gone unsaid is the collapse of the Aussie $$$$. Many prospective immigrants on the lookout for positions here will firstly look at the exchange rate and recalculate their package to their own domestic currency to see how it stacks up.... Assuming salaries in Australia _*were*_ commensurate with salaries in the rest of the Western World (prior to this latest dire turn in the credit crisis), they will be looking at a salary somewhat lower than they are currently receiving. When they check out house prices and see the headlines "... one of the highest in the Western world..." they will think twice..... I saw this back in Asia in the late nineties when the currencies all crashed overnight - not good if you were being paid in local currency! You cleaned up if you were being paid in US$ or GBP! 

Unfortunately, a lot of the local employers were not sympathetic to their foreign employees financial predicaments so a lot of my good mates bailed out and went back home. I don't expect Aussie salaries to rise by the 20-25% that the currency has fallen over recent months and I don't expect employers of foreign workers to grant them a 20% rise to help out cover their mortgage payments or family costs back home...

The reverse is also currently in progress - a fair number of my colleague's who are planning to go overseas at the end of the year are now in discussions trying to renegociate their packages in US$. Their future beer money is on the line since they've now had a fairly substantial pay cut!


----------



## PropertyGuy (18 October 2008)

wallyt99 said:


> Got a few developments you need to sell ay?




No, actually I sell development sites - big ones. Im like a stock broker I suppose, the worst thing for me is a flat market. Give me boom or bust and I make $$


----------



## chops_a_must (18 October 2008)

robots said:


> hello,
> 
> up to the eyeballs like every property owner is (aren't they), *will just keep bumping up the rent*



You honestly, honestly believe that don't you. 

Wow.


----------



## robots (18 October 2008)

awg said:


> Hi Robots,
> 
> A question if I may.
> 
> So if you were cashed up right now, would you buy now, or wait, say, 12 months ( or more)  to buy?




hello,

yes great question awg, and one many have pondered

if for your home get in soon as, its a great time to be buying, bit less competition, 

rates on way down, the inflation hype was just crock put out by the brigade

i wouldnt have a clue what happens in the future, i am looking 20-30yrs down the line when I am cruising the streets of Melbourne

yes it costs more to buy than rent but this soon swings around and presto you living the life

anymore questions fire away i am here to help 

thankyou
robots


----------



## chops_a_must (18 October 2008)

robots said:


> rates on way down, the inflation hype was just crock put out by the brigade



Let me get this straight.

You argue the costs of debt are going down, yet are admitting to deflation?

Do you even understand the dynamics of debt and its relation to inflation and deflation?


----------



## singlefished (18 October 2008)

*Sell, sell, sell: rich cut losses on property*
Sunanda Creagh and Jonathan Dart | October 17, 2008

In a sign the sharemarket collapse is affecting the spending power of finance workers, real estate agents are shaving millions off their initial asking prices for homes in traditionally upmarket areas.

http://www.brisbanetimes.com.au/news/national/sell-sell-sell-rich-cut-losses-on-property/2008/10/17/1223750373494.html


----------



## robots (18 October 2008)

chops_a_must said:


> Let me get this straight.
> 
> You argue the costs of debt are going down, yet are admitting to deflation?
> 
> Do you even understand the dynamics of debt and its relation to inflation and deflation?




hello,

nope, wouldnt have a clue chops

just plodding along with the crew, not to many holders of real assets out there that are concerned about those things,

they a given like the sun coming up, irrelevant

thankyou
robots


----------



## chops_a_must (18 October 2008)

robots said:


> hello,
> 
> nope, wouldnt have a clue chops
> 
> ...



Obviously, because it could prove very costly.

And given you don't have a clue, don't you think it is highly questionable for you to be telling people that it is a great time to buy etc.?

And if you think widespread and massive asset deflation is irrelevant, you and a whole host of others are in for a whole world of hurt.


----------



## robots (18 October 2008)

hello,

no i dont think so

thankyou
robots


----------



## chops_a_must (18 October 2008)

robots said:


> hello,
> 
> no i dont think so
> 
> ...




I hope you have the correct accreditation to be advising people that it is a great time to buy etc.


----------



## wallyt99 (18 October 2008)

robots said:


> hello,
> 
> no i dont think so
> 
> ...





Sounds like a RE Agent to me.  



I would say.... read my post.   As someone who has been scanning I have decided to hold off for a while after what I saw today.


Now is not the time to buy.


If property does go up....it will be a maximum of 5% over the year.  

If it does go down....it could go down 10-20 or even 30% in some areas.


The safe bet, is to wait.  If it goes up you don't lose alot. (In fact, the time you are not servicing the interest on the massive debt means you lose nothing at all)


If it goes down..... could be a significant loss if yo buy.  Or a significant gain if you wait.


----------



## PropertyGuy (18 October 2008)

chops_a_must said:


> I hope you have the correct accreditation to be advising people that it is a great time to buy etc.




Hiya,

You obviously have a very negative outlook for the property market.

Can I ask if you have any basis for this opinion given all the evidance to the contrary?

I know a little about the property market, but I dont know much about the effect the stock market failures will have on it. 

Regards


----------



## Temjin (18 October 2008)

PropertyGuy said:


> Hiya,
> 
> You obviously have a very negative outlook for the property market.
> 
> ...




I don't think we want to repeat the whole discussion again.  

If you wish to understand why we have a negative outlook on the property market, refer to the previous posts in this thread. And yes, it's a LOT OF READINGS. 

When you say, "evidences to the contrary", be VERY CAREFUL with where you are getting your evidences from. From the media or from those who have a vested interest in cheer leading the property market?


----------



## PropertyGuy (18 October 2008)

wallyt99 said:


> If property does go up....it will be a maximum of 5% over the year.




the reliable research shows "real" property prices in most capitals sliding by .5% - 1% over the next year. That would actually be an increase of 2-3% but is a net loss after inflation.

This does not take into account the recent interest cuts or the FHB Grant.

So its probably safe to wait if you think the above wont have too much posative effect.

Following year is projected 5-6% growth.


----------



## chops_a_must (18 October 2008)

PropertyGuy said:


> Can I ask if you have any basis for this opinion given all the evidance to the contrary?



What evidence to the contrary?

We have seen the biggest credit bubble in history pop, lending standards are going to be stricter, unemployment is sure to rise, prices are unaffordable, all the new developments I can see are largely unsold, ads for property in other states everywhere, developers stopped almost a year ago.

Anything else? 

Oh yeah... and prices are going down currently.


----------



## chops_a_must (18 October 2008)

PropertyGuy said:


> the reliable research shows "real" property prices in most capitals sliding by .5% - 1% over the next year. That would actually be an increase of 2-3% but is a net loss after inflation.
> 
> This does not take into account the recent interest cuts or the FHB Grant.
> 
> ...



ROFL.


----------



## wallyt99 (18 October 2008)

Realistically, there is only one thing less accurate than the weatherman are the economists. If people had EVIDENCE for the direction of the market, they would not have crashed and we would all be millionaires.  The market does not work this way.

Perhaps you could ask all the economists who used to work at Bear Stearns what they think...  They are quiet not since their multi billion $$$ company went belly up.
*
The best thing people can keep in mind, is that the best ANYONE can offer is an educated (or not so educated) Guess.*


----------



## PropertyGuy (18 October 2008)

Temjin said:


> I don't think we want to repeat the whole discussion again.
> 
> If you wish to understand why we have a negative outlook on the property market, refer to the previous posts in this thread. And yes, it's a LOT OF READINGS.
> 
> When you say, "evidences to the contrary", be VERY CAREFUL with where you are getting your evidences from. From the media or from those who have a vested interest in cheer leading the property market?




Ok well to start with, I am in complete agreement about being VERY CAREFUL of data sources and only rely on sources that sell research institutionally on their past accuracy eg BIS Shrapnal.

I have no interest in spruking from the likes of APM etc who are only interested in getting their name in print to sell a report to moms and pops on their house value - they are continually wrong but no one really cares.

I am stating for a fact that all credible data has the property markets in a very strong state as highlighted in my previous post.

Ive read the previous threads and seen nothing of note apart from personal opinions that would change the outlook hence the reason for asking for an actual fact that would challenge a robust property market.


----------



## PropertyGuy (18 October 2008)

wallyt99 said:


> Realistically, there is only one thing less accurate than the weatherman are the economists. If people had EVIDENCE for the direction of the market, they would not have crashed and we would all be millionaires.  The market does not work this way.
> 
> Perhaps you could ask all the economists who used to work at Bear Stearns what they think...  They are quiet not since their multi billion $$$ company went belly up.
> *
> The best thing people can keep in mind, is that the best ANYONE can offer is an educated (or not so educated) Guess.*




agree... but since we are talking property, you dont have fat cats with performance bonus' trading up your house value's and hiding bad deals in order to make fat chrismas bonus' with no regard for the future after they cut and run.


----------



## chops_a_must (18 October 2008)

PropertyGuy said:


> agree... but since we are talking property, you dont have fat cats with performance bonus' trading up your house value's and hiding bad deals in order to make fat chrismas bonus' with no regard for the future after they cut and run.



Rofl.

So banks and those involved with property trusts, i.e. investment banks, have no interest in talking up the property market? 

Are you intentionally being funny?


----------



## PropertyGuy (19 October 2008)

chops_a_must said:


> Rofl.
> 
> So banks and those involved with property trusts, i.e. investment banks, have no interest in talking up the property market?
> 
> Are you intentionally being funny?




you are a forum troll who is making no sense - im not responding to you anymore. The residential property market is robust and strong. sydney, perth and brisbane have some issues but you cant make the rest of the country have imaginary issues just by typing it in a forum - facts are facts.

If there are any people out there who have serious desire to discuss this issue, I would like to hear views on how the current stock market crash will affect the residential property market - personally im not really interested in views on the current state of the property markets as I am fully aware of the current status of markets. 

I can offer current market status for Melbourne market including sale rates for most major projects currently on the market - ask me the project, i can tell you the meter rate's, sales rates and availability.


----------



## CamKawa (19 October 2008)

PropertyGuy said:


> you are a forum troll who is making no sense - im not responding to you anymore. The residential property market is robust and strong. sydney, perth and brisbane have some issues but you cant make the rest of the country have imaginary issues just by typing it in a forum - facts are facts.



After reading some of the crap you post who are you to call other people a troll?

It's not all sweetness and light you know. Here's an article from Melbourne’s number one property spruiker. I've got a feeling that the smoke and mirrors campaign they have been running is growing a bit thin. You can only hide the truth for so long before readers start to leave I suppose. 

Auctions fall despite grant boost

"The attraction of the $14,000 grant for an existing house was not enough to stop clearance rates from collapsing by a staggering 6% yesterday - the worst result since separate records for Saturday sales have been kept. It follows another 5% fall last weekend."
 
Even my mate Enzo is having second thoughts. He rigged the clearance rate a few weeks ago to give a higher figure and it still falls. Where he goes to from here I don't know. Come on Enzo ramp it up!

"Real Estate Institute of Victoria chief executive Enzo Raimondo said: "If we don't see an improvement within the next couple of weeks we can assume things will continue like this for a while yet."


----------



## Macquack (19 October 2008)

PropertyGuy said:


> I can offer current market status for Melbourne market including sale rates for most major projects currently on the market - ask me the project, i can tell you the meter rate's, sales rates and availability.




PropertyGuy, are you a real estate agent?


----------



## kotim (19 October 2008)

Those who hold the biggest hands ultimately determine the direction of markets. Simple fact, funds look at best return views in short medium and long term.  Now if your a fund  and have just seen the stock market crash by 40%( roughly equivalent to biggest falls in history or thereabouts)and the price of property fall say 5%, (nowhere near the average fall in a pullback/crash) then where is the better value in the next 5 years.  

Those who hold the biggest hands take longer to change their positions,

That is why when the share markets fall, property sees falls in the following couple of years, because those with the biggest hands see more value in the share market going forward.  

Those funds use methods that are in general known only specifically to themselves, whatever it is their basing their decisions upon, if we knew the exact method they use, we would simply wait for them to change positions and ride the coat tails.

The reality is that value going forward from now is DEFINATELY in the share market, according to historical parameters.  History is all we have to measure against and that is one of the reasons why history repeats.

Think about superannuation funds.  Every month in Australia alone billions of dollars must flow into either cash, shares or property or combination thereof.  So value going forward MUST be weighted in the share market, so new funds alone will preference shares as distinct from property.

Funds talk about growth, but growth means averaging 10% odd over time, but more than that if one gets in early enough to a rising market.  There are plenty of good shares now that are paying substantial dividends going forward, so a little bit of growth gives good annual returns going forward.

Have a look at banks shares, there is not one fund out there that would not be aware that bank shares will regain huge % growth in year or so following a share market route and they will want to take advantage of that.

When all is said and done, property must fall to allow the share market to outperform due to its greater prospective value going forward.


----------



## YChromozome (19 October 2008)

Sorry guys for not participating in this thread last night. Looks like a lot of activity. 

I was actually having tea with my Landlord. One of his sons is in year 10 studying commerce. The last two weeks the topic has been on the global financial crisis and his son was telling me about the housing bubble, level of household debt and serviceability levels. He was able to say that the crisis in the states was more to do with the bubble and debt levels, than it was with defaults on subprime - that was just a trigger.


----------



## robots (19 October 2008)

hello,

dont get upset propertyguy, *we all trolls man*, its just discussion and debate

surely the handout brigade arent now claiming the auction results as supporting their opinion, for years the cries have been auction results mean nothing now it supports the claims, a bit hypocritical

the RBA will take note as always and go bang! down go the interest rates again, great time for the money renters 

people will be soon giving money to the Gov when they all go positive geared, doing our bit for society

great day, life rolls on

thankyou
robots


----------



## gfresh (19 October 2008)

Well you were yesterday claiming they were "great results", and first thing I read in the paper this morning is they were the worst in Melbourne for four years so it's more of a question of what is being said by yourself, as to what is is happening out there. 

The results may not mean much, but I read that many vendors had  been convinced by realestate agents to switch from fixed to Auctions, to cash in on this FHOB rush, and realise a higher price. Well that has failed hasn't it, if there are few buyers it's a waste of time and money. 

When even the paper that is largely paid by realestate agents dollars is running a lead story on the slumping auction market, I'd say there is not much good news out there to be found.


----------



## nunthewiser (19 October 2008)

Expats set to boost property market
19/10/2008 12:10:01 PM
Expat Australians looking to flee the global financial crisis are poised to set off a fresh wave of buying in property markets nationwide.

Jennifer Nielsen, chief executive of Loan

Market Group, says inquiries for home loans from expatriates have escalated in recent weeks. Loan Market operates a home finance broking group including leading independent broker X Inc Finance.

"There is strong interest from expatriate Australians, many of them banking and finance professionals, who are looking to return home to escape the credit crunch in places like London and Singapore," Ms Nielsen said.

"They want to buy property before they come back - we now have three in-house brokers dedicated to servicing inquiries from expats on top of our normal inquiries."

Ms Nielsen said interest from expatriates was expected to escalate in response to home mortgage rate cuts in Australia and the federal government's $10.4 billion economic package.

"The big drop in the Australian dollar is also a huge advantage to returning expats," she said.

"If they are cashed up in US dollars or UK pounds, they are keen to come into the Australian property market right now and chase a bargain."

Ms Nielsen said the home loan market had been resilient in recent months, despite ongoing concerns about the impact of a volatile world economy on Australia.

"While there is no question that the underlying residential real estate market in Australia has slowed in the past 12 months, the volume of inquiries about home loan finance is actually quite solid," she said.

"The interesting trend is the clear majority of people are inquiring about new finance, as opposed to people who are struggling somewhat and seeking refinance."

Ms Nielson said a tough rental market in most capital cities was the primary force pushing first home buyers to seek home loans.

"Many (renters) are looking to escape the rental trap by buying," she said.


----------



## cutz (19 October 2008)

Hi 

Can anyone suggest a source of property market info charting clearance rates, median prices, mortgage defaults ect. for the Australian market.

Thanks,

Cutz


----------



## robots (19 October 2008)

gfresh said:


> Well you were yesterday claiming they were "great results", and first thing I read in the paper this morning is they were the worst in Melbourne for four years so it's more of a question of what is being said by yourself, as to what is is happening out there.
> 
> The results may not mean much, but I read that many vendors had  been convinced by realestate agents to switch from fixed to Auctions, to cash in on this FHOB rush, and realise a higher price. Well that has failed hasn't it, if there are few buyers it's a waste of time and money.
> 
> When even the paper that is largely paid by realestate agents dollars is running a lead story on the slumping auction market, I'd say there is not much good news out there to be found.




hello,

yes back 4 yrs ago, no crash then in 2004 things just plodded along

peace out brothers, enjoy the day in this fine country

thankyou
robots


----------



## Glen48 (19 October 2008)

There is a web site called ONTHEHOUSE.COM which show homes sold by street or suburbs.
In mine last June 87 were sold June this yr 8


----------



## robots (19 October 2008)

hello,

here we go fellow money renters, 

NAB just come to the party with 25 basis pt drops, wow all those extra rises and a bit more have gone vanished disappeared completely,

my rate gone from 9.02 to 8.02 and will probably get 25pts in the next fee days when the CBA moves,

nirvana, any questions fire away

thankyou
robots


----------



## Beej (19 October 2008)

I notice as usual articles like this one: http://www.smh.com.au/news/national/buyers-rally-as-rates-drop/2008/10/18/1223750399532.html have conveniently not been posted to this thread. Good sales and auction clearance rate in Sydney on the weekend - 60% and good volume. Lot's of increased activity reported, especially in the FHB segments.



Temjin said:


> Again, on the same other forum, no one has ever answered my question on why house prices can INDEFINITELY rise above wage growth over the very long term. (30+ years) Wouldn't this one day make an average income earner to pay more than 100% of his/her income to service the mortgage loan on an average priced house. Clearly this is unsustainable. But of course, people think boom will last forever because it has done so before. Recency bias again.




Actually Temjin I think PropertyGuy answered this question quite well with his post here (https://www.aussiestockforums.com/forums/showpost.php?p=351316&postcount=1153) from yesterday. To paraphrase, over a long time the MEDIAN house price can only track wage/growth/inflation yes, and long term this is what it will do. However, when you buy in an established area where no more supply can be created of what you bought (other than to sub-divide which is another matter), then your asset becomes more and more desirable and EXCLUSIVE over time, in effect moving further and further away from where it was relative to the median when you bought it. In that way the value can and certainly does increase at a rate above inflation over the long term. To me and most others who understand the residential property market this makes perfect sense, and it's why we find all the analysis posted in forums like this laughable - it just does not reflect either the actual history of the market, or a common sense based understanding of who buys real estate, why they buy it and how they figure out how much they will pay for it.



Glen48 said:


> Sadly just like shares but RE will stay flat for yrs while you pay Rates Insurance and maintain which is money you have to get back before you can get a capital gain..shares you can see what is going on at any given time and if they start going up again you should be cashed up and poised...




Except you can't live in your shares...... you can't take a dip on the pool in the backyard of your shares on a nice summers afternoon, like today in Sydney 

PS: PropertyGuy - good articulate posts! Don't be put off by some of the aggressively negative responses you got here. There are people who dream of a property market crash purely for their own benefit. They may have put off buying for years and are jealous of those in the market who benefit everyday from their purchase both financially and in terms of lifestyle. They cannot understand why prices have kept rising, or why they are holding up pretty well in a finiancial crisis etc, when all their stock market based analysis suggests to them that the price of a house WHERE THEY WANT TO LIVE should be less than what it is. They quote career opportunists like Prof Steven Keen from UWS who has been prediciting something for nearly a decade that still hasn't happenned yet. I could go on but it's all been said in previous posts in this thread!

Cheers,

Beej


----------



## MrBurns (19 October 2008)

Beej said:


> . They quote career opportunists like Prof Steven Keen from UWS who has been prediciting something for nearly a decade that still hasn't happenned yet. I could go on but it's all been said in previous posts in this thread!
> 
> Cheers,
> 
> Beej




Last time I looked he was right and a lot of people have seen this coming for years, the longer it took to happen the worse the result will be as the bubble just kept building as did the debt.


----------



## Mofra (19 October 2008)

MrBurns said:


> Last time I looked he was right and a lot of people have seen this coming for years, the longer it took to happen the worse the result will be as the bubble just kept building as did the debt.



... no actually, he has been dead wrong for an extended period of time. He's on 60 minutes telling people that his home is now on the market - where was the courage of his conviction during his previous public discourses? Why wasn't his home on the market sooner? 

If someone is flipping a coin, and you keep yelling "heads" everytime, you may be right sooner or later.... but that doesn't make you Nostradamus, and it doesn't mean the coin will be heads next time you flip it.


----------



## MrBurns (19 October 2008)

Mofra said:


> ... no actually, he has been dead wrong for an extended period of time. He's on 60 minutes telling people that his home is now on the market - where was the courage of his conviction during his previous public discourses? Why wasn't his home on the market sooner?
> 
> If someone is flipping a coin, and you keep yelling "heads" every time, you may be right sooner or later.... but that doesn't make you Nostradamus, and it doesn't mean the coin will be heads next time you flip it.




I'll say it one more time, this is different, this is a once in a 100 year event and it will be ugly, 

It was always on the cards and those who didn't pick it should have, in any case now it's happening.

If you're so bullish go out and buy something now.

PM says 200,000 unemployed Keen says 1M there are jobs going every day here in Victoria hundreds of them just thrown out of work and it's just the start.

If you have any sense you'll take cover.

Not sure what Warren Buffets plan is , that intrigues me.


----------



## nunthewiser (19 October 2008)

Mofra said:


> ... no actually, he has been dead wrong for an extended period of time. He's on 60 minutes telling people that his home is now on the market - where was the courage of his conviction during his previous public discourses? Why wasn't his home on the market sooner?
> 
> If someone is flipping a coin, and you keep yelling "heads" everytime, you may be right sooner or later.... but that doesn't make you Nostradamus, and it doesn't mean the coin will be heads next time you flip it.





gday m8 , personally thought that 60 minutes article was irresponsible journalism and was using scare tactics to keep the viewers.... yeah agree a housing downturn due and looks to me inevitable BUT to be telling ppl to sell out now will only create fear and panic in those not so used to reading both sides of a story


----------



## MrBurns (19 October 2008)

nunthewiser said:


> gday m8 , personally thought that 60 minutes article was irresponsible journalism and was using scare tactics to keep the viewers.... yeah agree a housing downturn due and looks to me inevitable BUT to be telling ppl to sell out now will only create fear and panic in those not so used to reading both sides of a story




No worse than the real estate industry telling people to snap up the bargains, in fact it's more truthful.

Prople wont panic sell en masse this is property not shares.


----------



## Santoro (19 October 2008)

robots said:


> hello,
> 
> here we go fellow money renters,
> 
> ...





No, not right now....have to wait several more months..............................................................


----------



## Santoro (19 October 2008)

MrBurns said:


> No worse than the real estate industry telling people to snap up the bargains, in fact it's more truthful.
> 
> Prople wont panic sell en masse this is property not shares.




it will be relative to what levels unemployment falls to, you can't pay your mortgage if you haven't got an income or 2................


----------



## robots (19 October 2008)

hello,

thats why i like to post unbiased facts, figures and opinions

a lot of sharks out there on both sides, I hope people get something from all the great discussion

got to go one of my all time favorites is about to start Grease ch 7 9.15pm, John Travolta probably just behind Michael Jackson in list of all time movers to grace this planet

enjoy the rest of the night

thankyou
robots


----------



## generalofthearmy (19 October 2008)

Property is KING.

`Shockmarket' as one user here called it, is a very accurate description for an up and down, but generally down, yo-yo ride of your life.

Everyone knows property goes UP and ever upward! The premise for this thread is, perhaps, imaginary, illusory, illucid, hypothetical and above all, irrelevant to fact. The idea that the property market will suffer a significant collapse in the wake of rising inflation and population is the apotheosis of money-or-your-life speculation.

But let's say it does drop, that will only confirm to the naysayers that property is `bad', and they'' hang on to their CD's and Blue Chips like Dorothy to Todo in a hurricane, and they will inevitably miss the next upswing of the ever onward and ever upward march of success which Real Esate provides.

Thanks.


----------



## chops_a_must (19 October 2008)

generalofthearmy said:


> Everyone knows property goes UP and ever upward!



Lolza!

Who paid these professional rampers to get in here?


----------



## Santoro (19 October 2008)

generalofthearmy said:


> Property is KING.
> 
> `Shockmarket' as one user here called it, is a very accurate description for an up and down, but generally down, yo-yo ride of your life.
> 
> ...





ROFL


----------



## robots (19 October 2008)

hello,

the ShOcK ExChAnGe, 

more around with negative equity thanks to above than the humble prop market, yes negative equity, admit it

negative equity mate

all the best

thankyou
robots


----------



## chops_a_must (19 October 2008)

robots said:


> hello,
> 
> the ShOcK ExChAnGe,
> 
> ...




Do you know what that is?

Most don't leverage 90 times to buy shares, which makes "negative equity" on shares much less relevant, and in most cases of the sensible around here, completely irrelevant.


----------



## Santoro (19 October 2008)

> Hong Kong is undergoing a rare bout of deflation, brought on by the Asian financial crisis in 1997 and following a strong inflationary trend that lasted for decades in the territory. Economic contraction in Hong Kong has never previously resulted in inflation dipping below zero and recovery was invariably quick. The present deflationary situation is unique. On the one hand, the economic adjustment needed after the crisis was substantial; on the other, this adjustment could only be achieved through real cost reduction, as the linked exchange rate system prevents any nominal adjustment through currency depreciation. To restore external competitiveness, Hong Kong's property prices and wage costs had to fall and this inevitably led to serious deflation. In the more than two years since the outbreak of the crisis, *Hong Kong property prices have roughly halved from their peak* and wages have been slashed or frozen. Have they fallen enough to revive cost competitiveness and bring an end to this deflationary cycle?




Don't come tell me property prices don't fall fellow posters. This an atricle from 2000 post the Asian financial crisis....admittedly may not be the same situation ....but for better or worse who knows, agreed in the long term house prices are a good investment and if your raising a family who gives a toss.......but fact is property prices can and do fall....look at HK and Japan following their falls from property booms........and now the US and the UK......


----------



## Beej (19 October 2008)

MrBurns said:


> Not sure what Warren Buffets plan is , that intrigues me.




"Buffer Feels The Fear And Likes It"
http://business.smh.com.au/business/buffett-feels-the-fear-and-likes-it-20081018-53qb.html

Cheers,

Beej


----------



## SBH (19 October 2008)

robots said:


> hello,
> 
> here we go fellow money renters,
> 
> ...






Its great to hear about your interest rate cut. That means the economy is going good right? Imagine how high houses will go when interest rates fall down to 1% like in america!


----------



## Beej (19 October 2008)

nunthewiser said:


> Expats set to boost property market
> 19/10/2008 12:10:01 PM
> Expat Australians looking to flee the global financial crisis are poised to set off a fresh wave of buying in property markets nationwide.
> 
> ...




Now THAT is an interesting article! Probably won't have much of an impact on national or regional median prices, but more expensive houses in good area's in the major cities could well see a good pick up in demand, and prices due to that "expat effect". Something to consider for anyone who is in that segment of the market, especially if you are betting on further price falls......

Cheers,

Beej


----------



## gfresh (19 October 2008)

Everything comes down to interpretation doesn't it  

First thing when I read that, is that are financial expats put out of work in finance (due largely due to the causal crash of housing prices!) in both the UK, and the US, really going to as first priority buy a property here?? 

Surely, out of everybody, they would have an incredible sense of caution after coming from such a market to sunny Australia.


----------



## numbercruncher (19 October 2008)

returning unemployed expat hippys will be outweighed by the coming reduction in Immigration ...... imho .....


----------



## Beej (19 October 2008)

gfresh said:


> Everything comes down to interpretation doesn't it
> 
> First thing when I read that, is that are financial expats put out of work in finance (due largely due to the causal crash of housing prices!) in both the UK, and the US, really going to as first priority buy a property here??
> 
> Surely, out of everybody, they would have an incredible sense of caution after coming from such a market to sunny Australia.




But if they have been saving there pennies and pents, and the aussie dollar has just come off 20-40% (depending on pennies or pents!), then things start to look pretty cheap here don't they???  It's definetly something to think about.... Expat money has certainly paid a big role in driving Sydney property prices before.

Cheers,

Beej


----------



## Markcoinoz (19 October 2008)

PropertyGuy said:


> you are a forum troll who is making no sense - im not responding to you anymore. The residential property market is robust and strong. sydney, perth and brisbane have some issues but you cant make the rest of the country have imaginary issues just by typing it in a forum - facts are facts.
> 
> If there are any people out there who have serious desire to discuss this issue, I would like to hear views on how the current stock market crash will affect the residential property market - personally im not really interested in views on the current state of the property markets as I am fully aware of the current status of markets.
> 
> I can offer current market status for Melbourne market including sale rates for most major projects currently on the market - ask me the project, i can tell you the meter rate's, sales rates and availability.





Hi PropertyGuy,

People lose jobs.

Unemployment goes up.

If you really want a pulse on what is happening, ask a Truckdriver, especially in Melbourne.  Transportation is a leading indicator.  If our transport industry is not as robust as what it has been earlier on in the year and truckies are losing their jobs, that tells me that consumers are not spending as much and tightening their belts.  Have you checked out Harvey Norman's sales figures lately?  Isn't that one of the first port of calls for new home owners!!!

 I have no doubt that unemployment will increase over the coming 12 months with alot of pain and suffering to go with it.  The car industry is cactus with many losing their jobs.  Small businesses are suffering and can only get worse.

PropertyGuy, imo this global credit crunch has not even fully unravelled yet.
We still have the mother of all mothers to go.  The $50 Trillion Derivitives market to be unwound.  If and when that should happen there is no government on earth could stop it.  Why do you think Bush and his merry men were so protective of preventing Lehman Bros and the other 9 banks from going under.  It would have been a domino effect.

When you stop and consider that Australia's housing is approximately 8 x times avg annual income and we are sitting on a potential time bomb with the financial crisis gaining momentum, my clock says the last place i would want to invest in now is property.

In fact, liquidating your assets would be the prime concern unless you are prepared to have a house not as an investment.

But hey, don't listen to me, i only listen to what the truckies have to say.

Cheers markcoinoz


----------



## robots (20 October 2008)

SBH said:


> Its great to hear about your interest rate cut. That means the economy is going good right? Imagine how high houses will go when interest rates fall down to 1% like in america!




hello,

the money that doesnt go to the mortgage(interest) thanks to 1% interest rates will just go to savings offsetting anything that occurs, great stuff isnt it

save another 9-10k a year, awesome

win win everyway you look at it, just goes to show you have to be in it to win it

imagine just paying the principal and a little bit of margin, investment properties will be cash flow+, now do you think you will get a letter from the landlord?

i dont think so

great discussion, have a great day everyone in this fine country

thankyou
robots


----------



## lular (20 October 2008)

robots said:


> hello,
> 
> the money that doesnt go to the mortgage(interest) thanks to 1% interest rates will just go to savings offsetting anything that occurs, great stuff isnt it
> 
> ...




Are you saying you have a $1,000,000.00 loan?

How do you get this saving with a 1% interest rate cut.


----------



## numbercruncher (20 October 2008)

lol Robi, does your mrs ever slap you around ?




> save another 9-10k a year, awesome





Just keeping your spruiking honest, can you elaborate on this plz ?


----------



## Markcoinoz (20 October 2008)

Markcoinoz said:


> Hi PropertyGuy,
> 
> People lose jobs.
> 
> ...





Just to highlight something.

I was wrong when i said the $50 Trillion Derivatives market.

Try $600 Trillion.

We have reached the point of no return. A combination of globalization, greed, Central Banks, a fiat currency, 9000 hedge funds and $600 trillion worth of derivatives has brought the crisis to a boiling point. At this time, governments around the world are throwing $100 bills at the fire. It will have no effect; you cannot solve a financial problem caused by easy money by making money still easier. You can, however, create hyperinflation.

http://www.321gold.com/editorials/moriarty/moriarty102008.html

And some people here think our property market will continue on its merry way upwards...


Cheers markcoinoz


----------



## explod (20 October 2008)

Markcoinoz said:


> Just to highlight something.
> 
> I was wrong when i said the $50 Trillion Derivatives market.
> 
> ...




Yes I worked out and posted a couple of weeks ago that the derivatives amount stacked in US $100 bills would be 9 million miles high and end to end out of the universe.

Out of this world indeed.


----------



## Ageo (20 October 2008)

Markcoinoz said:


> Just to highlight something.
> 
> I was wrong when i said the $50 Trillion Derivatives market.
> 
> ...




Hmm everywhere i look now it seems more obvious that the central banks are responsible but most importantly the general public is becoming more educated.......

1 thing i do not get is if money supply increases then how can inflation be at stable levels as the RBA mentions??????? A person with little brains would understand that you cannot stop the increase of inflation by continuing to inflate it even more (i.e increased money in circulation).


----------



## Beej (20 October 2008)

Markcoinoz said:


> You can, however, create hyperinflation.
> 
> http://www.321gold.com/editorials/moriarty/moriarty102008.html
> 
> ...




Which is it to be then - hyper-inflation? Or falling house prices? The two do not go together! 

Beej


----------



## Julia (20 October 2008)

explod said:


> Yes I worked out and posted a couple of weeks ago that the derivatives amount stacked in US $100 bills would be 9 million miles high and end to end out of the universe.
> 
> Out of this world indeed.




Explod, I missed that.  Could you give me a link to your earlier post?
Does it make clear how you came to that conclusion and where the input data came from?
I ask because there seems to be such hugely varying estimates of the worth of the derivatives still out there.


----------



## jonojpsg (20 October 2008)

Ageo said:


> Hmm everywhere i look now it seems more obvious that the central banks are responsible but most importantly the general public is becoming more educated.......
> 
> 1 thing i do not get is if money supply increases then how can inflation be at stable levels as the RBA mentions??????? A person with little brains would understand that you cannot stop the increase of inflation by continuing to inflate it even more (i.e increased money in circulation).




Hey Ageo,
Have you looked at the Crash Course posted here elsewhere?  Chart looks suspiciously exponential like many other charts of significant quantities - I fully recommend that chapter (see link) for anyone looking at this chart.

http://www.chrismartenson.com/crash-course/chapter-3-exponential-growth

Interesting times ahead


----------



## generalofthearmy (20 October 2008)

numbercruncher said:


> I guess its too late for the money renters who bought last year, they are toast and will probably never recoup their investement in their entire lives .......




HAHAHA, laughable assertion.



> I notice the amount of RE forsale in Queensland is treble of what it was this time last year and the flood gates are only beginning to open ......




there have been plenty of downturns without flood gates doing anything.



> Ive noticed desperation in the sales adverts, as an example Stockland in the weekend bulletin preaching how those who hesitate lose money, those who boughht (land) in 1996 are now 300k better off (haha) , buy now buy now, it almost reads like begging, lala .....




yeah, but salesmen are generally desperate BS artists. nothing unusual here.



> Anyways, any of the regulars here at ASF would of known well in advance of what was coming and why it was coming and positioned accordingly so I imagine its happy days for most asfers .....




these happy days are yours and mine, happy days.


----------



## PropertyGuy (20 October 2008)

Markcoinoz said:


> Just to highlight something.
> 
> I was wrong when i said the $50 Trillion Derivatives market.
> 
> ...




Thanks for your response Mark.

I dont understand alot about the world of Global Finance and Derivitives, but if someone owes $600 Trillion, surely someone else is owed $600 Trillion - who is this entity/demographic that is owed this money?

Also, if Im owed $600 Trillion (Im obviously a pretty smart cookie) and the world markets were about to hyperinflate making my $600 Trillion worth $10 Trillion, wouldnt I be better off just taking $15 Trillion now and writting the rest off as a lesson in "dont be too smart"?

The question above may be a little simple, but this whole thing doesnt make any sense to me.

With regards to hyper inflation - buy as much property as you can without debt. High inflation is the low geared property investors dream come true. If you are geared, lower your gearing. 

Regards,


----------



## Mofra (20 October 2008)

PropertyGuy said:


> I dont understand alot about the world of Global Finance and Derivitives, but if someone owes $600 Trillion, surely someone else is owed $600 Trillion - who is this entity/demographic that is owed this money?
> 
> Also, if Im owed $600 Trillion (Im obviously a pretty smart cookie) and the world markets were about to hyperinflate making my $600 Trillion worth $10 Trillion, wouldnt I be better off just taking $15 Trillion now and writting the rest off as a lesson in "dont be too smart"?



PG,

That is the total value of derivatives taken on both sides (although the figures I have read are US$171trillion, almost 11 times the entire US economy) 
The value isn't the major concern - it's the spread (effectively the risk each party has taken with their position) you need to take into account, as even the most gung ho of hedge fund traders often have competing positions. Again, my figures (read) are a 2% spread risk ~ US$3.4trillion

Governments will struggle to cover the risk in the event of a complete meltdown, however as we've seen, finance market consolidation (t/o)conditions include an assumption of the takeover partie's debt/risk. Even the best estimates of what is going to happen next are just guesses, so in the menatime, sit back and enjoy the ride 

Cheers


----------



## Glen48 (20 October 2008)

N Z house prices are down 5% just the start of more to come


----------



## robots (20 October 2008)

numbercruncher said:


> lol Robi, does your mrs ever slap you around ?
> 
> Just keeping your spruiking honest, can you elaborate on this plz ?




hello,

if i'm on 8% now and goes down to 1% as mentioned by SBH, that makes the interest component of a P & I loan very very very low, 

on payments of $300pw, i reckon $200 would be interest, fantastic when they get to 1%,

so for the uneducated: 52wks x $200pw=$10400

no mrs is on the same ride Number, life

thankyou
robots


----------



## robots (20 October 2008)

hello,

wow, just read CBA has moved 21 basis pts, bang here we go

what a day 

thankyou
robots


----------



## explod (20 October 2008)

robots said:


> hello,
> 
> wow, just read CBA has moved 21 basis pts, bang here we go
> 
> ...




Yeh, BANG allright and then we will have a POP and probably a few PUFFS.   Used to be a reliable steady stock the ole CBA but like all in the new uncertain times it has become very volatile.

Not looking too good, everyone is trying to sell the house.

thankyou
explod


----------



## fimmwolf (20 October 2008)

> was wrong when i said the $50 Trillion Derivatives market.
> 
> Try $600 Trillion.





58 Trillion in credit default swaps though.


----------



## robots (20 October 2008)

explod said:


> Yeh, BANG allright and then we will have a POP and probably a few PUFFS.   Used to be a reliable steady stock the ole CBA but like all in the new uncertain times it has become very volatile.
> 
> Not looking too good, everyone is trying to sell the house.
> 
> ...




good evening explod,

somebody used to keep records of places for sale but havent seen them post for a while now

with the rba meeting in a few weeks it will be on again, 50 basis points, what you reckon explod? 

thankyou
robots


----------



## PropertyGuy (20 October 2008)

CamKawa said:


> After reading some of the crap you post who are you to call other people a troll?
> 
> It's not all sweetness and light you know. Here's an article from Melbourne’s number one property spruiker. I've got a feeling that the smoke and mirrors campaign they have been running is growing a bit thin. You can only hide the truth for so long before readers start to leave I suppose.
> 
> ...




I wouldnt consider Enzo an expert on property. Actually, I think the post he holds precludes him from making any statements that would not be in the best interests of the group that he represents. He might be an expert on the rules of conduct for agents etc, but when it comes to market analysis, his opinion would hold no weight with the industry whether it be up or down.


----------



## nunthewiser (20 October 2008)

are the amount of houses currently listed any different to previous spring/summer house selling listings ?

being that spring/summer the more traditional times when the majority of houses are listed


----------



## PropertyGuy (20 October 2008)

Someone mentioned affordability in a response to my post - thought you might like to read this:
The affordability of housing finance is a necessary condition for an investor to enter the
residential property market. However, affordability on its own is not enough to determine
whether housing is a good investment. A good investment decision is based on a comparison
of the cost of funds (real interest rates) or opportunity costs with the expected real returns (real
capital growth and rent).
The principal reason for the sensitivity of residential property markets to interest rate movements
is that strongly growing interest rates limit the capacity to finance housing investment. Likewise,
when interest rates fall, the size of an affordable loan is higher for any given income.
The cost of meeting repayments for a 25 year loan covering, say, three-quarters of the value of
a median-priced house provides a useful measure of home loan affordability. Table 2.6 shows
mortgage repayments for such loans at current standard variable housing loan interest rates as
at June 30th each year, expressed as a percentage of total full-time earnings. It should be
noted that, to provide a better indication of housing affordability, full time earnings are being
calculated at the state level.
This table does not necessarily represent the typical situation for all home buyers. Many factors
including the price of the property, amount of deposit, and income (especially two income
families) can affect individuals. Rather, it is a guide to changes in affordability, and variations
between states over time.
Over the past twenty years, the percentage of income allocated to mortgage repayments was at
its highest level and affordability was at its lowest level, across all states in 1989–1990. This
substantial deterioration was caused by a huge leap in house prices from June 1988 combined
with record high interest rates. The housing rate remained as high as 17% between June 1989
and March 1990.
Affordability was at its worst in Sydney (86.7%), Melbourne (68.8%), Canberra (48.6%),
Perth (48.8%), Adelaide (45.9%), and Hobart (38.7%) in June 1989. For Brisbane (49.3%) and
Darwin (37.3%), affordability fell to its lowest level in June 1990.
The steady fall in the housing interest rate to 8.75% from September 1993 to August 1994, as
well as growth in nominal wages, raised home loan affordability to its most favourable position
since the mid-1980s. By June 1994, mortgage repayments as a percentage of income had
fallen to 43% in Sydney, 34% in Melbourne, 30% in Brisbane, 26% in Adelaide, 27% in Perth,
25% in Hobart, 31% in Canberra and 31% in Darwin.
Despite solid growth in wages and minimal change in the level of median house prices, interest
rate rises in late 1994 (10.5% by December 1994) reduced home affordability marginally across
all capital cities by June 1995.
However, the percentage of income allocated to mortgage repayments decreased and remained
extremely low over the 1997 to 1999 period, during which all capital cities experienced their
most affordable housing prices since the early 1980s. Interest rates during this period had fallen
to 6.50% by December 1998, the lowest level in over twenty-five years. Home affordability was
at its most favourable position in Melbourne (29.6%) and Sydney (38.9%) at June 1997, in
Brisbane (22.4%), Perth (21.5%), Hobart (17.7%) and Adelaide (19.6%) at June 1998, and in
Canberra (21.2%) and Darwin (25.3%) at June 1999. These were generally the best
affordability levels since the early 1980s and, in some capitals, longer.
Affordability in Sydney (50.3%) and Melbourne (42.3%) by June 2000 had dropped to its most
challenging level since 1991. It was reduced by strong growth in median house prices from
1997, as well as by rises in housing rates from November 1999 to August 2000, despite strong
wages growth.
The fall in the housing interest rate, to 6.8% in 2000/01, resulted in home affordability improving
dramatically in each capital city by June 2001. However, strong price growth in 2001/02 across
all capital cities outweighed the 0.5% drop in interest rates and wages growth in this year,
resulting in home affordability again deteriorating. Further price rises in 2002/03 across the
board resulted in further deterioration in home loan affordability.
While price growth slowed across all capital cities over 2003/04, interest rate rises in December
quarter 2003 resulted in home affordability deteriorating further by June 2004. Affordability was
particularly challenging in Sydney (65.0%), far ahead of Melbourne (43.8%), Brisbane (39.4%),
and Canberra (41.6%). On the next level down, affordability was reasonably similar in
Adelaide (33.0%), Perth (31.0%), Hobart (34.1%) and Darwin (31.2%).
The deterioration in housing affordability in 2002/03 and 2003/04 was most pronounced in
Sydney and Brisbane. A substantial difference in affordability between Sydney and Melbourne
emerged over the course of 2002/03 and 2003/04, as affordability in Sydney deteriorated
greatly, but was comparatively static in Melbourne. Despite affordability improving slightly in
both capitals over 2004/05, the margin was still significant. This development has been due to
growth in Victorian average earnings being much greater than in New South Wales over this
period, while house price growth was weaker.
On the other hand, Brisbane’s housing affordability advantage relative to Melbourne has greatly
diminished over the last three years. Since 2002/03, growth in average earnings in Queensland
has exceeded that in Victoria, but the Brisbane median house price rose by 69% from June 2002
to June 2005, while the Melbourne median house price only increased by 10% over the same
period. As a result, Brisbane’s advantage as at June 2005 had diminished to be at its lowest
level since June 1995.
As at June 2005, the affordability of home loans improved in Sydney (58.8%),
Canberra (36.4%) and Melbourne (42.8%), stabilised in Brisbane (39.6%) and Darwin (31.9%),
but worsened in Adelaide (35.5%), Perth (34.0%) and Hobart (34.8%).
As at June 2006, affordability deteriorated slightly in Sydney as a small decrease in the median
house price was offset by an interest rate rise in May 2006. Affordability deteriorated marginally
in Melbourne, Brisbane, Hobart and Canberra due to a combination of price increases and the
interest rate rise. The greater changes in affordability were obviously in Perth and Darwin due
to strong growth in property prices.
Interest rate increases in August and November 2006, combined with solid price growth in most
cities caused affordability to deteriorate significantly in 2006/07. Sydney was the only major city
to not experience this, with the level of affordability remaining relatively constant. The gap
between Sydney and cities like Melbourne and Perth has continued to close.
By June 2008, affordability has deteriorated further. The overwhelming driver of this has been
the increased cost of borrowing for households. The variable housing rate has increased by
approximately 1.4% in 2007/08. This represents a significant burden for the average household
budget.
We think that affordability in Sydney will dip to lows not seen since the early 90’s. This level of
affordability is expected to stay through to 2011. Most major centres are expected to behave in
a similar fashion. Perth is the exception as robust wage growth is expected to improve
affordability by June 2011.
Affordability in Sydney has moved back to the level observed at the peak of the market in
2003/04. This situation means that there is little upside in the median house price until housing
rates come down.
Following large price increases, affordability in Melbourne, Brisbane and Darwin have
approached the level that prevailed in Sydney when prices peaked in 2003. As a result, we
think that only modest price growth will be sustained with interest rates at current levels.
The most affordable cities are Adelaide and Hobart. Their situation provides some upside to
price growth for these cities in 2008/09. However, dwelling construction is running at a strong
pace in both cities (relative to underlying demand), so the degree of housing undersupply is not
expected to be a significant factor for the residential property market in 2010 and 2011.
We expect that affordability will deteriorate marginally in the eastern capital cities over the
course of 2010/2011.
Our forecasts imply that housing affordability stabilises at an adverse level by comparison with
the average over the 15 years to 2006/07. A key rationale for this outlook is that the
unemployment rate has fallen to a very low level, which means that average household income
has risen more strongly than average wages growth. In addition, we believe that several cities
are struggling to maintain dwelling construction at a pace that is consistent with underlying
demand. This environment means that there is a higher premium placed on access to existing
dwellings, which will be reflected in acceleration of residential rentals, and also contribute to the
growth in residential property prices to 2011.


----------



## PropertyGuy (20 October 2008)

Table 2.6: Home Loan Affordability ”” Monthly Mortgage Repayments as a Percentage of Total
Full-Time Earnings
As at 30th
June Sydney Melbourne Brisbane Adelaide Perth Hobart Canberra Darwin
1988 50.1 47.7 29.6 33.4 27.7 30.5 36.4 32.6
1989 86.7 68.8 45.4 45.9 48.8 38.7 48.6 38.3
1990 79.5 63.0 49.3 44.9 42.0 38.6 45.1 39.6
1991 58.8 49.0 38.9 36.5 30.5 30.9 39.0 32.5
1992 49.1 38.2 34.1 28.9 26.4 25.4 35.3 28.8
1993 45.0 37.0 31.8 26.6 26.1 26.4 33.6 34.9
1994 43.5 33.7 29.8 25.7 27.0 25.2 30.6 32.7
1995 47.9 35.9 33.1 28.4 29.8 27.0 32.5 41.2
1996 44.8 34.0 30.1 25.6 26.9 26.4 30.5 35.7
1997 38.9 29.6 23.8 20.4 22.5 18.7 23.3 29.7
1998 40.3 32.2 22.4 19.6 21.5 17.7 21.5 27.4
1999 41.6 34.9 23.1 19.7 21.7 18.5 21.2 25.3
2000 50.3 42.3 25.8 22.5 24.6 22.3 25.9 30.0
2001 47.2 42.6 23.6 21.6 22.7 18.4 25.2 26.5
2002 55.4 42.0 25.3 23.7 23.6 18.1 26.3 26.4
2003 59.9 42.7 30.4 28.7 25.4 24.6 35.0 25.5
2004 65.0 43.8 39.4 33.0 31.0 34.1 41.6 31.2
2005 58.8 42.8 39.6 35.5 34.0 34.8 36.4 31.9
2006 59.8 44.2 40.2 35.5 43.6 36.6 38.4 41.5
2007 59.9 48.8 45.2 39.4 48.8 39.8 43.9 47.7


----------



## PropertyGuy (20 October 2008)

nunthewiser said:


> are the amount of houses currently listed any different to previous spring/summer house selling listings ?
> 
> being that spring/summer the more traditional times when the majority of houses are listed




Volume of Houses on the Melbourne Market is significantly down from previous years.


----------



## nunthewiser (20 October 2008)

PropertyGuy said:


> Volume of Houses on the Melbourne Market is significantly down from previous years.




do you have a link or similar to verify that please?


----------



## PropertyGuy (20 October 2008)

nunthewiser said:


> do you have a link or similar to verify that please?




http://www.reiv.com.au/home/inside.asp?ID=142&pnav=141

this is last weekend for melb - personally i check sundays age every week and volumes have been significantly down for last 3 months (5% - 40% week to week est)


----------



## nunthewiser (20 October 2008)

PropertyGuy said:


> http://www.reiv.com.au/home/inside.asp?ID=142&pnav=141
> 
> this is last weekend for melb - personally i check sundays age every week and volumes have been significantly down for last 3 months (5% - 40% week to week est)




thankyou very much......... can understand winter vols being low as is the case usually yearly ...... intresting that the actual listings havent actually risen above the normal spring/summer selling season ........kinda contrary to some of the posts here,,,,,,,,

cheers


----------



## PropertyGuy (20 October 2008)

Glen48 said:


> N Z house prices are down 5% just the start of more to come




Wow. Can you link source please?


----------



## CamKawa (20 October 2008)

PropertyGuy said:


> Wow. Can you link source please?



Big wave to Glen48.

http://www.tradingroom.com.au/apps/...shed/2008/10/287/catf_081013_094500_2788.html


----------



## nunthewiser (20 October 2008)

CamKawa said:


> Big wave to Glen48.
> 
> http://www.tradingroom.com.au/apps/...shed/2008/10/287/catf_081013_094500_2788.html




thanks for that , intresting reading

by the way im only a nun and no one else

thankyou

:


----------



## PropertyGuy (20 October 2008)

nunthewiser said:


> thankyou very much......... can understand winter vols being low as is the case usually yearly ...... intresting that the actual listings havent actually risen above the normal spring/summer selling season ........kinda contrary to some of the posts here,,,,,,,,
> 
> cheers




We have a serious undersupply here in Melbourne, so a flood of property would be a welcome occurance for those needing to buy. 

Victoria had an estimated stock deficiency of 4,800 dwellings as at June 2006. This is estimated to have shifted to a 9,000 deficit as at June 2008. Underlying demand is expected to increase significantly over the 2009–2013 period, averaging 46,100 dwellings per annum. The growth in underlying demand is anticipated to steadily raise the dwelling stock Victorian stock
deficiency, increasing it to 14,500 dwelling by June 2011.

This is all great news for property in Vic, but who knows if the financial issues of the day will overpower the basic economic supply/demand principles. 

I'd love to see the US regulate their morgtage industry (we dont really need to here) and all markets ban short term trading (must hold for 3 months) or put a 5% stamp duty on shares - then we can clear out all the Volatility Vultures, Options traders and spruikers - only long termers would be left. Buying a stock would be like buying a property - lifetime investment.


----------



## CamKawa (20 October 2008)

PropertyGuy said:


> We have a serious undersupply here in Melbourne, so a flood of property would be a welcome occurance for those needing to buy.
> 
> Victoria had an estimated stock deficiency of 4,800 dwellings as at June 2006. This is estimated to have shifted to a 9,000 deficit as at June 2008. Underlying demand is expected to increase significantly over the 2009–2013 period, averaging 46,100 dwellings per annum. The growth in underlying demand is anticipated to steadily raise the dwelling stock Victorian stock
> deficiency, increasing it to 14,500 dwelling by June 2011.



Wow. Where do you get these figures from?


----------



## nunthewiser (20 October 2008)

PropertyGuy said:


> and all markets ban short term trading (must hold for 3 months) or put a 5% stamp duty on shares - then we can clear out all the Volatility Vultures, Options traders and spruikers - only long termers would be left. Buying a stock would be like buying a property - lifetime investment.




sorry dont agree , short sellers , short term traders just another piece of the markets mechanics , we buy and trade shares for that very reason LIQUIDITY

some invest and thats fine as i do to , but i also trade short and long to pay for  the everyday things in life 

actually a bit of a trader in property (residential) and have been for years , i do have a "family " home which is not tradeable but all the rest is just another means to an end in my book , all makes a buck .....why not eh


----------



## chops_a_must (20 October 2008)

PropertyGuy said:


> I'd love to see the US regulate their morgtage industry (we dont really need to here) and all markets ban short term trading (must hold for 3 months) or put a 5% stamp duty on shares - then we can clear out all the Volatility Vultures, Options traders and spruikers - only long termers would be left. Buying a stock would be like buying a property - lifetime investment.



Lolza.

Obviously incredibly well thought out when some futures have an effective lifespan of about 3 weeks.


----------



## robots (20 October 2008)

hello,

let the money box traders do whatever they like, its free market man

all the while the real assets keep in the hands of the wealthy, as construction is continually dropping this just keeps the status quo

thankyou
robots


----------



## PropertyGuy (20 October 2008)

CamKawa said:


> Big wave to Glen48.
> 
> http://www.tradingroom.com.au/apps/...shed/2008/10/287/catf_081013_094500_2788.html




Thanks for that, it freaked me out a little initially, but when I called a buddy of mine who is a Valuer in NZ, I relaxed a bit.

QV Valuers use a methodology known as "Property Value Growth" which is based on comparing the sales price of a property on its "Capital Value" the year before.

In other words this "5.8% drop" in NZ was a year on year drop based on a valuers opinion of what it was worth the year before. Don't get me wrong, I'm a true hater of using median house price to gage our market here, but we are so used to MHP that the thought of a 5.8% MHP drop in a quarter in NZ scared me a bit.

Comparing that to a drop of 5.8% over the year when the basis price is a valuation is a lot less worrying - even if they are just Zealand's


----------



## PropertyGuy (20 October 2008)

chops_a_must said:


> Lolza.
> 
> Obviously incredibly well thought out when some futures have an effective lifespan of about 3 weeks.




Not to be a Killjoy but thats the point. Derivative's, futures even options are all (in my very naive opinion) just tools to gamble on the movements of values - scrap em all - they cause the problem. How can an industry that is based purely on volatility (or stability) have any other effect than to cause volatility.


----------



## chops_a_must (20 October 2008)

PropertyGuy said:


> Not to be a Killjoy but thats the point. Derivative's, futures even options are all (in my very naive opinion) just tools to gamble on the movements of values - scrap em all - they cause the problem. How can an industry that is based purely on volatility (or stability) have any other effect than to cause volatility.




Yes.

How dare we allow companies to buy and sell oil for our consumption.

Options are a hedge.


----------



## nunthewiser (20 October 2008)

LOL dear property guy 

please ignore chops insults and name calling 

he does this when he is feeling mentally flustered 

thankyou

i do however agree with his gist of post without the namecalling re derivatives and there need to be here


----------



## gfresh (20 October 2008)

PropertyGuy said:


> Not to be a Killjoy but thats the point. Derivative's, futures even options are all (in my very naive opinion) just tools to gamble on the movements of values - scrap em all - they cause the problem. How can an industry that is based purely on volatility (or stability) have any other effect than to cause volatility.




While it's all fallen into a heap now, leading up to that they have also provided ample funding to our financial institutions, and consumers, and also one of the biggest property and general economic booms in Australia's history. Some of which is no doubt has provided the extensive funding for your developments, and is now sitting there as profit, or in your bank account. 

While we can deride it all in hindsight, it has provided plenty of opportunities for those that have taken advantage of it and created many wealthy individuals. The only problem has been the final sucker holding the debt when it blows up in their face. Whether that be the banks, over-geared share owners, overly indebted home owners, consumers drowning in credit card debt, or whatever else.


----------



## PropertyGuy (20 October 2008)

chops_a_must said:


> You asked for my reasons for being bearish on property. You spat the dummy and didn't want to listen or go through the points raised when you read something you didn't want to hear. In a thread that IS for that I might add.




You have changed signons - you are the forum troll from a few days ago. You can go jump my friend - Im here to learn what is going on the financial markets and what if any impact I can expect them to have on the proerty markets.

Im happy to share the knowledge and expect some back in return. Your here for cheap thrills and personal insults. The points you raised on being bearish on property where general in nature and not based on any fact. I responded with "what about: 15% reduction in cost of funds, rental market of .9% vacancy (anything below 3% is considered critically low), increased non bank liquidity for residential property, undersupply by 7,000 reaching to 14000 dwellings by 2014 for melbourne, and the first home buyers grant of $14 -$21k, this onto a market that has been flat for 12 months (maybe slightest rise) with the lowest consumer confidance of all time.

You gave me increased unemployment - not "if unemployment reaches 6%, average houshold income will reduce by 2.9% meaning affordability will push out to 45% of household income which is 3% lower than where we were before the latest interest rate cuts so expect moderate growth"

just flat "increased unemplyment" as if that in itself is supposed to be anymore informative than saying "it might be colder this winter" (and hyperinflation)- this is my first forum so maybe ive expected to much....


----------



## PropertyGuy (20 October 2008)

gfresh said:


> While it's all fallen into a heap now, leading up to that they have also provided ample funding to our financial institutions, and consumers, and also one of the biggest property and general economic booms in Australia's history. Some of which is no doubt has provided the extensive funding for your developments, and is now sitting there as profit, or in your bank account.
> 
> While we can deride it all in hindsight, it has provided plenty of opportunities for those that have taken advantage of it and created many wealthy individuals. The only problem has been the final sucker holding the debt when it blows up in their face. Whether that be the banks, over-geared share owners, overly indebted home owners, consumers drowning in credit card debt, or whatever else.




very good point (i dont have any developments, but i did take advantage of readily available credit).

I suppose it depends on how bad this gets as to how much the system needs an overhaul.


----------



## robots (20 October 2008)

hello,

you hang in there PropertyGuy, 

the money box crew have been having a hard time at the moment, with all the turmoil on the shock exchange and still the "little" issue with houses being 7x average income

they all looking to exert some frustration, 

we like the punching bag, the release valve, which we dont mind because we just floating through life thanks to the hard yards the property crew have put in,

next time you walking down the street stand tall brother and be proud of who you are and your achievements

thankyou
robots


----------



## chops_a_must (20 October 2008)

PropertyGuy said:


> You have changed signons - you are the forum troll from a few days ago. You can go jump my friend - Im here to learn what is going on the financial markets and what if any impact I can expect them to have on the proerty markets.
> 
> Im happy to share the knowledge and expect some back in return. Your here for cheap thrills and personal insults. The points you raised on being bearish on property where general in nature and not based on any fact. I responded with "what about: 15% reduction in cost of funds, rental market of .9% vacancy (anything below 3% is considered critically low), increased non bank liquidity for residential property, undersupply by 7,000 reaching to 14000 dwellings by 2014 for melbourne, and the first home buyers grant of $14 -$21k, this onto a market that has been flat for 12 months (maybe slightest rise) with the lowest consumer confidance of all time.



I can assure you I only have 1 account.

And go on, prove that's what you responded to me with.


----------



## PropertyGuy (20 October 2008)

chops_a_must said:


> I can assure you I only have 1 account.
> 
> And go on, prove that's what you responded to me with.




hmm maybe it wasnt you - or for that matter this forum - my sincerest appologies


----------



## numbercruncher (20 October 2008)

robots said:


> hello,
> 
> if i'm on 8% now and goes down to 1% as mentioned by SBH, that makes the interest component of a P & I loan very very very low,
> 
> ...





So that was a couple of posts of waffle to say that you think Interest rates are going to be slashed to 1 per cent ?

or am i still having difficulty understanding ?


----------



## robots (20 October 2008)

hello,

SBH is suggesting 1% interest rates as mentioned in post,

so Number what happens if IR goes from 8% right down to 1%? in relation to home loan payments

okay put it another way, when the 6mth review comes in from bank, the weekly payment would probably drop from $300pw to $100pw when IR goes to 1% as others are suggesting, FANTASTIC

thankyou
robots


----------



## ROE (21 October 2008)

robots said:


> hello,
> 
> SBH is suggesting 1% interest rates as mentioned in post,
> 
> ...




I'm not arguing about house price, I beleive in free market, people buy what the hell ever they want, property, shares, arts, cars, junk bonds... over price, under price, cheap, expensive..they will learn soon enough which category they fit in 

but do you know what it mean when interest rate drop? that mean the economy is in trouble, people are losing jobs, retail are falling, not much money is flowing around.

so when people don't have jobs it doesn't matter if it's a $100 or $50 repayment,  they still cant afford it

it's better paying $300 and have a job than $50 and you are unemployed I say 

when the economy slows and people start to lose job, sentiment drop and no one is willing to pay much for ANY Asset, shares, property, car the whole shi bang


----------



## numbercruncher (21 October 2008)

robots said:


> hello,
> 
> SBH is suggesting 1% interest rates as mentioned in post,
> 
> ...





1pc - awesome ill play poker at that price as well !!


----------



## Beej (21 October 2008)

ROE said:


> I'm not arguing about house price, I beleive in free market, people buy what the hell ever they want, property, shares, arts, cars, junk bonds... over price, under price, cheap, expensive..they will learn soon enough which category they fit in
> 
> but do you know what it mean when interest rate drop? that mean the economy is in trouble, people are losing jobs, retail are falling, not much money is flowing around.
> 
> ...




Only a small proportion of people are DIRECTLY effected by a rise in unemployment - for the 90-95% of people still with jobs the interest cuts mean a real ability to either draw down debt faster or take more on at a cheaper cost of they want. In a downturn it is much more the psychology around how secure people feel in their jobs and with their financial position that will determine which option they take, but either way robots is actually right that for the vast majority of people falling interest rates are a good thing financially, whichever way you cut it.

Remember the entire Howard years (politics aside) were generally seen by most people as good economic times, primarily because employment was secure, and interest rates were low. This changed as rates went up quite a bit, but they are now coming back down. Eventually the economy will recover from this current situation and we all then enjoy low interest rates for some time again with inflation also low and under control, and with an increasing level of financial and job security.

Cheers,

Beej


----------



## numbercruncher (21 October 2008)

Brave and confident words Beej !!

I sincerely hope that this nirvana materialises ! ....


Im not sure youve lived through an economic crisis such as the one we find ourselves now in though ?


----------



## Glen48 (21 October 2008)

John Howard won the last election he gets his super and other lurks doesn't have to answer to any one and didn't bother to regulate the Mortgage brokers who helped put us in this mess.
He was in Government at the right time and loosing his seat was the best thing that ever happened to him.


----------



## Beej (21 October 2008)

numbercruncher said:


> Brave and confident words Beej !!
> 
> I sincerely hope that this nirvana materialises ! ....
> 
> ...




You think it is brave to essentially say "No matter how bad things get they will always, eventually, get better"?? I think that's a truism. You can argue all you like about how deep, shallow, or even non existent a slow down from the current situation will turn out to be, but you would be delusional to contend that things will never improve. Personally, I think all the doom and gloom some of you guys here subscribe to is way overdone.

As for having lived through something like now before? Hard to say, I was alive in the early 70s when things were pretty bad - credit crunch, oil shock, 4 year bear stock market, but was only a kid so don't really remember it  I do remember having a happy child hood despite all that, my parents always had jobs, a house etc, and I didn't want for anything that I can recall? I do remember the recessions of the early 80s and 90s - very well, and I worked and invested through the latter of those. If you are going to compare things to the 30s (which I think is a mistake), then not many people have actually lived through times like these have they?  However, even after the GD things still, eventually, got better!

Cheers,

Beej


----------



## Pommiegranite (21 October 2008)

Beej said:


> Only a small proportion of people are DIRECTLY effected by a rise in unemployment - *for the 90-95% of people still with jobs the interest cuts mean a real ability to either draw down debt faster or take more on at a cheaper cost of they want*.




Except that this time around, credit will be harder to secure for those with 'secure' jobs, and they will not neccessarily be willing to pay for a depreciating asset, no matter what the interest rate.

Sure, if I can borrow *cash* at 1%, then I would. However, a secured loan on a depreciating property is totally different kettle of fish.


----------



## Mofra (21 October 2008)

Pommiegranite said:


> Sure, if I can borrow *cash* at 1%, then I would. However, a secured loan on a depreciating property is totally different kettle of fish.



You can co-secure a loan to cash as well - however cash is also a depreciating asset


----------



## Beej (21 October 2008)

Pommiegranite said:


> Except that this time around, credit will be harder to secure for those with 'secure' jobs, and they will not neccessarily be willing to pay for a depreciating asset, no matter what the interest rate.
> 
> Sure, if I can borrow *cash* at 1%, then I would. However, a secured loan on a depreciating property is totally different kettle of fish.




You've made some big assumptions there, neither of which I agree with. Credit is no problem right now for good risks - in fact the banks here are falling over themselves to lend money. And as for a depreciating asset - yea right, well that's what this whole thread is about, and I still contend you will never go wrong owning property, at least as your PPOR. For pure investment that's another matter though, although if you buy well and focus on yields and potential yield growth, you can still do very well out of this current market.

Cheers,

Beej


----------



## Pommiegranite (21 October 2008)

Mofra said:


> You can co-secure a loan to cash as well - however cash is also a depreciating asset




True. Looks like we are caught between a rock and a hard place. Technically isn't this stagflation ?

http://business.theage.com.au/business/inflation-set-to-hit-5-20081020-54t1.html



> *Inflation set to hit 5%*
> 
> 
> 
> ...


----------



## xoa (21 October 2008)

With CPI running at 5.6%, the vast majority of Australian workers are suffering a recession in their real earnings. Surely, the RBA must end this madness soon? 

How much longer can they bail out money renters at the expense of people who live responsibly?


----------



## kotim (21 October 2008)

The vast vast majority of people do not need to sell their homes in a downtrend, only those who want to or need to have to sell, so whatever price reduction in house prices we see will only in effect impact upon a small percentage, as far as house prices are concerned.  The real problem is inflation,  Lots of people will still have lots of money and items in the inflation basket will go up in price,  We are going to pay a lot more for water adn power in the coming years, if rent goes higher it impacts upon the inflation rate( I think rent is in the basket)

Share marekts on their but, house prices still high, Now where do you think the big players are going to put their money for the coming 3-5 years if they want growth, it aint going to be property.


----------



## numbercruncher (21 October 2008)

xoa said:


> With CPI running at 5.6%, the vast majority of Australian workers are suffering a recession in their real earnings. Surely, the RBA must end this madness soon?
> 
> How much longer can they bail out money renters at the expense of people who live responsibly?






Yup seems they are going to shaft everybody, I dont think they have an alternative only way out of this quagmire is inflation or the deflationary death spiral option ......

I want to see heads roll though, blame can be assigned to many many players ...


----------



## MrBurns (21 October 2008)

xoa said:


> With CPI running at 5.6%, the vast majority of Australian workers are suffering a recession in their real earnings. Surely, the RBA must end this madness soon?
> 
> How much longer can they bail out money renters at the expense of people who live responsibly?




I'm getting increasingly pissed off at the trouble the Govt is going to with OUR MONEY to save the big end of town.

There are thousands of homeless that could have done with a hand up too, this really stinks.


----------



## gfresh (21 October 2008)

kotim said:
			
		

> The vast vast majority of people do not need to sell their homes in a downtrend, only those who want to or need to have to sell, so whatever price reduction in house prices we see will only in effect impact upon a small percentage, as far as house prices are concerned.




Just thinking on this. It would only take 1 in 10 families to be in serious debt of some kind (expensive car, large credit card outstanding, no savings), and only 1 of the 2 working partners to lose their job, and I think we'd have a pretty serious crisis on our hands. The Government knows this. 

Last recession, debt levels were much less than they were now, how manageable are they these days if a recession were to occur? I don't know exactly, my feeling is they are not too good. 

*I honestly hope things don't pan out terribly, as I have friends who will be the ones really suffering.* I can tell you many people (yes Gen-Y) whom I know with reasonable paying jobs, recent mortgage holders, of whom the concept of "savings" is some laughable concept. Yes, they'll joke about it!


----------



## Mofra (21 October 2008)

xoa said:


> With CPI running at 5.6%, the vast majority of Australian workers are suffering a recession in their real earnings. Surely, the RBA must end this madness soon?
> 
> How much longer can they bail out money renters at the expense of people who live responsibly?



In response to your second question, it was a Howard adviser who noted "rising house prices makes for happy voters". 

What is economically responsible, and what is popular with voters, are two seperate ideals. Given the history of politics, I'd say the gummint will lean towards the second ideal more often than not (ie Krudd securing 100% of deposits which goes _against_ RBA advice).


----------



## CamKawa (21 October 2008)

MrBurns said:


> I'm getting increasingly pissed off at the trouble the Govt is going to with OUR MONEY to save the big end of town.
> 
> There are thousands of homeless that could have done with a hand up too, this really stinks.



I agree with you. The government is morally bankrupt.


----------



## gfresh (21 October 2008)

NAB raised the 200,000 unemployment figure last few days. This seems close to reality, if we assume 4.5->6% unemployment which is actually quite modest return to longer-term average. 

ABS figures show 10.7M working people out there. 1.5% x 10.7 = ~160,500 out of work. So that many people out of work effects 321,000 households (or 400,000 if you want to go on NAB figures). Now assuming my 1 in 10 struggle with debt as is, that's 32,000 - 40,000 households who could be in trouble with these sort of figures without finding work very quickly. Whether they own or rent, either way. 

That is why there should be cause for concern.


----------



## CamKawa (21 October 2008)

gfresh said:


> NAB raised the 200,000 unemployment figure last few days.



And with that figure coming from a bank it's likely to be at the lower end of the scale. I think Keen said on 60 seconds last Sunday night that unemployment would rise to one million. The truth maybe somewhere in between.


----------



## MrBurns (21 October 2008)

From Crikey today - 

Steve Keen: An invitation to Gerard Henderson

Gerard Henderson's diatribe in today's SMH argues that the media has done a "soft" job on my views, which have only gained notoriety because of the extreme predictions I have made about the forthcoming economic downturn qualifying as not merely a recession, but a Depression. It seems I've only got attention because of my extreme views, while the media has let the side down by doing a "tabloid" job only, and not subjecting my views to scrutiny.

In fact, as many in the media know, I have gained attention because of my Debtwatch Report, which will be two years old as of the next issue (No. 28, to be published in November the day before the RBA meeting). The journalists who have reported my views -- including of course Kerry O'Brien, who gets special attention from Gerard in his mockumentary -- have read my analysis for two years now. Yet I saw no sign of any attention to the analysis behind my predictions in Henderson's piece, apart from possibly a "just in case" concession towards the end where he noted that "[Keen's] predictions of a debt-induced decade-long depression ... may be correct."

In that case, the commentator who deserves the approbrium for "tabloid" journalism is Henderson himself, and not the ABC nor the Daily Telegraph, nor Sixty Minutes. They, after all, read my research, have quizzed me extensively about it, and made the decision based on investigative journalism that my views deserved coverage.

For this, I applaud them. I applaud them for standing up for the principles of the Fourth Estate. Standard economic commentary has been dominated by the cheerleaders for the policies which have led to this crisis, while the authorities themselves and the academic profession of economics itself have turned a blind eye to any arguments that questioned the mantra in favour of deregulated finance.

I know this from extensive experience. I have made five applications for ARC funding to investigate the dynamics of debt-deflations and Depressions in the last ten years; all have been unsuccessful (including one time when I topped UWS researchers on the ARC's then published referees' point scores, after which seven UWS researchers received funding -- but I was not one of them).

I made a submission to the Wallis Committee in July 1996, in which I warned that securitisation of loans could lead to a crisis exactly like the Subprime crisis that has now unfolded, and of course my comments were ignored.

I wrote to the RBA in June 1998 offering to hold a seminar on the "Financial Instability Hypothesis", which is the foundation of my argument that we are likely to experience a Great Depression. The offer was declined.

As has often been said, official channels are clogged to make sure information and criticism doesn't get listened to. So when I saw the debt that Australia's speculative bubble in real estate and belatedly shares had got us into, I turned to the journalistic profession to raise the alarm. To its credit, since I made a good case and the empirical evidence was compelling, journalists listened to me.

So Gerard, maybe you should do some investigative journalism now too. Go to my website www.debtdeflation.com, where you will find Debtwatch Reports going back to November 2006, and academic papers on debt deflation published as long ago as 1995 (maybe even read Debunking Economics; certainly check out its website).

And if you'd like to take a real risk and play the ball rather than the man, I'm more than willing to give a seminar on debt deflation at your Sydney Institute.

Over to you.


----------



## Beej (21 October 2008)

The Steven Keen Cheer-squad song: (all the members of the squad here please feel free to sing along and out loud!)


"Go! Go! Steves our man!"
"Selling his flat while he can!"
"He sees all the doom and gloom"
"and turns it into a personal boom!"
"Goodbye to good old UWS"
"Soon he'll be ivy league in the good old US!"
"Gooooooooo Steve!"


Beej


----------



## robots (21 October 2008)

hello,

here we go, government bashing, real estate owners bashing, mortgagee bashing

man get a life, oh everybody is ruining me i want a handout

Numbercruncher you still have trouble working out those numbers or accepting the reality of those numbers?

thankyou
robots


----------



## Beej (21 October 2008)

FYI for those that missed Gerard Hendersons SMH piece "Doomsayer Get's Instant Fame": http://www.smh.com.au/news/opinion/...ant-fame/2008/10/20/1224351149788.html?page=2

Cheers,

Beej


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## akabj (21 October 2008)

Another potential problem to housing prices is that the losses that people have made on the sharemarket would reduce the savings of many first home buyers, potential investors in second/third property and as a result there will be less ability to afford housing loans.

In addition, as I saw on the news the other night from one investor who had significant share losses but required further capital for margin call risks said that you would be silly to sell shares in this market but he was selling his house. 

The full flow on effects from the sharemarket losses are yet to be fully felt. With Sub-prime set to be ongoing for at least the next 2 years due to loan interest rates moving from teaser cheap interest into really high interest rates we have not seen the worst to come.

I just don't know why we think we are immune from falling house prices when they have fallen in pretty much every country where we have seen massive increases in prices over the last few decades.


----------



## tasmart (21 October 2008)

akabj said:


> I just don't know why we think we are immune from falling house prices when they have fallen in pretty much every country where we have seen massive increases in prices over the last few decades.




Some good reading about global house prices in the IMF report released last week. Ireland, UK and Australia quoted as the worst in house prices being out of kilter with fundamentals (and they went back to 1970). (page 16 of the first chapter).

http://www.imf.org/external/pubs/ft/weo/2008/02/index.htm

This has been an interesting thread to read - with lots of varied input. Hard to see any up for property for a while, even if interest rates get down to 1%


----------



## robots (21 October 2008)

hello,

thats why its so good, you plod along with a P & I loan, just living life

knocking the principal down year on year, 

thankyou
robots


----------



## Indie (21 October 2008)

G'day

Robots, you seem to be winning the argument for now IMO. But that's only because the media in general aren't fully reporting the negative aspects of what's happening in the market. The pullback in prices will inevitably filter through slowly as tighter credit chokes the market.

I'm settling on Friday and relived I'm getting out. I sold 5 months ago on an extended settlement. My real estate agent freely admits the market has dropped 10-15% in that time. I believe her, but then again she's probably trying to convince me to get in quick while there's "a lull in the market".

good luck
Indie


----------



## MR. (22 October 2008)

Robots... Property Guy, 
Some good figures put there "for" property.  Lower interest rates and people can't help themselves. It is something to think about but if people see property falling and jobs going who cares about lower interest rates? Oh yes the ones already purchased and the new home owners.  Good rental returns vs interest but how hard is it going to be to get rent out of someone with no job?  Is that why shares are traded? ie: Sellers think the price is going to drop so they sell! (and also Stamp duty should be on shares)

Always been a fan of property but as I go to auction next week I feel I am already a little too late.  Back on the 30/1/08 (Re: Imminent and severe market correction thread) I claimed it was time to sell the house.  During the marketing on this property (9 months after 30/1/08) the share market has fallen apart. Doh... and 6 weeks ago I bought the new family home, down sized. Interest rates are falling fast now, must be good for property!  But buyers are few and far between just now. Perhaps when the smoke settles and interest rates are even lower, more property buyers will appear. (They better) 

But isn't that what happened in the late 80's the property market remained afloat for some time after stocks dropped and then million dollar homes dropped to 600K and 250K homes dropped to 200K.  The average home didn't fall but the average home is not $140K any more. If property remains at the same price (at best) for years to come, why not just stick it in the now government secured banks and get some small interest.  But then again buy some property and rent it out and the return might be far greater than the banks!  Question is will property fall in value?  Going with my gut...... commited anyway.  

Is property, shares in slow motion?


----------



## MrBurns (22 October 2008)

> AAP
> 
> 22/10/2008 4:53pm  Email to a friend  Print article
> 
> ...




Gee ......didn't Steven Keen say that the other day ??????
Seems like he may not be far off the mark in this and therefore other predictions, run hide sell sell sell.................


----------



## CamKawa (22 October 2008)

Here we go, dodgy real estate figures exposed on Media Watch. Click on the video link.

Rental Figures Squeezed


----------



## robots (22 October 2008)

hello,

my girlfriend bought me the wrong size thongs today can we link that in here someway as well please,

anybody like pepperoni on there pizza?

thankyou
robots


----------



## nunthewiser (22 October 2008)

robots said:


> hello,
> 
> my girlfriend bought me the wrong size thongs today can we link that in here someway as well please,
> 
> ...




personally always thought thongs on a bloke were a bit off especially if they a little too tight...... they not the leapord pattern ones are they ? 

nah gimme salami anyday



cheers


----------



## MrBurns (22 October 2008)

MrBurns said:


> Gee ......didn't Steven Keen say that the other day ??????
> Seems like he may not be far off the mark in this and therefore other predictions, run hide sell sell sell.................




I'll just bring this down a bit so no one misses it. looks like Steven Keen was right, yes right, so if he's also right on real estate it's stuffed.


----------



## robots (22 October 2008)

hello,

gee what s surprise: SQM Research good plug CamKawa

sent this guy an email and will now send another one, never heard from the expert, 

oh yes but this guy is credible isnt he? any vested interest from him?

another one in with Keen, sell sell, get rid of debt, 

man money is getting cheaper, way cheaper brothers, 1% in recent months and more to come in November, my own inflation stats for housing costs indicate a 7% drop, fantastic

anyone got a nice letter from the landlord with 7% drop or anything for that matter,

would just like to take this time to thank the Government and the RBA for the hard work they are doing in keeping this country a fine place

thankyou
robots


----------



## MrBurns (22 October 2008)

> Originally Posted by MrBurns
> Gee ......didn't Steven Keen say that the other day ??????
> Seems like he may not be far off the mark in this and therefore other predictions, run hide sell sell sell.................
> 
> I'll just bring this down a bit so no one misses it. looks like Steven Keen was right, yes right, so if he's also right on real estate it's stuffed.




Hate to rub it in but I'll bring this down again so no one misses it. looks like Steven Keen was right, yes right, so if he's also right on real estate it's stuffed.


----------



## CamKawa (22 October 2008)

*Down house prices go!*

9:36 AM, 22 Oct 2008 

Tony Boyd
*Lenders get tough*

Anecdotal evidence collected from a range of participants in the housing sector suggests banks are tightening their lending criteria to mitigate the risks of being caught as the economy slows and house prices fall. 

The anecdotes point to banks applying much tougher loan to valuation ratios (LVR) and demanding higher levels of income to cover loan repayments. 

Competition for customers among the major lenders is said to be much less intense than earlier this year as banks become more selective in their approach to lending. 

At a time when the emphasis is on building capital ratios rather than striving for asset growth, banks have become more cautious in the loans they write. 

It is believed the more conservative stance is in anticipation of rising loan defaults. 

Home loan defaults, which have been rising sharply over the past year, tend to lag interest rate increases by about 12 months. Loan delinquencies in the latest bank accounts would relate to Reserve Bank rate rises from November last year. The RBA only stopped raising interest rates in March this year. 

Deteriorating conditions were seen in National Australia Bank's results, which showed the bank's 90 days past due retail delinquency rate rose 10 basis points to 81 basis points between March and September due to rising mortgage delinquencies in Australia and New Zealand. 

The biggest impact from tighter lending standards is being felt by the self-employed who previously relied upon non-bank lenders offering low-doc loans. Low-doc loans only comprise about 1 or 2 per cent of all outstanding home loans, but it is believed the tougher lending criteria are being applied to full-doc borrowers. 

One anecdote involved a tradesman on the NSW Central Coast with a low doc loan who had an LVR of 80 per cent and wanted to increase the loan amount to fund expansion of his business. A major bank told him that he could have the money provided the LVR was lowered to 70 per cent. This was not possible because his house had fallen in value. 

Industry sources said low-doc lending was still occurring but that LVRs had been wound back to as low as 65 per cent. 

The RBA noted in its recent financial stability review that credit had become less available for higher risk borrowers. 

Small businesses that had previously relied on non-conforming home loans with interest rates of 9.5 per cent to finance their businesses are being told by major banks to shift to business loans secured by home mortgages but with interest rates of 12 per cent. 

Another anecdote involved an architect who had pre-approval for a full-doc loan with an LVR of 95 per cent. When he tried to roll the loan over while he continued his search for a house, the bank changed the LVR to 80 per cent. 

One factor that is said to have influenced the banks is the tougher conditions included in lenders' mortgage insurance policies. 

It is not clear whether the tightening of credit criteria is being confined to particular geographic areas or particular types of assets, as occurred several years ago when lending for inner city apartments had a maximum LVR of 70 per cent. 

Financial results from Westpac, due next week, should provide a test of whether or not tougher lending criteria actually help to reduce default rates. 

Westpac moved into a tightening bias 18 months ago. It made adjustments to various factors including serviceability levels and property valuation requirements. A bank spokeswoman said lending criteria were reviewed constantly as part of sound business management. 

source: http://www.businessspectator.com.au/bs.nsf/Article/Lenders-get-tough-KMUB6?OpenDocument&src=sph
​


----------



## robots (22 October 2008)

nunthewiser said:


> personally always thought thongs on a bloke were a bit off especially if they a little too tight...... they not the leapord pattern ones are they ?
> 
> nah gimme salami anyday
> 
> ...




hello,

i love pepperoni, pineapple and tomato sauce

sometimes I go extra pepperoni if its an extra special night like tonite for instance,

gee, they forgot to discuss what people are doing for christmas in that article CamKawa

thankyou
robots


----------



## DJZ (22 October 2008)

nunthewiser said:


> personally always thought thongs on a bloke were a bit off especially if they a little too tight...... they not the leapord pattern ones are they ?
> 
> nah gimme salami anyday
> 
> ...




LOL 

Those leopard pattern ones always look Good


----------



## xoa (22 October 2008)

robots said:


> man money is getting cheaper, way cheaper brothers, 1% in recent months and more to come in November, my own inflation stats for housing costs indicate a 7% drop, fantastic




Yeah, interest rates will fall in coming months, but what about this time next year, or ten years from now? Twenty years from now?

:

Most people are intelligent enough not to commit themselves to a massive long-term debt on the basis of short-term interest rate movements. Intelligent people also look at the underlying value - no point buying an overpriced asset regardless of how "cheap" the debt is.


----------



## robots (22 October 2008)

hello,

i have been riding the basic variable wave for 10yrs, and hope to do the same for the next 10

IR is not a huge consideration for purchasing property, income is the main factor and there seems to be an awful lot who use the internet that cannot afford property,

your income is where you make the most "risk free" $ in life and the sooner you embrace it the better,

question time is open

thankyou
robots


----------



## MrBurns (22 October 2008)

Boy that Steven Keen is spot on isn't he ?

Forecast 1M unemployed and now that's backed up by J P Morgan after the Govt said 200k ..........pish posh to them, rank amateurs. they should consult Mr Keen for advice.

I wonder what Mr Keen has to say about property ? He seems to have the real answers.


----------



## gfresh (22 October 2008)

robots said:
			
		

> gee, they forgot to discuss what people are doing for christmas in that article CamKawa




Spending is one thing they won't be be doing.. And in Jan/Feb, after they've worked this out,  retailers will start laying off staff. Happy New Year!


----------



## robots (22 October 2008)

hello,

gee you on the ball tonite Mr Burns

whats your favourite Mr Burns, pepperoni or salami like nunthewiser?

unemployment is still at just under 5%

thankyou
robots


----------



## mantronic (22 October 2008)

Being a real estate agent I know that prices always go up and will continue to do so.

But the level of doom and gloom around in the press is laughable.

This is the worst example

"Why real estate spending could make Australia the new Iceland"

http://www.brisbanetimes.com.au/articles/2008/10/19/1224351113115.html

After quoting Redeker, the Telegraph's global business columnist, Ambrose Evans-Pritchard, weighed in with his own commentary: "The immediate problem for Australia's banks is that they gorged on offshore US dollar markets to fund expansion because the interest costs were lower. They were playing on a huge scale with leverage. European banks face much the same problem as dollar liabilities come back to haunt, but Australian lenders have pushed their luck even further."

Gabriel Stein, of Lombard Street Research, weighed in with this, after noting that Australian household debt had reached 177 per cent of gross domestic product, almost a world record: "It is amazing that in the midst of the biggest commodity boom ever seen they have still been unable to get a current account surplus. They have been living beyond their means for 10 years. What worries me is that productivity growth has been very low: they have been coasting after their reforms in the 1990s."

The global financial world is watching the Australian dollar because it holds a key to the great unanswered question of this uncertain era: will the global market punish a currency for its declining interest yield? Or will it reward a currency because of the soundness of its economy? Central banks are acutely interested in the answer.

Evans-Pritchard thinks the early signs are hopeful that the answer is the good one, that nations will be rewarded for having sound economies. But he does not believe Australia can escape the consequences of excess: "Australia has allowed its net foreign liabilities to reach 60 per cent of GDP during a decade-long boom, twice the level of the US. The country will, in effect, have to pay 4 per cent of GDP in the form of rents to foreign asset-holders as the bill for such extravagance falls due."

The bill is falling due. Earlier in the year Australians travelling in Europe would have paid about $1.50 for every euro spent. Today they need $2.10. The Aussie dollar is weak again, despite all the luck of the China boom. This raises a number of awkward questions. Did the lucky country became the greedy country? Did it fail to sufficiently embark on a program of nation-building during the resources boom? Was most of the bonus redistributed as tax cuts, which were spent chasing bigger mortgages, bigger homes, new cars and general consumption, stimulating short-term economic growth but not enough on long-term productivity and higher savings?

During 17 years of unbroken economic expansion and a 10-year commodities boom, it took a lot of people, borrowing a lot of money, taking a lot of unproductive risk, to get to where we are today: a nation with excessive debt and excessive vulnerability to external circumstances barely within our control.


----------



## MrBurns (22 October 2008)

robots said:


> hello,
> 
> gee you on the ball tonite Mr Burns
> 
> ...




Good evening Robots, I like salami, but it doesnt like me very much.

I wonder what Steve Keen likes ? Perhaps to have some backup for his forecasts, unless of course J P Morgan are scaremongers too ?

Ahh lovely evening here.


----------



## mantronic (22 October 2008)

MrBurns said:


> Good evening Robots, I like salami, but it doesnt like me very much.
> 
> I wonder what Steve Keen likes ? Perhaps to have some backup for his forecasts, unless of course J P Morgan are scaremongers too ?
> 
> Ahh lovely evening here.





All these professors and experts saying prices will fall, but apart from a slight dip this year things are going great guns. If you want to know about property ask a taxi driver - they always have the inside word and they will tell you its upward and onward.  These educated people let their book lerning get in the way of a good boom


----------



## robots (22 October 2008)

hello,

great evening where i am too, still travelling around Balmoral Slopes taking in the scene's, a lot of pretend token multimillionaire's around

bemmers, benz's etc trying to find Fat Pizza is that near you Mr Burns? heard they got a new shipment of pepperoni in and it is HOT, H O T

life is great

thankyou
robots


----------



## MrBurns (22 October 2008)

mantronic said:


> Being a real estate agent I know that prices always go up and will continue to do so.
> 
> But the level of doom and gloom around in the press is laughable.




I was a real estate agent for almost 30 years so I know how it works, it will go up again eventually but in the meantime it will crash very hard taking a lot of people with it, trade the BMW on a Kia while you can.


----------



## mantronic (22 October 2008)

MrBurns said:


> I was a real estate agent for almost 30 years so I know how it works, it will go up again eventually but in the meantime it will crash very hard taking a lot of people with it, trade the BMW on a Kia while you can.




This half might be is a little weak but things will take off next year for sure.  Like I said its you guys with your fancy sentences that spread the doom and gloom. Without you guys we would still be in boom times.


----------



## chops_a_must (22 October 2008)

mantronic said:


> Being a real estate agent I know that prices always go up and will continue to do so.



How come this sort of blatant ramping doesn't lead to bans on this site?


----------



## mantronic (22 October 2008)

mantronic said:


> Being a real estate agent I know that prices always go up and will continue to do so.
> 
> But the level of doom and gloom around in the press is laughable.
> 
> ...




Look at this guy and his fancy suit. No idea!

"October 2008: two weeks ago Redeker repeated his claim that abundant foreign money had been available to Australia and too much of it had been spent on real estate, creating a speculative bubble: "The easy money went straight into real estate - Australia will now have to generate 4 per cent of GDP to meet payments to foreign holders of its assets. This is twice as high as the burden faced by the US."

Easy money will always be around and will always go into property.


----------



## MS+Tradesim (22 October 2008)

mantronic said:


> This half might be is a little weak but things will take off next year for sure.  Like I said its you guys with your fancy sentences that spread the doom and gloom. Without you guys we would still be in boom times.




No doubt the real estate agents were saying this at the top of the American housing cycle.


----------



## mantronic (22 October 2008)

MS+Tradesim said:


> No doubt the real estate agents were saying this at the top of the American housing cycle.




The US crash is another media myth.  Many areas are still rising. Stock and credit markets have problems dont necessarily effect house prices.


----------



## MrBurns (22 October 2008)

mantronic said:


> This half might be is a little weak but things will take off next year for sure.  Like I said its you guys with your fancy sentences that spread the doom and gloom. Without you guys we would still be in boom times.




Oh I get it you're really a stand up comic, very very funny.


----------



## MS+Tradesim (22 October 2008)

mantronic said:


> The US crash is another media myth.  Many areas are still rising. Stock and credit markets have problems dont necessarily effect house prices.




Thanks. That's the best laugh I've had in ages. If you are truly a real estate agent your ramping is negligence at best.


----------



## MrBurns (22 October 2008)

mantronic said:


> The US crash is another media myth.  Many areas are still rising. Stock and credit markets have problems dont necessarily effect house prices.




See ? that proves it, the nut house DOES have internet access, another axcellent Rudd initiative but they shouldn't actually turn the PC's on, these unfortunates cause havoc in forums around the world.


----------



## robots (22 October 2008)

chops_a_must said:


> How come this sort of blatant ramping doesn't lead to bans on this site?




hello,

throw the multi-nicking in with that too chops, but hey, level playing field fine by me

whats your opinion on it Mr Burns?

what a day

thankyou
robots


----------



## mantronic (22 October 2008)

All this doom and gloom and yet the market is still strong.  Ill bet these experts would call my clients uneducated, illiterate, or both.

http://www.smh.com.au/news/national/in-the-tailspins-of-a-twin-storm/2008/10/17/1223750333653.html


----------



## chops_a_must (22 October 2008)

robots said:


> hello,
> 
> throw the multi-nicking in with that too chops, but hey, level playing field fine by me
> 
> ...



WTF are you talking about?


----------



## mantronic (22 October 2008)

MrBurns said:


> See ? that proves it, the nut house DOES have internet access, another axcellent Rudd initiative but they shouldn't actually turn the PC's on, these unfortunates cause havoc in forums around the world.




The problem with guys like you is that you think the property market is dictated by "experts". Its not.  Its all about who will pay top dollar and its usually a case of "a little bit of knowledege is dangerous" . Look at who the PM is giving handouts to as these are the people that keep things ticking over.


----------



## mantronic (22 October 2008)

Another one. Where do they find these guys?  In the end its about making or losing money and those in property will have the last laugh.

http://www.smh.com.au/news/national...ses-on-property/2008/10/17/1223750333615.html

The number of house sales in Mosman increased 22 per cent in the third quarter this year, compared to the corresponding period last year.

Figures from RP Data show that between the first and last time the properties were listed, they recorded an average drop in price of 5.9 per cent.

"Historically, these areas are underpinned by the financial markets and then you get the other people who draw income from them such as lawyers, bankers and so on," said Robert Simeon, from Richardson & Wrench Mosman. "So some people are being forced to market but we are not seeing carnage. People are saying if we can, we'll weather the storm."

New research by analysts Australian Property Monitors shows real estate agents slashing millions from their initial asking prices for homes in some upmarket areas after only a few weeks or months.

In one case, a real estate agent cut $6.5 million from the original asking price for an eastern suburbs mansion after four months on the market while a five-bedroom house in Wahroonga - initially advertised for $3.5 million in June - is now open to offers around $2.5 million.

RP Data analyst Tim Lawless said affected areas include the northern beaches suburbs such as Manly, Warringah and Pittwater.

"House values there have fallen by 10 per cent and the median is now around $900,000, down from just over $1 million in July last year," he said.


----------



## mantronic (22 October 2008)

mantronic said:


> All this doom and gloom and yet the market is still strong.  Ill bet these experts would call my clients uneducated, illiterate, or both.
> 
> http://www.smh.com.au/news/national/in-the-tailspins-of-a-twin-storm/2008/10/17/1223750333653.html




I have never heard of anyone losing money on property over 5 years and yet these newspapers manage to concoct these little stories.


"But before you start shedding tears for the investment bankers hit by the sharemarket collapse and forced to sell the Mosman homestead in a droopy property market, spare a thought for the clients of Paulette Ghaleb at LJ Hooker Guildford.

"It's not uncommon for us to sell a property for 40 per cent less than what someone bought it for five years ago. I have a lot of people who bought in the 2002 boom period and basically they come back to us asking us for opinions. Nine times out of 10, they are looking at a loss," Ghaleb says."


----------



## chops_a_must (22 October 2008)

Get to your point Mantronic...


----------



## So_Cynical (22 October 2008)

mantronic said:


> The US crash is another media myth.  Many areas are still rising. Stock and credit markets have problems dont necessarily effect house prices.




LOL...next you'll be telling us the holocaust never happened.


----------



## mantronic (22 October 2008)

chops_a_must said:


> Get to your point Mantronic...




I didnt think we needed a point with all the off topic and post whoring on here. But the point is property guys end up rich and the rest of you will be begging for coins.  I know it sounds harsh but us property guys are just trying to help you guys see the light.


----------



## chops_a_must (22 October 2008)

mantronic said:


> I didnt think we needed a point with all the off topic and post whoring on here. But the point is property guys end up rich and the rest of you will be begging for coins.  I know it sounds harsh but us property guys are just trying to help you guys see the light.



Lol...

So tell me again how you saying property ALWAYS goes up is not ramping?


----------



## mantronic (22 October 2008)

chops_a_must said:


> Lol...
> 
> So tell me again how you saying property ALWAYS goes up is not ramping?




Its a fact that the other property experts will confirm for you.  Easy money as we call it.


----------



## MrBurns (22 October 2008)

mantronic said:


> I didnt think we needed a point with all the off topic and post whoring on here. But the point is property guys end up rich and the rest of you will be begging for coins.  I know it sounds harsh but us property guys are just trying to help you guys see the light.




Gee really ? I know of dozens that went to the wall in the early 90's, must have been their imagination.


----------



## mantronic (22 October 2008)

They might be making it up.  Property really is the easiest and best way to make a profit.


----------



## robots (22 October 2008)

robots said:


> hello,
> 
> throw the multi-nicking in with that too chops, but hey, level playing field fine by me
> 
> ...




hello,

Mr Burns where are you? 

couldnt agree more mantronic, biggest investment in your life just the humble home

sent note 

thankyou
robots


----------



## lular (22 October 2008)

mantronic said:


> They might be making it up.  Property really is the easiest and best way to make a profit.




On the "slim"(read probable) chance that we go into recession, what is your assesment of the impact  this will have on the property market?


----------



## mantronic (22 October 2008)

lular said:


> On the "slim"(read probable) chance that we go into recession, what is your assesment of the impact  this will have on the property market?




Thanks for the question.  Property prices will remain steady in the worst areas.  Good property will continue to average 10% per annum and double every 7 years as me and my colleagues have been trying to tell you all for years.  Get in soon, sign a mortgage, sign a contract, make your payments, wake up rich.  Simple really.  Just ignore the "experts".


----------



## MrBurns (22 October 2008)

robots said:


> hello,
> 
> Mr Burns where are you?
> 
> ...




mantronic is obviously a sub agent with no experience, your own house over the long term is a great investment, buying before a crash is not, wait till the bottom has been reached roughly then go in not now.
Developers are already out of it so take the hint.
Robots I agree that property is great in the long term , I prefer it but timing is important and gearing is important, the less the better except in a full boom which has finished here.


----------



## lular (22 October 2008)

May I ask what you base this assesment on?

Do you have statistics from previous recessions that are not avaliable to anyone else?

Thankyou

(Question is for Mantronic, appologies MrBurns)


----------



## MrBurns (22 October 2008)

lular said:


> May I ask what you base this assesment on?
> 
> Do you have statistics from previous recessions that are not avaliable to anyone else?
> 
> Thankyou




Please specify who you're talking to.


----------



## Mofra (22 October 2008)

xoa said:


> Most people are intelligent enough not to commit themselves to a massive long-term debt on the basis of short-term interest rate movements. Intelligent people also look at the underlying value - no point buying an overpriced asset regardless of how "cheap" the debt is.



No one ever went broke by underestimating the public 

Remember, RAMS amassed a $15b loan book by borrowing short & lending long (the cardinal banking sin). I wouldn't bet on the intellect of the general populace to keep the market in check, when "the smartest guys in the room" struggled to do so.


----------



## professor_frink (22 October 2008)

chops_a_must said:


> How come this sort of blatant ramping doesn't lead to bans on this site?




Hi chops,

we've never really felt the need to try and moderate ramping/downramping on the property threads. Firstly it's a general chat discussion, and secondly, as far as I'm aware there isn't a regulatory authority that's interested in what is said by us punters on the general property market.  

Wouldn't a ramp or downramp of the property market be the equivalent of trying to ramp the XJO? Rather pointless IMO.



robots said:


> hello,
> 
> throw the multi-nicking in with that too chops, but hey, level playing field fine by me
> 
> ...




I know what you are getting at here robots, but you've fired a blank on that one.


----------



## mantronic (22 October 2008)

professor_frink said:


> Hi chops,
> 
> we've never really felt the need to try and moderate ramping/downramping on the property threads. Firstly it's a general chat discussion, and secondly, as far as I'm aware there isn't a regulatory authority that's interested in what is said by us punters on the general property market.
> 
> ...





I agree but the downrampers ruin the discussion and make the site a bit of a rabble.  Why not have a price fall thread and a price rise thread.It will stop them attacking us and their thread can die a quiet death.


----------



## lakemac (22 October 2008)

Both sides are right.

What you have to understand in real-estate is there are cultural differences between countries.

Here in Australia we have a very high home ownership ratio relative to the US (I can't remember the exact ratio but it is something like we have double the ownership rate of the US per capita and even more so than in England where it is very low).

Because of that cultural difference the demand for houses here in Australia (particularly major capital cities) will always be high (Australian's are basically coastal fringe dwellers). With a net immigration (also into those cities) you have a constant demand for housing.

robots and most property people understand is that in the long term (> 10 years) houses will appreciate in *intrinsic* value due to those demands. Hence why the double in 7 year rule.

The doom sayers on the other hand are right but for different reasons - it is the credit bubble added on top of the *intrinsic* value of housing that causes negative equity. What goes on here is that people (often highly leveraged due to low credit ratings or just starting out - hence outer suburbs where housing is cheaper) buy into the market late in the game at the point of highest rate of credit creation then the credit gets withdrawn. At this point the non-intrinsic value disappears as no new buyers come into play at the inflated figures (remember banks are not lending as much) and we hear cases of "negative equity maaaaate".

Those successful in real-estate have either learnt this or got lucky and entered the cycle early in the game - they have either positive or neutral equity. Either that or their gearing ratio is low enough that the outgoings are not killing their investment.

If you can hold on until either the intrinsic value of property goes up and/or the bubble value comes back again (as it will eventually) you will make money.

In the US there is an excessive supply problem in a lot of cities (caused by credit creation allowing developers to build more than demand really wanted). With a different cultural and legislative environment their housing problem - loss of equity is different to ours.

Question here is - is real-estate money easy money? I personally (my opinion) don't think so - but I am more a business and stock market focussed investor. For me having to look after tennants, spend weekends running around looking at run down properties then fixing them up is not my idea of fun. My fun is going to Sydney staying at the Intercon, dressing up to go to the Opera and spending quality time with my wife and family. Easy money is having companies and other people work for me rather than me subsidising someone to live in a house. But that is a personal preference. Some do enjoy being covered in plaster and paint on their weekends 

However I will say to be in the stockmarket you do need to be a bit smarter about the economy than owning houses here in Australia. It is relatively easier to own investment property and make money than it is to do the same with shares particularly in times like these if you don't understand the game.


----------



## CAB SAV (22 October 2008)

Mr Burns, release the hounds, on moronic.


----------



## robots (22 October 2008)

hello,

i accept the verdict professor, there was a lot of coincidence in many posts not just here

a lot of smart computer people around

thankyou
robots


----------



## chops_a_must (22 October 2008)

mantronic said:


> Your just angry because you arent rich like us property guys.  If there is one thing we know its property.  Join us.
> 
> And Im ordering some chinese with a side order of late 30s single man its a discontinued line due to lack of demand and going cheap tonight. Good times.



Mmm... 24, no debt, and enough savings for a deposit.

That I wouldn't use for a house even if I could service the debt, because I'd rather not assign myself to 30 years with a ball and chain mortgage.

Not my idea of fun if I want to take lengthy time off work, for travel or study. No thanks, I'd rather not assign myself to a lack of flexibility like that.


----------



## chops_a_must (22 October 2008)

professor_frink said:


> Hi chops,
> 
> we've never really felt the need to try and moderate ramping/downramping on the property threads.



Well, I think you should.

Makes it look like a bit of a joke compared to the moderating in other parts on here.



professor_frink said:


> Wouldn't a ramp or downramp of the property market be the equivalent of trying to ramp the XJO? Rather pointless IMO.



I would have thought you would need the same accreditation regardless of recommendation of financial product.

Basically you are giving the ok for anyone here to ramp on the XAO thread as far as I'm concerned.


----------



## professor_frink (22 October 2008)

mantronic said:


> I agree but the downrampers ruin the discussion and make the site a bit of a rabble.  Why not have a price fall thread and a price rise thread.It will stop them attacking us and their thread can die a quiet death.




We do have both! Both sides just seem to go to whichever thread is getting posts at the time. Personally I think the discussion would be pretty bland if there weren't a debate going on

As for downrampers ruining the discussion, that's your opinion, I'm sure many people think just the opposite.



robots said:


> hello,
> 
> i accept the verdict professor, there was a lot of coincidence in many posts not just here
> 
> ...




Yes your absolutely right robots, there are ways around these things, I'm sure some have done it. Generally they will slip up eventually though so if you're right, I'm sure we'll find out later. In the meantime it would be great if the thread wouldn't be sidetracked by people accusing others of having multiple usernames. That goes for a few other people posting on here too


----------



## mantronic (22 October 2008)

chops_a_must said:


> Well, I think you should.
> 
> Makes it look like a bit of a joke compared to the moderating in other parts on here.
> 
> ...




Or as a middle ground make 2 separate threads and keep them separate.


----------



## chops_a_must (22 October 2008)

And you've undoubtedly quashed any assertions authoritatively with that post professor.


----------



## robots (22 October 2008)

lakemac said:


> Both sides are right.
> 
> What you have to understand in real-estate is there are cultural differences between countries.
> 
> ...




hello,

great post lakemac,

i wouldnt have clue what happens in the future,

we have to live somewhere and your "own home" is an option

thankyou
robots


----------



## chops_a_must (22 October 2008)

mantronic said:


> Or as a middle ground make 2 separate threads and keep them separate.



That's why we had this thread...


----------



## mantronic (22 October 2008)

professor_frink said:


> We do have both! Both sides just seem to go to whichever thread is getting posts at the time. Personally I think the discussion would be pretty bland if there weren't a debate going on
> 
> As for downrampers ruining the discussion, that's your opinion, I'm sure many people think just the opposite.
> 
> ...




Understood.  If anything its probably more the post whoring and off topic that combine with the bickering to give  bad first impression of the thread.


----------



## professor_frink (22 October 2008)

chops_a_must said:


> Well, I think you should.
> 
> Makes it look like a bit of a joke compared to the moderating in other parts on here.




I'll mention it to Joe, though think it would be an absolute nightmare for us mods so can already guess how he'll react





chops_a_must said:


> Basically you are giving the ok for anyone here to ramp on the XAO thread as far as I'm concerned.




basically I am. Whiskers has been doing it for months and look how far it's got him


----------



## chops_a_must (22 October 2008)

professor_frink said:


> basically I am. Whiskers has been doing it for months and look how far it's got him



Lol.

Sweet. I'm gonna have some fun.


----------



## mantronic (22 October 2008)

chops_a_must said:


> That's why we had this thread...




Its like having a thread to discuss VHS and having to argue why beta isnt better.  Those forums usually have separate threads.  The alternative is like a red rag to a troll.


----------



## MrBurns (22 October 2008)

CAB SAV said:


> Mr Burns, release the hounds, on moronic.




I could crush him like an ant. But it would be too easy. No, revenge is a dish best served cold. I'll bide my time until ... Oh, what the hell. I'll just crush him like an ant.


----------



## professor_frink (22 October 2008)

MrBurns said:


> I could crush him like an ant. But it would be too easy. No, revenge is a dish best served cold. I'll bide my time until ... Oh, what the hell. I'll just crush him like an ant.




You could always release the robotic Richard Simmons first


----------



## mantronic (22 October 2008)

Now now, you might need me to offer you shelter in the coming depression.
Buy now. You snooze you lose. ;-)


----------



## MrBurns (22 October 2008)

professor_frink said:


> You could always release the robotic Richard Simmons first




I was saving that for later !!! 

I think you're the one who deleted a previous offensive post of mine.

I may require the odd bit of editing as the troglodytes do enrage me from time to time.


----------



## mantronic (22 October 2008)

MrBurns said:


> I was saving that for later !!!
> 
> I think you're the one who deleted a previous offensive post of mine.
> 
> I may require the odd bit of editing as the troglodytes do enrage me from time to time.




Cause you know we are right.   Leverage up and buy some nice sunglasses because the future is bright.


----------



## professor_frink (22 October 2008)

MrBurns said:


> I was saving that for later !!!
> 
> I think you're the one who deleted a previous offensive post of mine.
> 
> I may require the odd bit of editing as the troglodytes do enrage me from time to time.




and yet if you were to have them killed, you would be the one to go to jail. That's democracy for you. 



mantronic said:


> Cause you know we are right.   Leverage up and buy some nice sunglasses because the future is bright.




Don't you think you've made your point already?


----------



## mantronic (22 October 2008)

professor_frink said:


> Don't you think you've made your point already?




Sorry I was deliberatley post whoring.  I saw robot do it about 5 times tonight and figured Id found the one thread on the entire internet where its the done thing.


----------



## professor_frink (22 October 2008)

mantronic said:


> Sorry I was deliberatley post whoring.  I saw robot do it about 5 times tonight and figured Id found the one thread on the entire internet where its the done thing.




Despite the fact that the bears don't like him, they all missed him when we gave him an enforced holiday a while back so we let him back in. Do you think you'll be missed by the bears and we'll let you back in? You are quite welcome to keep going and find out!


----------



## lakemac (22 October 2008)

Anyone have a real thought to add to this instead of just trolling?

robots (and others) maybe you can educate the trolls (and myself):

what does your typical investment in property look like?

I have asked these questions in other places so I will repeat them here so we can all learn.

Firstly what LVR do you use?
What kind of area do you invest in (eg. high value suburbs vs high yield ones - usually regional areas)?
The LVR and area will give an idea of the cost/return from any given investment. I am curious as to what the experts use.

Are the properties ready to rent or do they require refurbishment? If they need a touch up how much additional investment (as a percentage of initial property price) do you put in to fix it up?

If you are negative gearing any given property how do you fund that? From another business, wages, other investments?

Next, how do you expand the portfolio? Is it buy borrowing against the increased equity in the existing properties or do you sell and bring in other peoples money to do what Steve McKnight's original double up strategy does? (He waits till the equity increase covers two new deposits plus taxation plus selling/buying costs of two new properties). That way he doubles his portfolio size every time and at the same time sucks in more external equity giving him higher deposit figures.

So can we have some real answers and all learn something here?


----------



## MrBurns (22 October 2008)

professor_frink said:


> and yet if you were to have them killed, you would be the one to go to jail. That's democracy for you.




Look at them frink stuffing their faces with donuts on my time! That's right, keep eating...Little do they know they're 'drawing ever closer to the poison donut!
There is a poison one, isn't there frink? 

Err...no, sir. I discussed this with our lawyers and they consider it murder.


----------



## mantronic (22 October 2008)

lakemac said:


> Anyone have a real thought to add to this instead of just trolling?
> 
> robots (and others) maybe you can educate the trolls (and myself):
> 
> ...




Well yes somey can get all scientific and confuse themselves into buying but most investors dont but I dont expect any of those types on this thread. You dont need to.  

In essence you are making a bet on price rises.  A leap of faith.  You know what a bet is right?  You just have to trust us agents that its a goldmine.

If you are buying a home, which is not an investment unless you intend to downsize, then just buy somethink you like.  Its pretty simple really.


----------



## robots (22 October 2008)

lakemac said:


> Anyone have a real thought to add to this instead of just trolling?
> 
> robots (and others) maybe you can educate the trolls (and myself):
> 
> ...




Hello, 

i am in it for mostly lifestyle and if money comes along then so be it, looking for greener pastures in 20-30yrs when i can walk this fine country with ease

so investment was bought mainly for future "lifestyle" decision, moving to different bayside area, downsizing as such

very much a believer in your home being your biggest investment, wouldnt have a clue what happens in the future

thankyou
robots


----------



## mantronic (22 October 2008)

robots said:


> Hello,
> 
> i am in it for mostly lifestyle and if money comes along then so be it, looking for greener pastures in 20-30yrs when i can walk this fine country with ease
> 
> ...




There you go!


----------



## robots (22 October 2008)

hello,

great night, the discussion has been awesome

have a great day tomorrow, enjoy the moment, love thy neighbour and please spread the word that everything is fine here in Australia

thankyou very much, robots has left the building

thankyou
robots


----------



## lakemac (22 October 2008)

thanks for the reply robots.
I always enjoy your posts 

Anyone else care to put up some hard data so we can all learn?


----------



## Julia (22 October 2008)

mantronic said:


> Or as a middle ground make 2 separate threads and keep them separate.



No, that simply wouldn't work.  A comment only makes sense in sequential reading as it responds to an earlier one.  It's fine the way it is.


----------



## nunthewiser (22 October 2008)

Julia said:


> No, that simply wouldn't work.  A comment only makes sense in sequential reading as it responds to an earlier one.  It's fine the way it is.




totally agree . 2 sides to every discussion of worth and if u remove one side ya just dont have a discussion worth listening too


----------



## Ageo (23 October 2008)

Ageo said:


> I believe some good country properties would be interesting for cash flow..... like this 1
> 
> http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007347763
> 2 bedroom cottage, which you can pick up for $74,000 and with 20% down that would mean you would have to come up with $14,800.....
> ...




Lakemac here is some rough figures i have done (posted in here previously) to show there is some potential cashflow properties out there..... i havent figured in everything but you get the idea that this 1 has the potential to be an easy 10% cash on cash return (steve mcknights 0 to 130 properties book was handy).

Anyways for me personally when buying for growth unless its at a major discount i would just develop a batch instead (as your building the dwelling at a major discount compared to buying it).

Anywayz some food for thought as there is alot of bitching going on in here


----------



## gfresh (23 October 2008)

Have you been to Dimboola Ageo? It's been a few years since I've been there, but if I remember it was a dying town out in the middle of nowhere, ever since the highway skirted it. Did not at all a vibrant town to me. It's all good having cheap property, but you have to have tenants who want to live there. I don't know, maybe you know more about the area, but those are just my impressions from the past.


----------



## Ageo (23 October 2008)

gfresh said:


> Have you been to Dimboola Ageo? It's been a few years since I've been there, but if I remember it was a dying town out in the middle of nowhere, ever since the highway skirted it. Did not at all a vibrant town to me. It's all good having cheap property, but you have to have tenants who want to live there. I don't know, maybe you know more about the area, but those are just my impressions from the past.




No gfresh never been there although it does have the western hwy passing by (you just need to exit).... this was a simple example and you will find alot of people are moving from the cities to the tree change (regional) as its cheaper etc....

There are many places in NSW (young for instance) you can pick up places under 100k with good rental yields (the population is large for a country town).

And since we get about 300,000 immigrants per yr (if my figures are right) regional areas are becoming more popular (not for growth as such but rental yields)


----------



## gfresh (23 October 2008)

I think the biggest mistake by the realestate agents, investment property kings, and whoever else that trawls this thread is assuming that everybody that is discussing property negatively in here at the moment: 

a) Hates property with a passion
b) Thinks property is a poor investment long-term
c) Is "too poor" to be able to purchase one (6 figures in the bank thanks, I'm fine)

There is a time for everything, cycles are cycles, and when people have a choice of when to enter (or leave) the market they'll choose the time they think is right. I don't think that time is now, right now for lots of reasons put forward in here. 

Global recession is coming - US, UK, Japan, Europe, China may soon be experiencing what may seem like a recession.. People only need to half read some of the overseas news sources to see how badly this crisis is playing out. It seems most property investors like to ignore them and dismiss the rest of the world as not being applicable to Australia. Whatever the worst beliefs that have been put forward have been met so far. Even outrageous claims have turned out to become true. 

The world's largest investment banks falling over? 95% of people would have laughed at you 2 years ago if you had even tried to suggest such a thing.

We're an island, we're insulated somewhat, but the time will come, is coming (speak to some small businesses out there), for the world economic downturn to hit our economy. 

JP Morgan coming out and predicting 1M job losses coming up is in stark contrast to the conservative economists views out there, often sponsored by the major banks mind you. I wouldn't dismiss such estimates so quickly, as the conservative viewpoints have proven to be the incorrect ones so far. 

The spin talk all seems to sound like the one put forward by those with shares 12 months ago. Lots of logical arguments as to why this was a never-ending super cycle, lots of nice theories that do make sense, but in the end, a big fail as 12 months later we're heading for 2004 share market levels.

Those perma-bulls that seem to believe that property prices can never ever fall, have plenty of nice charts and theories that the rules are somehow different, may be heading towards exactly the same mistake. 

We can all just watch and wait and see if this proves to be correct or not.

There is plenty of caution, even put forward by those in the property investment community if people read around a bit more.


----------



## Ageo (23 October 2008)

Couldnt agree more gfresh, my dad's builder who builds alot of homes is pulling back production... many of my customers (jewellers) cant even pay a small debt, many of the small business's that are over capitalized will get slammed.....im hearing it everywhere, i.e people in westfields are still paying crazy rents but arnt generating the revenue to keep up.

And i also agree now isnt the time (for me anyway) to buy property or shares (as i believe the worst is yet to come) but when it all falls through the roof perhaps 90% of the population will not be able to afford investment (they will be in survival mode) and thats the time to look at entering..... (of course my opinion and shouldnt be taken as advice).


----------



## ROE (23 October 2008)

Watch a doc made in US about three years ago called
in debt we trust... they already know 2007/2008 is the year America fall over.

Your home equity is a form of debt  and if you tape in to spend or fuel further purchase of more property, you are in for a rude awakening.

Think about it ...bought a house $100K gone up to 200K
yipe I'm 100K richer...let cash it out ...and do something about it but the reality is you just put another 100K debt on your balance... it's ok when personal debt is low but we are now reaching the absolutely limit...and there is only one way and that is down...everything in general not just housing...all asset will be reprice and those who leverage will be the hardest hit of them all...and of course many will go bankrupt..they didn't believe it then until it happen, Australia doesn't believe in it now... until 2010


----------



## ROE (23 October 2008)

gfresh said:


> I think the biggest mistake by the realestate agents, investment property kings, and whoever else that trawls this thread is assuming that everybody that is discussing property negatively in here at the moment:
> 
> a) Hates property with a passion
> b) Thinks property is a poor investment long-term
> ...




I love property with a passion  that why I own my own home and no debt and that equity the damn banks and financial people keep advising me to use and buy more property and shares...

I said no thanks...my home is not an ATM it's a place I like to live and where my kids grow up. I don't want anyone to pull it guts out should **** happen in the world

I'm now thankful I stick by those decision, maybe not as rich as some but debt free and have a better night sleep


----------



## ROE (23 October 2008)

Ageo said:


> Couldnt agree more gfresh, my dad's builder who builds alot of homes is pulling back production... many of my customers (jewellers) cant even pay a small debt, many of the small business's that are over capitalized will get slammed.....im hearing it everywhere, i.e people in westfields are still paying crazy rents but arnt generating the revenue to keep up.
> 
> And i also agree now isnt the time (for me anyway) to buy property or shares (as i believe the worst is yet to come) but when it all falls through the roof perhaps 90% of the population will not be able to afford investment (they will be in survival mode) and thats the time to look at entering..... (of course my opinion and shouldnt be taken as advice).




nothing wrong with keeping that cash in the bank at 7% and wait for the perfect pitch to come to you .

The fact is most true millionaires (the one that survive the boom and bust) dont have much debt at all

they are frugal lots and save and invest slow and steady years in years out and economic cycles doesn't affect their life style or their money much.

Maybe now is the time to read a book called "the millionaire next door" ...


----------



## Ageo (23 October 2008)

ROE said:


> nothing wrong with keeping that cash in the bank at 7% and wait for the perfect pitch to come to you .
> 
> ...




Something just doesnt sit right with me regarding our banks...... i mean lets say your bank falls over (which is very achievable due to foreign lending) how many other people will do a bank run...... then id like to see the governments guarantee in action (people will storm the parliament house to demand their cash hehe).


----------



## mantronic (23 October 2008)

Julia said:


> No, that simply wouldn't work.  A comment only makes sense in sequential reading as it responds to an earlier one.  It's fine the way it is.




Well what you call your opinion I call nonsense.  You may not want to bicker about that just as not every property tycoon wants to bicker with property naysayers.  For those that do you could set up a "property childish bickering" thread.

Anyway another day another profit turning renters dead money into my living money.  Any more questions from the live under a bridge crew on the everlasting fountain of wealth that is property?


----------



## spooly74 (23 October 2008)

mantronic said:


> Well what you call your opinion I call nonsense.




Here you go mate .. you can rant away to your hearts content there.

https://www.aussiestockforums.com/forums/showthread.php?t=9911&highlight=house+rising


----------



## awg (23 October 2008)

I like to keep things as simple as possible.

rising unemployment will mean many holders of single investment property especially, (and ppor) will no longer be able to service their negative gearing = more (forced) sellers.

rising UB + difficulty qualifying for tightened credit will mean less buyers.

more sellers + less buyers means prices fall.

these are basic assumptions, tell me were I am wrong.
Is there any sausage that thinks UB will not rise?

I believe that immigration plus undersupply of home construction, and rental supply, is holding up the market at the moment, that is saving us. I dont believe these factors can hold back the tide.

I talk to RE pros sometimes. Every single one of them tells me prices are falling hard.

Obviously there will be some small pockets that are not afflicted, but they will be few and far between

disclosure: I own my own home outright, and have 1 negative geared IP, which i wont sell unless forced to, and these views represent my opinions only. I am not a RE pro, but have bought and sold numerous properties over 20 yrs.


----------



## mantronic (23 October 2008)

spooly74 said:


> Here you go mate .. you can rant away to your hearts content there.
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=9911&highlight=house+rising




Sorry mate but until the consensus is separate threads us property experts are here to stay!

Did anyone buy thongs today?


----------



## mantronic (23 October 2008)

awg said:


> I like to keep things as simple as possible.
> 
> rising unemployment will mean many holders of single investment property especially, (and ppor) will no longer be able to service their negative gearing = more (forced) sellers.
> 
> ...




UB?  Dont sweat the small stuff. Hold on buy more and end up richer than the alternative.  You heard it here first.  Stay tuned for more breaking news.


----------



## ROE (23 October 2008)

Ageo said:


> Something just doesnt sit right with me regarding our banks...... i mean lets say your bank falls over (which is very achievable due to foreign lending) how many other people will do a bank run...... then id like to see the governments guarantee in action (people will storm the parliament house to demand their cash hehe).




Well you don't have to keep your money in the bank, buy Government bonds ..currently 5 years bond get you 6.5% 
nice and pretty close to risk free  

When the government give a guarantee they protect depositor they WILL. It's not just Aussie money, it's also foreigners who has money in Australia.

if you pull a stunner and renege on your obligation the country not only suffer but also its people.

Russia default on its loan not long ago, look what happen
no one will invest in that country again, its people are starving even now after decades people are weary of Russia and all the money go to other country like China.


----------



## Aussiejeff (24 October 2008)

Interesting article today from The Australian...

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

*Mortgage pain to hit 1 million - survey*
By Katherine Jimenez and Nick Perpitch October 23, 2008 06:46am

... Mortgage stress is predicted to hit a record high despite interest rate cuts.

    * One million forecast to fall into mortgage stress
    * 1 per cent rate cut won't make a difference
    * Unemployment uncertainty leading factor 

MORE than one million Australians are forecast to fall into mortgage stress by March next year - the worst rate ever - as rising unemployment, tumbling house prices and ballooning credit debt take their toll.

Even after factoring in a further 1 per cent cut in interest rates, the latest mortgage stress survey from Fujitsu Consulting is predicting a massive 42 per cent surge in "severe stressed" households to about 363,000, the highest number ever recorded by the survey.

At the heart of the mortgage stress is employment uncertainty.

The report found 15 per cent of households had experienced a reduction in overtime payments in the past three months, and 35 per cent of people employed by small businesses had seen their hours reduced.

"The findings are very concerning as it shows that despite the potential for more rate cuts in coming weeks, the spectre of falling employment is off setting the potential benefit," Fujitsu managing consulting director Martin North said.

The "double whammy" of unemployment and the higher cost of living were driving more people into stress, he said.

"This will lead to further house price reductions in many suburbs," Mr North warned.

Mortgage stress is tipped to rise 27 per cent to more than one million by March - that is based on a further 1 per cent decline in official cash rates and unemployment rising from 4.3 per cent to 4.7per cent.

If unemployment reached 5 per cent [some predictions are for 6% - aj], Mr North estimates stress levels would rise above 1.4 million. And the alarming predictions are not just confined to the battlers. Affluent stress is also on the rise due to the further stock market falls, margin calls and rising costs of living.

The Fujitsu report highlighted that *a number of sea change regions - including the Gold Coast -were being hit by forced sales as superannuation returns slump, and young families in Western Australia were also coming under financial pressure*.

"We are seeing very significant issues in WA because house prices have slipped quite a bit there," said Mr North.

"People had to really extend themselves to get into the market, so we are seeing quite significant signs of negative equity emerging in WA." 

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

Hardly a glowing appraisal of the RE industry outlook over the coming months (years?).



aj


----------



## gfresh (24 October 2008)

Here is the goldcoast specific slant of that article, which I tend to agree could be true. Lots of small businesses running behind with large mortgages, feeding off other people with large mortgages in the same situation. 

http://www.goldcoast.com.au/article/2008/10/24/17907_gold-coast-top-story.html



> "The Gold Coast is at the bleeding edge of what's happening," said Mr North.
> 
> "The Gold Coast is certainly facing it more than other areas of Queensland and other states, although Western Australian is slightly worse, especially around Perth
> 
> ...




Should be able to buy a 2br unit close to some of the best beaches in Australia for under $350k. The sort of scenery that in Sydney or in Melbourne would cost you close to twice that. In fact you already can, but you'll probably be able to buy a bit better.


----------



## Aussiejeff (24 October 2008)

S&P/ASX 200 A-REIT [XPJ] getting hammered again. Here is just one of the miserable examples of why I think RE is going to suffer over the coming months. 

ING Industrial Fund down 40% today. 

From Commsec company info -

--------------------
ING Industrial Fund (IIF) invests in industrial properties in key global markets. Its portfolio is primarily made up of Industrial Properties and Business Parks. As at June 2008, *IIFs portfolio comprised interests in around over 550 properties with total assets of around $6bn*. Properties are located in Australia, Europe and Canada. The fund is managed by ING Real Estate Australia.

IIF is currently in harm minimisation mode, with falling property values pushing gearing to uncomfortable levels. Asset sales into weak markets are necessary to fund the large development pipeline and avoid triggering debt covenants. ING Industrial Fund reported NPAT down 90% to $39m for the year ended 30 June 2008.
-----------------

SP has plummeted from abt $2.85 (last year) to 40c (today) - an 86% drop in 1 year.


If these RE fund companies are where a lot of development moolah comes from, the near future is looking dim IMO.


----------



## Aussiejeff (24 October 2008)

Todays firesale of the S&P/ASX 200 A-REIT [XPJ] continues unabated - sector is now down almost 12% for the day across the board at this time.


----------



## nunthewiser (24 October 2008)

Isabelle Oderberg: What is the residential property market like at the moment? Are we seeing some of the interest rate cuts feeding through? 

Enzo Raimondo: Look, it’s a bit early to ascertain whether there’s been any effect on transaction volumes because of the interest rate cut or the government’s announcement. I think we’ve got to wait for another three or four weeks to see that, although this Saturday coming it will be a real test for the residential market in Melbourne because we’ll have close to 1,100 auctions. If we see a clearance rate in the mid 60s, I would suggest that that’s a pretty good result given what’s happening in the broader economy. 

But no, we haven’t seen any effect on transaction numbers because of the interest rate cut or the government announcements, but we have seen, and agents tell me that they’ve seen more people attending auctions, a bit more confidence although cautious confidence. People sort of not bidding as enthusiastically as they were this time last year, and the agents I’ve spoken to suggest that early indications are that investors are certainly back in the market place looking at investment property mainly in the apartment / townhouse market. 

IO: Given the additional grant money that would be given to first home buyers looking at a new build or off-the-plan property, are you expecting to see a shift in the market towards those sorts of properties? 

ER: No, I don’t think there’ll be any great shift in people building or buying an established home. The first home buyer market generally fluctuates between 17 per cent to 20 per cent if it’s really buoyant, so 20 per cent is probably the top end of the first home buyer’s market, that’s about 20 per cent of total transactions and within that 20 per cent it’s probably a similar split of how many people build their first home and buy established. But I don’t think there’ll be a significant shift, but it will be an important part of the market that needs some confidence. 

For the best of this century since 2000, first home buyers have found it reasonably difficult to get into the market. We’ve seen affordability at its worst in 25 years. We’ve probably had the tightest continuing rental market that we’ve had in the same period as well in the last 25 years. Vacancy rates are still one per cent or just above one per cent which is a very tight rental market. So for first home buyers, it hasn’t been a very good scenario or situation to buy their first home, but certainly now in the last four or five months the market has turned towards the buyers a bit more so. It’s probably the best situation or best opportunity they’ve had in the last eight years to get into home ownership if first home buyers are serious. And with the, potential $21,000 to build your home and $14,000 to buy an established home and I think an extra $3,000 from the state government if you buy under a certain amount, that’s significant assistance and we believe it will add some confidence to that sector of the market. 

IO: Does the increase in grants for first home buyers encourage people who hadn’t previously been looking to enter the market or push those who are already looking into a higher bracket? What’s your opinion? 

ER: Look, there’s no doubt that the $14,000 or the $21,000 is a significant boost to your purchasing capacity and I know there are a lot of people who have delayed their purchasing decision because of prices last year hitting all time highs. We saw 2007… You know it was an aberration in relation to property prices. It was the strongest year in a long, long time where we had most suburbs going up at least 20 per cent in the year. 

We believe that when we release our medians for the September quarter we’ll see a reduction in the value somewhere between three per cent and five per cent, I suspect on the Melbourne median. More importantly, we’ve seen probably a larger reduction in the number of transactions. They’re about 26 per cent down on this time last year. So for first home buyers it’ll provide some opportunities, but they’ll have less choice. I mean last year everybody was buying and everybody was selling. This year it’s a totally different market place, but it does favour buyers, especially first home buyers, all buyers really. If you’ve got the capacity to obtain a loan and service a loan, now is probably the best it’s been for buyers in a long time. 

IO: How are you expecting things to evolve towards Christmas given that it’s likely we’re going to see two more rate cuts of about fifty basis points each? 

ER: Well, that’s a good question because of the interest rate movement. I’ve been a bit sceptical of it since the beginning of the year when we had the banks telling us that they had to put interest rates up outside of the RBA because of costs of funds, cost of borrowing. We heard that only a few weeks ago and then we’ve seen ANZ reduce their interest rates by 0.25 and NAB and Commonwealth have followed. There’s speculation of other interest rate cuts by the RBA and I’m not sure whether the banks are preparing us not to pass on the 0.5 by giving us a 0.25 at the moment. 

I don’t know if that’s the case, but it just seems to be that they’ve argued or they’ve presented the case that the cost of borrowings between banks and the costs of funds to banks have been increasing, yet we see them acting totally opposite by reducing interest rates. So I’m not sure what’s happening in the interest rate market, but I can tell you that every time there is a movement up or down in interest rates, there is a correlating effect in the property market, but it’s usually you know a minimum of four weeks from the time of that interest rate movement. So if we see another one, I think November will probably be a fairly hectic month for residential property sales in Melbourne and I think it will make a lot of people happy especially vendors and estate agents.


----------



## ROE (24 October 2008)

Aussiejeff said:


> Todays firesale of the S&P/ASX 200 A-REIT [XPJ] continues unabated - sector is now down almost 12% for the day across the board at this time.




When debt deflator and de-leverage comes, nothing is spared in its wake ..... all Asset will continue to fall until the
beast is contained and debt once again on the rise.
Economic 101.

the guys with cash can pick and chose the best of the best. Never in my life I seen so many good stocks trade close to book value and below PE of 10  and continue to pick and chose the best of the best.


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## Glen48 (24 October 2008)

Today Courier Mails states in July there were 138 houses foreclosed on  this month up to 100 so far BUT it does not include the "Investors" who are walking away from their "Investment"  
Some Banks are foreclosing the day after the payment is over due.
So if you are in to buying "investment " properties get in now and like the sign use to say this Man is waiting for the price of real estate to come down and a picture of an old Man in a chair it will now read this Man is waiting for the price of real Estate to go up..


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## ROE (25 October 2008)

Glen48 said:


> Today Courier Mails states in July there were 138 houses foreclosed on  this month up to 100 so far BUT it does not include the "Investors" who are walking away from their "Investment"
> Some Banks are foreclosing the day after the payment is over due.
> So if you are in to buying "investment " properties get in now and like the sign use to say this Man is waiting for the price of real estate to come down and a picture of an old Man in a chair it will now read this Man is waiting for the price of real Estate to go up..





 why don't you buy up all the bargains, you be millionaire in 7 years cos real estate will be double by then


----------



## Aussiejeff (25 October 2008)

Boral's August 2008 graph showing where detached house approvals are heading. NSW looking particularly sick, given that this downturn is likely to follow the trend as indicated by the significant drop in approvals around 2001....


----------



## Aussiejeff (25 October 2008)

Coincidental to that big plunge in Oz house starts around 2001, the $AUBananaBuck had briefly slumped to it's lowest ever level since floating - a mere $US 0.489 in March 2001. It took 24 months to recover back to $US60c in March 2003.

It has now dropped (today) to $US 0.6224 and likely to head into the sub-$US60c zone next week. Will it hit the sub-$US50c? Will it languish in the twilight zone for years again (would seriously hurt importers of furniture / household items)?



aj


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## Pommiegranite (26 October 2008)

Does anyone have, that real estate stronghold called Melbourne's, auction clearance rates? Did they 'rocket' or did they 'plunge'?


----------



## CamKawa (26 October 2008)

Pommiegranite said:


> Does anyone have, that real estate stronghold called Melbourne's, auction clearance rates? Did they 'rocket' or did they 'plunge'?



Auction results 53%

It's being touted as "black Saturday" by the Herald Sun - Auction sales keep falling


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## explod (26 October 2008)

Pommiegranite said:


> Does anyone have, that real estate stronghold called Melbourne's, auction clearance rates? Did they 'rocket' or did they 'plunge'?




Notice you have the thumbs up on the thread now Pommie, a good show, or very bad show, depends where you are coming from.

Usually get a report from my pal Robots on Melbourne's Sat'dy take.  Seems to be missing.  Maybe he is carrying the water for Enzo Ramondo, REIV head here in Vic.

Age today "Auction Clearance rates collaps to four year low.   Down to 53%, lowest since July 2004.    Article by Vedelago.

thankyou

explod


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## Pommiegranite (26 October 2008)

CamKawa said:


> Auction results 53%
> 
> It's being touted as "black Saturday" by the Herald Sun - Auction sales keep falling




Thanks Camkawa. Robots, were you in the 53%? Probably not seeing the way you value property.

Here is how its reported in the Age:




> *Auction clearance rates collapse to a four-year low*
> *Chris Vedelago *
> October 26, 2008
> MELBOURNE'S auction clearance rate plunged to its lowest level in more than four years yesterday, with almost half of the properties up for sale failing to sell.
> ...


----------



## Pommiegranite (26 October 2008)

explod said:


> Notice you have the thumbs up on the thread now Pommie, a good show, or very bad show, depends where you are coming from.
> 
> Usually get a report from my pal Robots on Melbourne's Sat'dy take. Seems to be missing. Maybe he is carrying the water for Enzo Ramondo, REIV head here in Vic.
> 
> ...




Hey explod, the thumbs up is for affordability being slowly brought back to the masses. Its the next generation we should be thinking off. Just want the world to be a better place for our kids.


----------



## wallyt99 (26 October 2008)

I think an interesting point was raised in another thread....

Th $21,000 grant is all about keeping property prices up.....  Why?


What position would the big 4 be in if we saw forced closures on a number of homes which had negative equity? Not good I presume.


----------



## Aussiejeff (26 October 2008)

Pommiegranite said:


> Thanks Camkawa. Robots, were you in the 53%? Probably not seeing the way you value property.
> 
> Here is how its reported in the Age:




hello

hear a rumour Robots have looose screw service

bewdy bonza mates

aussiebots


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## gfresh (26 October 2008)

"Black Sunday" ? ha, it's like the entire world has ended for them! jeez, could actually be worse. 

Keep holding off buyers, grab yourself a bargain in a few months time


----------



## gfresh (26 October 2008)

What was that about record population growth, migration will save us, or some such:

http://www.theage.com.au/national/call-for-a-25-cut-in-migration-20081025-58oc.html



> AUSTRALIA'S migration intake must be immediately slashed by one quarter to help cope with the global financial crisis and relieve pressure on cities and the environment, says the Federal Opposition.
> 
> Amid growing concern that Australia's unemployment rate is set to increase, Opposition immigration spokeswoman Sharman Stone said plans for a record 190,300 migrants in 2008-09 should immediately be scaled back to the 2005-06 level of 142,930.
> 
> That would represent a 25% drop, effectively ending Australia's policy of relying heavily on migrants to plug skills shortages in an acknowledgement that the economy is set to slow sharply.


----------



## theasxgorilla (26 October 2008)

explod said:


> Age today "Auction Clearance rates collaps to four year low.   Down to 53%, lowest since July 2004.    Article by Vedelago.




fantastic news for ex-pats returning home hoping to pick up a bargain.  take good care of the place while I'm away.

thankyou

expatbots


----------



## singlefished (26 October 2008)

_*Buoyed home buyers back on streets: Plibersek
October 25, 2008 - 5:57PM*

An increase in the first home buyers grant is helping renew interest in the housing market, federal Housing Minister Tanya Plibersek says.

http://www.brisbanetimes.com.au/news/national/housing-market-on-the-mend-govt/2008/10/25/1224351604380.html_


A case of *"open mouth - engage foot" *I believe....

Surely the smart thing would have been to wait until clearance rates were released yesterday evening before passing any further comment on the issue???


I noticed 14 blocks of land in Oakhurst (Sydney) yesterday were all passed in without any interest.... Ooops 

http://www.homepriceguide.com.au/saturday_auction_results/sydney.pdf

Big thumbs up for the guvmnt thinking the first home buyers would support the failing housing market....


----------



## Aussiejeff (26 October 2008)

singlefished said:


> _*Buoyed home buyers back on streets: Plibersek
> October 25, 2008 - 5:57PM*
> 
> An increase in the first home buyers grant is helping renew interest in the housing market, federal Housing Minister Tanya Plibersek says.
> ...




In this world of "instant gratification", a quick policy jab should be followed by a satisfying K.O. Unfortunately, the Guv-Mint appear$ to be using Kid Gloves.....

... after putting both hands behind their back and knotting the laces together!





aj


----------



## Aussiejeff (26 October 2008)

theasxgorilla said:


> fantastic news for ex-pats returning home hoping to pick up a bargain.  take good care of the place while I'm away.
> 
> thankyou
> 
> expatbots




hello

no wait for return journey

expatbots GO to mighty US and BUY, BUY, BUY whole exciting suburbs for a song!

just bulldoze then charge rents for tents! make fantastic profits for you and me!

me charge only 20% for idea. GREAT!

rippa news mate

thankyou

aussiebots


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## robots (26 October 2008)

hello,

absolutely superb result yesterday at 53% clearance, quarterly results coming out soon will be great reading also

havent been able to find a waterfront plot for 2004 prices though like the stocks at the shock exchange,

just been hanging out to see if any other characters step up to the plate here at ASF, i have been doing my bit for the numbers for a long time now

but no stopping for the hardcore, its good to have a laugh explod I dont expect an apology though I can take it on the chin man

hope everyone is having a great day, what a life we all enjoy

thankyou
robots


----------



## Pommiegranite (26 October 2008)

robots said:


> hello,
> 
> *absolutely superb result yesterday at 53% clearance, quarterly results coming out soon will be great reading also*
> 
> ...




Hey Robie...relieved to see you going strong. Keep the laughs coming. 


Just wanted to remind you that the thread title is "*House prices to keep falling for years" *and not "*House prices are not falling as much as the shock market"*


----------



## Aussiejeff (26 October 2008)

robots said:


> hello,
> 
> absolutely superb result yesterday at 53% clearance, quarterly results coming out soon will be great reading also
> 
> ...




hello,

yes, superbly stunning result yesterday, next week will be awesome expect sub 50%, wonderful.

keep selling up shockmarket chips and buy real bargains.

life is wonderful

thankyou
aussiebots


----------



## robots (26 October 2008)

hello,

and i wouldnt be posting in this one either if the "original" big banger was still open "house prices to stagnate for years", just gone past its 3yr anniversary

i have a shrine setup in my place for that one, the colonel of them all which was closed unfortunately,

prices are still going strong though brother, records still around the place

the REIW have indicated the "median" is being heavily impacted by selling at the lower end, not lower prices

still unaffordable for a lot though I guess thats the main problem, they just cant afford it,

thankyou
robots


----------



## robots (26 October 2008)

Aussiejeff said:


> hello,
> 
> yes, superbly stunning result yesterday, next week will be awesome expect sub 50%, wonderful.
> 
> ...




hello,

yes, real assets and real returns

no manager, no ceo, no board just a humble dwelling

good to see you on the ride man, 

thankyou
robots


----------



## CamKawa (26 October 2008)

Pommiegranite said:


> Hey Robie...relieved to see you going strong. Keep the laughs coming.



I'm pleased see him back to. I thought for a minute there the penny had dropped and pictured him standing atop the Westgate Bridge.


----------



## robots (26 October 2008)

CamKawa said:


> I'm pleased see him back to. I thought for a minute there the penny had dropped and pictured him standing atop the Westgate Bridge.




hello,

never do that gutless act CamKawa, clear out yes

great news, Big BAd Aussie John on 10 having just announced cut of 50basis pts, woo hoo

here we go, debt getting cheaper and cheaper again fantastic for those in for the long run, cant wait for the next 30+ years of life,

bit strange with all the money lending issues and we have the crew cutting rates, even the term deposits and online accounts are getting cut

what a weekend

thankyou
robots


----------



## wallyt99 (26 October 2008)

How long though before low clearance rates = lower prices?


I mean, the realestate agents are whispering bull**** in the ear of sellers.... 


Will they start to smell something soon?


----------



## chops_a_must (26 October 2008)

robots said:


> hello,
> 
> yes, real assets and real returns
> 
> ...




hello,

if rent doesn't cover costs and interest payments

there is no real return

thankyou,
chopbots


----------



## robots (26 October 2008)

hello,

actually i think auctions will slowly reduce over the next couple of months,

people will bang them up for private sale and all the fun and games can go on behind the eye of all the sticky beeks,

people will pull properties off and if the interest rates keep going the way they are it will be easier and easier to hold on and clean up,

thankyou
robots


----------



## robots (26 October 2008)

chops_a_must said:


> hello,
> 
> if rent doesn't cover costs and interest payments
> 
> ...




hello,

what a ridiculous post, everybody buys with credit do they? and how's that chops Aussie just dropped 50basis pts, 

a bit like the margin loaners as well, no return, stick it all in cash for 50yrs

here we go the poverty pack are waking up

thankyou
robots


----------



## robots (26 October 2008)

hello,

here we go:

http://www.news.com.au/heraldsun/story/0,21985,24554300-5005961,00.html

top effort aussie john, you doing you're bit for the community so have a couple of ruski's tonite man,

basic rate down to 7.59%

would be good if leaders in other industries could do something now

question time officially open

thankyou
robots


----------



## chops_a_must (26 October 2008)

robots said:


> hello,
> 
> what a ridiculous post, everybody buys with credit do they? and how's that chops Aussie just dropped 50basis pts,
> 
> ...



hello,

yes, most buy homes on credit,

and i'm doing very well of late, thankyou very much

thankyou,
chopbots


----------



## robots (26 October 2008)

hello,

yes same here thanks chops, income is killing it, 

saving 30% of gross wage thanks to property and the next 30yrs are looking even brighter

thankyou
robots


----------



## Pommiegranite (26 October 2008)

robots said:


> hello,
> 
> here we go:
> 
> ...





50 points!!! Is that all???

The spread between the RBA cash rate and lenders' SVR is increasing with every RBA cut. Soon the time will come that the RBA policy will have NO effect on stimulating the economy, due to the much higher rates that lenders will me charging.

This is when the most jobs will be cut, and reality will really hit home for those geared investors.

I'm already thinking of starting a thread titled ' Rent prices to fall for years'


----------



## robots (26 October 2008)

Pommiegranite said:


> 50 points!!! Is that all???
> 
> The spread between the RBA cash rate and lenders' SVR is increasing with every RBA cut. *S**oon the time will come that the RBA policy will have NO effect on stimulating the economy, *due to the much higher rates that lenders will me charging.
> 
> ...




hello,

thats right man, the lower the rates go the better,

you really think rents will drop after all the carry on from the renting pack? how does it go: slumlord, speucvestor, money renter

hahaha goodluck getting that rent reduction letter

the great divide continues, utopia

thankyou
robots


----------



## chops_a_must (26 October 2008)

robots said:


> hello,
> 
> thats right man, the lower the rates go the better,
> 
> ...



Good luck increasing rents on those that don't have jobs...

Especially in places like Perth where you will get a mass exodus as jobs dry up...

Vacant property... or lowering rent... hmmm.... tough choice...


----------



## robots (26 October 2008)

hello,

another one of the if's, going to, could, maybe, forecast 

unemployment level 4.5%, thankyou very much

you going to take them all in chops with your caring nature?

thankyou
robots


----------



## chops_a_must (26 October 2008)

robots said:


> hello,
> 
> another one of the if's, going to, could, maybe, forecast
> 
> ...




hello,

no, i'll just tell them where there are many vacant houses, like there are now

thankyou,
chopbots


----------



## cuttlefish (26 October 2008)

What are peoples views specifically on Sydney house prices, particularly in the eastern and northern suburbs and the inner city?

Unlike places like Brisbane and Perth, Sydney boomed pretty heavily up till about 2003 but then seemed to have a bit of a peak and slump and has been a bit more orderly since then.  The city is still growing at a very rapid pace.  Rents have risen considerably due to lack of new supply.  Interest rates are falling.    

Can this neutralise some of the other effects or do people still think we're in for big price falls in Sydney?


----------



## robots (26 October 2008)

cuttlefish said:


> What are peoples views specifically on Sydney house prices, particularly in the eastern and northern suburbs and the inner city?
> 
> Unlike places like Brisbane and Perth, Sydney boomed pretty heavily up till about 2003 but then seemed to have a bit of a peak and slump and has been a bit more orderly since then.  The city is still growing at a very rapid pace.  Rents have risen considerably due to lack of new supply.  Interest rates are falling.
> 
> Can this neutralise some of the other effects or do people still think we're in for big price falls in Sydney?




hello,

i know many on another forum believe Sydney is in for a good run over the next few years due mainly to the reasons you have mentioned, 

i understand it has an extremely tight rental market at the moment

thankyou
robots


----------



## numbercruncher (26 October 2008)

mantronic said:


> Exactly. We dont need their type. We are getting rich off capital gains.





Just noticed this comment - seems you are a regular/common forum troll type ?

Or maybe you are a mega bear attempting to give one eyed permabull extremist capitalists a bad reputation.

either way, no one appreciates the tone of your input.

bye.


----------



## sinner (26 October 2008)

Looking at the US is like looking into the future for us. So far higher demand than supply has staved off the property tumbles that have severely affected the US, Europe, Northern Africa, Asia Major, SE Asia, etc etc. 

The attitude of pay or on the street is at face value, fair enough. After all, this is the same attitude the bank has with you and they probably use better eviction agents!

Let's look into the future for the US at a second

Chicago
http://www.foxnews.com/story/0,2933,434603,00.html
and then see what happens, 
http://www.chicagobreakingnews.com/2008/10/cook-county-to-resume-evictions.html

Obviously all those Capital Gains investors in the US are happy to put the keys in an envelope and send them to the bank, walk out on the debt, leave the renters holding the bag. It's well documented.

Maybe the Republicans will get their wish to reduce CGT further 

I think if it happens in Aus it will probably be even worse than the US. Someone already linked the article by Paul Sheehan in the SMH, where Hans Redeker (head of foreign exchange strategy at BNP Paribas, Europe's biggest investment bank) outlines quite simply how Australias foreign debt sits roughly and that in high probability some of this debt will be called soon. 



> Two weeks ago Redeker repeated his claim that abundant foreign money had been available to Australia and too much of it had been spent on real estate, creating a speculative bubble: "The easy money went straight into real estate ... Australia will now have to generate 4 per cent of GDP to meet payments to foreign holders of its assets. This is twice as high as the burden faced by the US."




later in the article quoting Ambrose Evans Pritchard of the London Times



> "Australia has allowed its net foreign liabilities to reach 60 per cent of GDP during a decade-long boom, twice the level of the US. The country will, in effect, have to pay 4 per cent of GDP in the form of rents to foreign asset-holders as the bill for such extravagance falls due."




but the real juice which imo is a different issue and what will make it worse for us than other countries (due to the 2 pronged nature of the above quotes and the below)



> Gabriel Stein, of Lombard Street Research, weighed in with this, after noting that Australian household debt had reached 177 per cent of gross domestic product, almost a world record: "It is amazing that in the midst of the biggest commodity boom ever seen they have still been unable to get a current account surplus. They have been living beyond their means for 10 years. What worries me is that productivity growth has been very low: they have been coasting after their reforms in the 1990s."




So, property-bulls, what is your "household debt" in the interests of portfolio disclosure of course?

Do you disagree with these numbers?

Too much doom and gloom?


----------



## chops_a_must (26 October 2008)

Our housing wont be as bad as the US.

You need to understand non-recourse loans, and the price falls of properties in states that never legalised these as pointers for us.

i.e. they have fallen about 5-10% more than ours at this stage.


----------



## tech/a (26 October 2008)

> The Property market is the worlds biggest pyramid scheme. Very soon, people will be holding negative equity. Cant wait.




Not if you own it.

I visit this thread every few months.
Its very clear those who hold property and those who dont.

If you own it its a no brainer.


----------



## Mofra (27 October 2008)

sinner said:


> So, property-bulls, what is your "household debt" in the interests of portfolio disclosure of course?
> 
> Do you disagree with these numbers?
> 
> Too much doom and gloom?



Well, I'm not sure if "neither buying nor selling" makes me strongly bullish in real terms, although thanks to the trolling efforts of robots & mantronic, there's a fairly well defined battle on here; anyone holding property is automatically a "one eyed permabull extremist capitalist**", so I'll answer as best I can without a patronising "thank you" to finish.

My household debt consists of approximately 3.9 times my income, which propably puts me close to the "traditional" notion of mortgage stress if you incldue the rent I pay (only holding investment properties).

I pay my credit card off every month, so today for example 99.7% of my debt is tax deductable.

** Thanks to numbercruncher for the quote, you'd be a worthy addition to parliament with that effort; since Keating & Latham have retired, there's a gaping hole in the classic paliamentary quotes market


----------



## gfresh (27 October 2008)

etc... not sure why people are persisting with auctions? Agents managed to convince vendors to put up large numbers for auction, and the results have been poor. 



> http://www.news.com.au/couriermail/story/0,23739,24557041-952,00.html
> 
> AUCTION clearance rates crashed to record lows over the weekend, with first-home owner grants failing to offset buyers' financial crisis concerns.
> 
> ...


----------



## nunthewiser (27 October 2008)

anyone got any data on tasmania? as according to local listings in the huon valley they getting snapped up with vigour still ........ intresting ....mind you it might be because the suns out and the tourists are flooding back in with dollars to spend , who knows ......... DO know however you get more bang for ya buck down these parts as in what ya can buy for the same dollar amount as the mainland


----------



## robots (27 October 2008)

hello,

my household debt is 20000x income, is that okay by you? or is 10000x income okay?

the RBA is continually putting out stats which indicate household debt is fine, 

look at those girls on Insight the other week, 25k on credit card each and will probably just rollover soon to make it 30k, 

auction's will be dead soon gfresh i think, will be good news for those selling 

thankyou
robots


----------



## numbercruncher (27 October 2008)

> the RBA is continually putting out stats which indicate household debt is fine





I especially love it when you make it up as you go along !


goodday to you Robi


----------



## BradK (27 October 2008)

Do you all think that fixed interest rates will hit 6% (for the consumer) in the next few months? 

Brad


----------



## Pommiegranite (27 October 2008)

robots said:


> hello,
> 
> my household debt is 20000x income, is that okay by you? or is 10000x income okay?
> 
> ...




Half right. Its well known that auctions are only good in boom times. Good news for those *buying *that auctions are failing*. *

You're learning though, so can be forgiven.


----------



## robots (27 October 2008)

hello Number,

how's the leg man?

that household debt is even getting easier and easier to manage with Interest Rates dropping daily?

"we'll save you"

thankyou
robots


----------



## robots (27 October 2008)

Pommiegranite said:


> Half right. Its well known that auctions are only good in boom times. Good news for those *buying *that auctions are failing*. *
> 
> You're learning though, so can be forgiven.




hello,

thanks pommie yes I am only a beginner

I dont think so, the stand off between buyers and sellers may move from the public arena to the "private" arena, real estate office or "mobile" phone

dummy bids galore, no legislation for that 

the auction system is clean now

thankyou
robots


----------



## generalofthearmy (27 October 2008)

You're all guessing. This is pure guesswork. No-one should take this thread contents seriously.


I do know one thing though. You can live in a house but you can't live in a stock. House owners will find it easier in the short term than renters who thought they were smart by simply buying stocks.


----------



## robots (27 October 2008)

BradK said:


> Do you all think that fixed interest rates will hit 6% (for the consumer) in the next few months?
> 
> Brad




hello,

many believe this may occur around early 09,

official cash rate down to about 4 or 4.25%, utopia when it happens man

thankyou
robots


----------



## Pommiegranite (27 October 2008)

generalofthearmy said:


> You're all guessing. This is pure guesswork. No-one should take this thread contents seriously.
> 
> 
> I do know one thing though. You can live in a house but you can't live in a stock. House owners will find it easier in the short term than renters who thought they were smart by simply buying stocks.




I also know one thing:

Most people who have bought houses are hundreds of thousands on dollars in debt.

Most people who buy stocks just spend a few k, and its usually not borrowed.

Sweet dreams


----------



## robots (27 October 2008)

hello,

every night pommiegranite

thankyou
robots


----------



## numbercruncher (27 October 2008)

generalofthearmy said:


> You're all guessing. This is pure guesswork. No-one should take this thread contents seriously.
> 
> 
> I do know one thing though. You can live in a house but you can't live in a stock. House owners will find it easier in the short term than renters who thought they were smart by simply buying stocks.





If you own your house sure , but if you have a typical mortgage youre paying out 3x a typical rental, how can this possibly be " easier " ?


----------



## Mofra (27 October 2008)

numbercruncher said:


> If you own your house sure , but if you have a typical mortgage youre paying out 3x a typical rental, how can this possibly be " easier " ?



As a guess, perhaps holding investment property of similar value x 3, pays no maintenance on the older house he rents, buys newer investment properties with lower maintenance bills, gummint subsidises the interest payments and any maintenance bills are tax deductable.

Of course, the reality is many renters don't put their savings (cheaper to rent than rent money) to use anyway.


----------



## grace (27 October 2008)

Did anyone watch the 7.30 Report tonight?  Alan Kohler was interviewed and suggested that the top end of the property market would see a 50% correction.


----------



## So_Cynical (27 October 2008)

cuttlefish said:


> What are peoples views specifically on Sydney house prices, particularly in the eastern and northern suburbs and the inner city?
> 
> do people still think we're in for big price falls in Sydney?






grace said:


> Did anyone watch the 7.30 Report tonight?  Alan Kohler was interviewed and suggested that the top end of the property market would see a 50% correction.




The good half of Sydney (east of concord) and Perth (north of the river) would be considered the top end of the market....so 25 > 50% would seem possible.:dunno:


----------



## singlefished (27 October 2008)

grace said:


> Did anyone watch the 7.30 Report tonight?  Alan Kohler was interviewed and suggested that the top end of the property market would see a 50% correction.




I missed it earlier but ABC are quite prompt with uploading content to their site so have just caught it...

What's the definition for "top end of the market" then??? >$10M+++ or are we talking the sort of properties where you'd need a security and credit check before showing up at OFI's???


----------



## chops_a_must (28 October 2008)

So_Cynical said:


> The good half of Sydney (east of concord) and Perth (north of the river) would be considered the top end of the market....so 25 > 50% would seem possible.:dunno:



Right... so Applecross, Ardross, East Fremantle, Mt. Pleasant, Freo et al. and coastal land down to Rockingham isn't top of the market? 

Personally, despite being bearish property, I found his argument to be crap about the high end.

In Perth, you can buy equivalent property in Cot, Freo, Shelley, North Perth etc. for about 1/3rd of the price of Melbourne and Sydney equivalent property. And I'm sure it's the same in Adelaide and Brisbane. So can't see those markets falling.

It's the subdivisions out in whoop whoop with no nearby jobs or transport that will continue to cop it badly. Especially if new development creates more supply with the FHOG.


----------



## So_Cynical (28 October 2008)

chops_a_must said:


> Right... so Applecross, Ardross, East Fremantle, Mt. Pleasant, Freo et al. and coastal land down to Rockingham isn't top of the market?
> 
> Personally, despite being bearish property, I found his argument to be crap about the high end.
> 
> In Perth, you can buy equivalent property in Cot, Freo, Shelley, North Perth etc. for about 1/3rd of the price of Melbourne and Sydney equivalent property. And I'm sure it's the same in Adelaide and Brisbane. So can't see those markets falling.




I used to live in east Freo...its nice but it aint Claremont, is it chops. anyway how about
everything north of Canning Hwy then.


----------



## chops_a_must (28 October 2008)

So_Cynical said:


> I used to live in east Freo...its nice but it aint Claremont, is it chops. anyway how about
> everything north of Canning Hwy then.




Depends if you are down on the river, or are near to. Same with Bicton.

And no... that cuts out most of Freo and some of the river suburbs. 

And nah... better to be in the south. Lower rates of cancer and other nasties, from those particulates from the prevailing winds blowing crap all over the northern suburbs.


----------



## Mofra (28 October 2008)

chops_a_must said:


> It's the subdivisions out in whoop whoop with no nearby jobs or transport that will continue to cop it badly. Especially if new development creates more supply with the FHOG.



Yup totally, even without a recession these properties struggle, simply because the rule of thumb of 80% of the value in a new development being in the dwelling (which depreciates), and 20% of the value being in the land (in a less-desireable area) doesn't make for a happy union.

Most Australian cities simply lack the population density. It makes cheap, reliable public transport (especially at the fringes of suburbia) an extremely costly exercise for local governments, hence the billions of land "banked" by development companies awaiting either approval or better market conditions.


----------



## Glen48 (28 October 2008)

Some time soon the Council's will have to rewrite the building application rules and allow Trailer park's to be built just kike USA has.
OHAS will have to be put on hold to speed things up and cheap housing will spring up like Mushrooms.
House prices are still going down in USA and setting mew records from when all this started in 2006, houses are being demolished to stop squatters, one lady had all her copper plumbing ripped out when she was asleep amd I suppose making her house worthless over night.
There has been more growth in the last 7 yrs than the last 39 which has to be adjusted.
I saw on CH  7 last night were the rich are flogging of their Merc's etc to get money.


----------



## Go Nuke (28 October 2008)

robots said:


> hello,
> 
> and i wouldnt be posting in this one either if the "original" big banger was still open "house prices to stagnate for years", just gone past its 3yr anniversary
> 
> ...




So good points posted lately.

Firstly I totally agree with you on this Robots....sadly alot of us just can't afford a house yet.
As ive said I KNOW that to service say a $350,000 loan (which isn't excessive by any means) it takes roughly about what...$700-$750 a week to repay?
Thats a big chunk of most peoples combined income imo.

If house prices fell, we would be looking at a mini USA property crisis. Except for the supply issue of course.

I personaly agree that if unemployment continued up and up then it is real that either rents would have to come down or we would have alot worse traffic congestion as the roads become clogged with people who can no longer afford to live close to the city or where they work...if they still have a job at all!

And dont even suggest publc transport!
Brisbanes in MAJORLY overcrowed as is, and is not widespread enough to get people to their destinations.

Well at least the govenment might do one thing right soon....slash the immigration intake to keep Australians employed! Seen as unemployment is on the way up


----------



## CamKawa (28 October 2008)

I reckon this sums it up.


----------



## gfresh (28 October 2008)

Problem is at 6.5% property is probably affordable, at 9% they weren't.. So down we go to make them all "affordable" again. According to the trusty mortgage calculator. 

$350k = $544/wk @ 6.5%
$350k = $677/wk @ 9%

24% more expensive! 

So here we go again back down to 6.5% to make sure everybody runs and jumps into property, and starts pushing the price up again so they can be unaffordable at 9% once again to anybody who missed out at 6.5%. 

The whole system is so utterly ridiculous... the only way to beat the madness is to play along unfortunately.


----------



## robots (28 October 2008)

gfresh said:


> Problem is at 6.5% property is probably affordable, at 9% they weren't.. So down we go to make them all "affordable" again. According to the trusty mortgage calculator.
> 
> $350k = $544/wk @ 6.5%
> $350k = $677/wk @ 9%
> ...




hello,

as long you "saving" "investing" the difference in the scenario of renting vs buying you are doing well and should be proud of yourself,

either way you on the home run for pure bliss, 

landlords need tenants and places are still around, some suburbs have 50% rental properties for eg. south yarra here in Melbourne

20-30% gross income is great start

thankyou
robots


----------



## ROE (28 October 2008)

Here is for some who doesn't understand what compound and exponential means in their calculation 

Let history speak itself about a value of an asset

http://bubblepedia.net.au/tiki-index.php?page=House Prices Double Every X Years


----------



## robots (28 October 2008)

hello,

can you also put up that graph which shows prices for places have gone nowhere over the last 100years,

thankyou
robots


----------



## wallyt99 (28 October 2008)

"Popular among laymen but not fully confirmed by empirical research,[5][6] greater fool theory portrays bubbles as driven by the behavior of a perennially optimistic market participants (the fools) who buy overvalued assets in anticipation of selling it to other rapacious speculators (the greater fools) at a much higher price. According to this unsupported explanation, the bubbles continue as long as the fools can find greater fools to pay up for the overvalued asset. The bubbles will end only when the greater fool becomes the greatest fool who pays the top price for the overvalued asset and can no longer find another buyer to pay for it at a higher price."


----------



## Glen48 (28 October 2008)

Spoke to my landlord he purchased my house and I pay less a week than he does, he told me he sold nothing last month and is running out of time to sell some thing this month other wise things are ok.
The First home owners will have to change their name to maybe maybe not Home owners as the 21K is not working.


----------



## Glen48 (28 October 2008)

Wonder how all those books are selling?
How to own 10 houses in 10 yrs. 
How to buy a house with no money down,
How to retire at 15 and own 20 houses
Real Estate made easy
Real Estate for dummies ( should be called how not to get sucked in)
The was a RE 20 yr RE agent on the Sunshine Coast who opened her own office and was making a fortune a few yrs ago.


----------



## Aussiejeff (29 October 2008)

Glen48 said:


> ....
> The was a RE 20 yr RE agent on the Sunshine Coast who opened her own office and was making a fortune a few yrs ago.




hello,

awesome rumour have it that she move in with someone called robots at balmoral slopes


thankyou
aussiebots


----------



## CamKawa (29 October 2008)

Found an interesting site. Thought I'd share.

*John T. Reed’s Real Estate B.S. Artist Detection Checklist*

Some of the points he makes are fairly obvious, some others aren't.


----------



## CamKawa (29 October 2008)

Some more interesting reading.

Pros and cons Written by Travis Morien 


Advantages of property:
A good asset to hold in inflationary times, capital growth and rent increases tend to be linked with inflation and hence property is a true inflation hedge (over the longer term). 
Banks are more comfortable with property, and will lend more money at lower rates than they do with share investors. No margin calls, good interest rates, high loan to value ratios make this a good asset to gear into. 
Reasonable long term returns. 
The sector is more tax efficient than bonds and cash, though less so than shares. 
There is enormous profit potential in fixing up slightly run-down old properties in desirable locations, though development is not the same as passive investment. 
Property trusts that invest in commercial property eliminate most of the disadvantages mentioned below, and often give better returns, while having most of the advantages mentioned above!! 
As long as you have tenants you'll never be bored or lonely! 
Disadvantages of property:


Gearing is a double edged sword, and the ease of credit only encourages people to take unacceptable risks. 
(Direct) property is an extremely expensive and high maintenance investment. At least when you own shares the company won't suddenly force you to fork out more money all the time. Don't underestimate the risk of costs blowing out, it happens very often in this investment. 
Tenants are an expensive pain. Just talk to a plumber and ask if he would be happy to invest in a rental property. He's used to having tenants call and casually rattle off a list of expensive jobs they want done, with the understanding that they will pass the bill on to the landlord as a _fait accompli_ when the job is finished. Most plumbers I have met have sworn solemnly never to invest in a rental property! 
The supposed low risk of property is an artifact of infrequent quotes. Prices are set in a somewhat inefficient market and are driven by the same sorts of market forces that make the stock market so volatile. Don't believe this stuff about residential real estate always going up, that is a lie. 
It is hard to get good data to do research. Often it doesn't exist at all, often when data does exist you can't get it or must pay a lot of money for it. At the same time measures of performance like median house price indexes are seriously flawed and do not give a true picture of returns. 
It is hard to get good advice, ASIC does not regulate the real estate industry and so it is full of dodgy Arthur Daley types that fled the financial planning and insurance industry when that started becoming regulated in the 90s. Most books and almost all seminars on the subject are worthless. 
Never confuse "I've lived in buildings all my life and therefore understand the general concept of a rental property, at the seminar they told me houses go up a lot and that you can save tax!" with "I understand the business purchasing and managing a real estate property and tenants, am familiar with my rights an obligations as a landlord, can understand the market forces that drive prices, know a thing or two about mortgage finance, I know how the tax system works, I understand the strengths of weaknesses of property compared to alternative assets and am prepared for the constant paper work and occasional hard labour involved in property management."


----------



## Judd (29 October 2008)

Yeah, same fella who has slammed the author of "Rich Dad, Poor Dad" as the fraud he actually is.

As for the book, read the first half and then just throw it away.  Better to borrow it from the library than pay for the garbage it espouses.  Much like robots' advice/theory/pontifications/rubbish I suppose.


----------



## CamKawa (29 October 2008)

Judd said:


> Yeah, same fella who has slammed the author of "Rich Dad, Poor Dad" as the fraud he actually is.



Funny you should say that. I was just reading about it here.


----------



## ROE (29 October 2008)

Judd said:


> Yeah, same fella who has slammed the author of "Rich Dad, Poor Dad" as the fraud he actually is.
> 
> As for the book, read the first half and then just throw it away.  Better to borrow it from the library than pay for the garbage it espouses.  Much like robots' advice/theory/pontifications/rubbish I suppose.




Don't be irritated by the these people , it best sum up with Plato

"Wise men talk because they have something to say; fools talk because they have to say something." -- Plato


----------



## robots (29 October 2008)

hello,

i dont mind taking the heat fellow ASF members, just make sure you can cop it sweet on the other foot fellow ASF members,

its all a laugh and I  hope life is swell for everybody,

thankyou
robots


----------



## sinner (30 October 2008)

Had a very illuminating and extensive browse through the state rural real estate listings today.

Pretty much EVERYTHING under $80k that is not falling apart is under offer.

Only one or two good ones left about (I assume to be gone soon) and the rest were either falling apart or in dead towns.


----------



## Temjin (30 October 2008)

CamKawa said:


> Some more interesting reading.
> 
> Pros and cons Written by Travis Morien





Travis Morien is definitely a model of what a financial planner should really be. No bulls--t, unbiased opinions. I frequently look at this site. The best part that he even recommends future tradings.


----------



## bribieman (30 October 2008)

With rates about to drop again. Some of myclients are telling me they are at the crossroads to buy. One mortgagee administrator has released to a client 3 new 3 bedroom units with lockup garages in redfern NSW that have been on the market for $550k. KPMG have now decided to let them go at $400k today!

Last week in palm Beach 15 new listings hit the streets. Record since 1981 in that area. And Mosman has 300 homes for sale, another record.

I can see evidence for both sides of the fence, Bargin! hunters are now crawling out,,,,, However the Bears are still way ahead in the Property Market.

It has alotof us scatching our heads out here!


----------



## mantronic (30 October 2008)

I did see a house sell at auction with agent valuation of 3.3m, quoting mid $3m to buyers, sell for 2.5m in the last week or so.  Im sure its just a little hiccup though.  Should see lots of incredible prices and clearance rates over the next few weeks with rates falling and economies recovering.


----------



## Glen48 (30 October 2008)

I use to think safe as houses meant you could not go wrong under any circumstance.
Now I find out it means using your house as a safe to hide your money and other assets while you wait for the prices to go up....if you live long enough.


----------



## robots (30 October 2008)

hello,

thanks great news

any chance you can give the viewer's here the previous last recorded sale price of that place you have so closely followed?

thankyou
robots


----------



## Pommiegranite (30 October 2008)

There is a consensus amongst property bulls and bears alike that house sale volumes have been falling.

Low volumes = exacerbated price falls


http://news.bbc.co.uk/2/hi/business/7698393.stm




> *Low sales drive house prices down *
> 
> 
> 
> ...


----------



## mantronic (30 October 2008)

robots said:


> hello,
> 
> thanks great news
> 
> ...





Was a brand new 4 bed house with pool approx 1.2m construction cost. 50 year old house next door sold for 1.68m 24 months ago.  Tonight that same 50 yr old house went up for auction and failed to get a bid with interest topping out at 1.5m.  Market suddenly strange this month.  Next month should be better.


----------



## singlefished (31 October 2008)

mantronic said:


> ... Should see lots of incredible prices and clearance rates over the next few weeks with rates falling and economies recovering.




Care to enlighten us on exactly which economies will be recovering and how this could possibly have a positive impact on local clearance rates?



mantronic said:


> ... Market suddenly strange this month...




Yup - that's the reality of a global recession starting to sinking in.... and we're not immune, not by a long shot


----------



## Beej (31 October 2008)

Well it seems that at least one RBA board member thinks the views expressed here about prolonged house price falls in oz of up to 40% are extremely unlikely:

http://www.smh.com.au/news/national/house-prices-stable/2008/10/30/1224956238429.html

He makes many of the same points made by myself and many others, many times, on this and the other thread. Some good quotes from the article:



> HOUSE prices in Australia are not set for precipitous falls, as in the US, nor are household balance sheets suffering too badly, says the Reserve Bank deputy governor, Ric Battellino






> Amid predictions that house prices would fall by 40 per cent as households crumbled under the weight of mortgage debt, Mr Battellino told a bankruptcy conference in Sydney that prices would hold up much better than in the US, where they have fallen about 16 per cent in the past year.
> 
> Unlike the US, Australia's housing bubble had already burst, about three years ago, Mr Battellino said. "The Australian housing boom ended because prices rose to levels that severely strained the financial capacity of buyers to pay higher prices, not because too many houses were built, as in the US.
> 
> ...




PS: I'm still seeing plenty of action out there and many places I am looking at selling for good prices still.

Cheers,

Beej


----------



## gfresh (31 October 2008)

Depends where you are looking I guess. Some areas (mainly 10km+ from Brisbane CBD) I have been watching have been putting up 5 new properties a week, and old stock is still sitting there. 

With 50-80 properties listed in individual suburbs, and stock being added a week why would you pay full price? 

Is becoming better and better time to be buying.. I still want to see some further stagnation, will have even more sellers caving in for a low-ball offer. 

Next year should be brilliant


----------



## Beej (31 October 2008)

More not so bad news on the Sydney housing market: http://business.smh.com.au/business/nsw-home-sales-get-a-lift-20081031-5f30.html

Cheers,

Beej


----------



## robots (31 October 2008)

mantronic said:


> Was a brand new 4 bed house with pool approx 1.2m construction cost. 50 year old house next door sold for 1.68m 24 months ago.  Tonight that same 50 yr old house went up for auction and failed to get a bid with interest topping out at 1.5m.  Market suddenly strange this month.  Next month should be better.




hello,

yeah right, got the link for both

thankyou
robots


----------



## robots (31 October 2008)

Pommiegranite said:


> There is a consensus amongst property bulls and bears alike that house sale volumes have been falling.
> 
> Low volumes = exacerbated price falls
> 
> ...




hello,

anything from this fine country pommie?

they drink warm beer there in UK but we dont drink warm beer do we

thankyou
robots


----------



## robots (31 October 2008)

hello,

hey hey hey, something not from the mother land

http://www.tradingroom.com.au/apps/view_article.ac?articleId=253191

fantastic performance, with adelaide doing extremely well

the humble home, roof over the head is hanging in there brothers, real asset and real return

anything happen on the shonkey exchange today?

any questions fire away,

thankyou
robots


----------



## robots (31 October 2008)

hello,

sorry, just had to check back that this thread is actually working I hope i am coming through loud and clear, test test

thankyou
robots


----------



## robots (31 October 2008)

hello,

oh yeah all's fine

thankyou
robots


----------



## Glen48 (31 October 2008)

Well the crash has started in  SEQ about 2,5k Houses are for sale, people are walking away from their houses yet 12 mths ago they were sleeping out side the RE office to buy a block of land. A lot are paying the mortgage with bank card or playing the pokies trying to survive. There is a 6 weeks waiting list for advice on what to do, marriages breaking up and all stressed to the max..
Rates default are 5 times higher and the rates only came out in July. The local council is now trying to cut back on spending and  cutting jobs.
Gold Coast has the highest rate of foreclosures.
This is just starting and will go one for years.
If you haven't sold don't worry because you can't now as there are no buyers.. 
Mean while USA debt bill is rising at 400 Billion a month.


----------



## sinner (31 October 2008)

City Pacific (CIY) a GC property group jumped 42% today according to CommSec market close report, "after its lenders agreed extend its debt repayment deadline".

i.e. CIY bailed out, mortgagees not so lucky: no money = out on the street.


----------



## Glen48 (31 October 2008)

Things are so bad I am tipping another full 1% on Tuesday.

CommSec economist Savanth Sebastian said the outlook for Australia's housing market was bleak.

"The housing market shows no signs of

recovering and investors are staying away from the housing market in droves," he said.


----------



## sammy84 (31 October 2008)

Glen48 said:


> If you haven't sold don't worry because you can't now as there are no buyers..  Mean while USA debt bill is rising at 400 Billion a month.




I take it your a glass is half miserably empty type of person 
A friend of mine's place sold last week in Port Melbourne for $730,000. Nothing special about the place, still were plenty of prospective buyers there and many bidders aswell.

You can check result here;
http://www.realestate.com.au/reales...ort+melbourne+port+melbourne/cjwpor/105213833


----------



## Glen48 (31 October 2008)

Your friend should have come to North Lakes QLD he could have got 3 houses for that amount.

My glass is half full as I intend to cash in once house prices collapse to a reasonable price and I see signs that USA is turning around. There will be some great bargains out there in a few years time get cashed up now and wait to pounce.
I sold my place in August and now ready.


----------



## saiter (1 November 2008)

Glen48 said:


> Your friend should have come to North Lakes QLD he could have got 3 houses for that amount.
> 
> My glass is half full as I intend to cash in once house prices collapse to a reasonable price and I see signs that USA is turning around. There will be some great bargains out there in a few years time get cashed up now and wait to pounce.
> I sold my place in August and now ready.




How long do you think it will take till we hit the bottom, and what will the bottom be?


----------



## Warren Buffet II (1 November 2008)

sammy84 said:


> I take it your a glass is half miserably empty type of person
> A friend of mine's place sold last week in Port Melbourne for $730,000. Nothing special about the place, still were plenty of prospective buyers there and many bidders aswell.
> 
> You can check result here;
> http://www.realestate.com.au/reales...ort+melbourne+port+melbourne/cjwpor/105213833




That confirms that there so much stupidity out there. How can you pay that much for that piece of crap, run down ghetto?

WBII


----------



## Sean K (1 November 2008)

Does anyone else think tere are some conflicting signals out there regarding housing and the economy is general.

One day a report says we're all doomed, the next there's a report saying all's rosie..




*Recovery 'imminent' for property market*
October 31, 2008 - 5:16PM

The Australian property market is showing signs of recovery, new figures show.

Indicative figures for the September quarter show property values nationally declined by just 0.5 per cent, according to the RP Data-Rismark National Property Values Indices.

In the nine months to September 30, Australian property values have been largely resilient, tapering only 1.4 per cent.

Rismark International managing director Christopher Joye said the disconnect between housing demand and supply will positively impact house prices in the future.

"We need to produce 190,000 homes annually but the supply-side is only currently delivering about 145,000 homes per annum," Mr Joye said.


----------



## robots (1 November 2008)

hello,

look out great results here:

http://www.reiv.com.au/news/Economic-uncertainty-causes-house-price-volatility-

a mixed bag, look at those units pepperoni hanging in there strong man,

14.7% for st kilda I hope some of that rubbed off on the unit market

enjoy the day, spend up 

thankyou
robots


----------



## CamKawa (1 November 2008)

Well Enzo has released the September quarterly property figures for Victoria and house prices are down 3.3%.







According to this media report

*MELBOURNE'S house values have dropped over the past three months because of the volatile economic climate, the latest data has revealed.*
The median price of a house in Melbourne has declined by 3.3 per cent to $435,000, according to the Real Estate Institute of Victoria September quarter median property values report. 

But it is the most expensive suburbs that have been hardest hit. Albert Park dropped by a massive 39 per cent, from $1,525,000 to $929,000, followed by Armadale, which fell by 32 per cent from $1,477,000 to $1,005,000. 

Canterbury, Elwood and Brighton also recorded drops of at least 20 per cent.


----------



## MrBurns (1 November 2008)

sammy84 said:


> I take it your a glass is half miserably empty type of person
> A friend of mine's place sold last week in Port Melbourne for $730,000. Nothing special about the place, still were plenty of prospective buyers there and many bidders aswell.
> 
> You can check result here;
> http://www.realestate.com.au/reales...ort+melbourne+port+melbourne/cjwpor/105213833




Probably would have sold for $100K more 6 or 8 months ago.

The market may hold up while Rudds bribes kick in , but it will go down, probably another 20% at least, considering it's already down at least 10%.

It's not like the share market, this will take perhaps 12 months to fully play out then it will stay down for a few years or until the economy gets it's act together, so the time to recovery is anyones guess.


----------



## nunthewiser (1 November 2008)

WA bucks trend in new home sales

31st October 2008, 11:00 WST 


Sales of new homes in WA grew 19.5 per cent in September, according to the Housing Industry Association, bucking the national trend, which suffered its third monthly fall in a row.

But the HIA noted that the rise, as detailed in the HIA's latest New Home Sales Report, came on the back of weak results in July and August.

New home sales were still down 18 per cent on the September 2008 quarter, 6 per cent lower than a year earlier, the HIA said.

Despite this, HIA executive director WA John Dastlik said the statistics showed there was cause for optimism that the worst of a decline in WA housing may be behind us.

“With interest rates on the way down and a tripling of the First Home Owners Grant for new dwellings, there is a good chance we may finally see a bottoming out in leading housing indicators in WA over the December 2008 quarter,” he said in an announcement.

“The clear signal from leading housing indicators for WA is that new home building activity will remain soft through to the end of 2008 at least.”

“However, we would hope to see a modest recovery in housing starts emerge over the first half of 2009, although it would be insufficient to put the entire 2008/09 financial year in the black,” he said.

Private sector house approvals in WA also increased by 1.6 per cent in August, following a 7.5 per cent rise the previous month.

New home sales also grew in New South Wales, up 4.5 per cent, while sales fell 10.6 per cent in Queensland, 9.7 per cent in South Australia and 9.2 per cent in Victoria.

HIA’s New Home Sales Survey is compiled from a sample of the largest 100 residential builders in Australia and is the first indicator of new home building activity released each month.

ANDREW HOBBS


----------



## CamKawa (1 November 2008)

A good video story here from the ABC called hooked on debt which looks at mortgage stress in Australia. It sounds like it's better to sell up sooner than later.


----------



## Mofra (1 November 2008)

kennas said:


> Does anyone else think tere are some conflicting signals out there regarding housing and the economy is general.
> 
> One day a report says we're all doomed, the next there's a report saying all's rosie..



Depends on your timeframe. It's fairly obvious that both sides of the property divide are right - in many (most?) areas, property values will fall in the short term, and in many areas, property values will appreciate over the longer term. 
In areas that are close to the CBD, have multiple forms of public transport and are desireable places to live, prices should exceed CPI. 
"Panic" is not a fundamental that has a major lasting impact on prices for longer term investors, as it is just another part of the cycle.


----------



## gfresh (1 November 2008)

Fantastic news! Melbourne down 3.3%. You wanted figures Robots, well there they are, from the great man himself..

-3.3 x $400k = -$13.2k - 8% x say $300k loan = -$37,200. That's a lot of rent.

Panic may not be for long-term real investors, but there are many speculators out there, who have betted on short term returns. It's what happens in a bubble, and they get burned first. 

Lead story on the 6pm Brisbane Channel 9 news last night over record numbers of people in mortgage stress across Bris. Reports of people paying their mortgage with their credit cards, living on borrowed time, etc. 

Had a quick look at the personal loan and credit card rates before too. No wonder everybody is still going broke, and retail sales, car sales are plummeting.. 12% minimum for a personal loan, and around 12-18% for a credit card. When are those lovely 6% RBA rates coming through to the consumer? They're not, but they are very important if you are in a ship loan of debt -- especially if you've also got a heavy mortgage over your head. 




			
				camkawa said:
			
		

> But it is the most expensive suburbs that have been hardest hit. Albert Park dropped by a massive 39 per cent, from $1,525,000 to $929,000, followed by Armadale, which fell by 32 per cent from $1,477,000 to $1,005,000.
> 
> Canterbury, Elwood and Brighton also recorded drops of at least 20 per cent.




Wow.. those are massive falls in those blue chip areas. Going to reverse with job cuts on the horizon? Possible 10,000 bankers out of a job next year? nope.


----------



## Glen48 (1 November 2008)

All I know is SEQ is in big trouble with the local council worried about rate payers defaulting. USA is still going down and we are just starting, like USA OZ home owners are using bankcard to pay their mortgage or walking away the next growth industry will be boarding up homes and mowing lawns for the banks repo homes.
When USA turns give it 2 yrs and we will be next.
To work out a price take 1 MONTHS rent and x by 150 and you have your price.
My area is the second worst in SE QLD and we have years to go, this will affect all range of  house prices.


----------



## gfresh (1 November 2008)

SEQ did well to bid up the prices to Melbourne, and Sydney levels in the last 5 years, however outside of a few industries, the wages still aren't quite the same to support those prices long-term. 

Was about to post that, BCC doing it's best to help the luxury apartment market during these times: http://www.brisbanetimes.com.au/new...pbells-coffersb/2008/10/31/1224956274586.html


----------



## sammy84 (1 November 2008)

MrBurns said:


> Probably would have sold for $100K more 6 or 8 months ago.
> 
> The market may hold up while Rudds bribes kick in , but it will go down, probably another 20% at least, considering it's already down at least 10%.
> 
> It's not like the share market, this will take perhaps 12 months to fully play out then it will stay down for a few years or until the economy gets it's act together, so the time to recovery is anyones guess.




I totally agree. I was just responding to the overly pessimistic view expressed earlier that there are no buyers out there in this current market. Any one who bought a few years ago could still sell now and still be in the black.


----------



## gav (1 November 2008)

Glen48 said:


> To work out a price take 1 MONTHS rent and x by 150 and you have your price.




Forgive my lack of knowledge on property, but how did you come by this figure?  I am renting, but if I could buy the place I am currently living in for 150 x 1 month rent, I'd be in the bank today for a loan


----------



## Indie (1 November 2008)

^^^^^

I'm a buyer at 150x monthly rent too. Hard to see that ever happening in melbourne.


----------



## mantronic (1 November 2008)

gfresh said:


> Fantastic news! Melbourne down 3.3%. You wanted figures Robots, well there they are, from the great man himself..
> 
> -3.3 x $400k = -$13.2k - 8% x say $300k loan = -$37,200. That's a lot of rent.




Hmm thats quite a loss.  Anyone that did that might have done better not to get out of bed the day the locked that in! But in reality most of us property types buy with cash as interest money is dead money like rent.


----------



## robots (1 November 2008)

gfresh said:


> *Fantastic news!* Melbourne down 3.3%. *You wanted figures Robots, well there they are, from the great man himself..*
> 
> -3.3 x $400k = -$13.2k - 8% x say $300k loan = -$37,200. That's a lot of rent.
> 
> ...




hello,

yes fantastic figures, ST KILDa up 14.7% awesome, a lot of other suburbs banging it on too..

-3.3% compared to the SHock ExchANge at 30% now thats numbers

enjoy the day man

thankyou
robots


----------



## Beej (1 November 2008)

Wow! So the Melbourne median house price is back to where it was sometime between March and June this year... ho hum.

Re 150 x 1 months rent, that means you expect to buy a place on a gross rental yield of 8%! Not likely in Sydney or Melbourne! More like 4% is the norm, so therefore multiply your months rent by 300 and you would get there.

As interest rates fall the numbers for buying property rather than renting stack up more and more. That factor plus the lack of supply will put a floor under prices and soon. I suspect that this current quarter and maybe the first quarter next year will in hind sight turn out to be the bottom for Sydney and Melbourne. SE Queensland and WA etc are running to a different cycle and may well fall a lot further and/or for longer before they bottom (as others have speculated), so it really depends which market we are talking about.

Re prices in more expensive suburbs, you have to be careful looking at just the median numbers, as the $2M+ market has been fairly dead, and therefore only the cheaper properties have been on the market, thus producing (primarily) the median downward change. It will be interesting to see figures for the $2M+ range this quarter actually as at least in Sydney a LOT of property in this price range has just come onto the market, so as those homes sell (or not) we will have a better handle on what that end of the market is looking like.

Cheers,

Beej


----------



## grace (1 November 2008)

robots said:


> hello,
> 
> -3.3% compared to the SHock ExchANge at 30% now thats numbers
> 
> ...




Perhaps you might have to annualise that for comparison purposes.  Ouch!


----------



## lioness (1 November 2008)

If you are talking about inner city, it is still going up.

I live in Fitzroy North and things are pumping here.

Single fronts cottages(3 bedrooms) renovated for 1.2 million just sold last week.


----------



## Indie (1 November 2008)

robots said:


> hello,
> 
> yes fantastic figures, ST KILDa up 14.7% awesome, a lot of other suburbs banging it on too..
> 
> ...




G'day

With cash at call I can get +6.5%, zero risk. Better than paying interest on rented money and dealing with negative yield and asset depreciation. For now anyway. Timing is everything and as someone who has just sold out of the market I'm happy my capital is growing and my purchasing power is being preserved. Every asset class has its time in the sun. 

Matronic, "most of us property types buy with cash..." lol, yeah, sure you do. Then you were missing out of negative real interest rates for the best part of 20 years. That's not how to make the most of your investment dollar.


goodluck
Indie


----------



## robots (1 November 2008)

hello,

someone shouted "oh what about an annual return", make of as you wish,

http://data1.reiv.com.au/trendchart/default.aspx

indie, yes and how about the rent you pay after cashing out, always forgotten about isnt it, amazing

6.5%, take away tax, take away rent and presto HELL

and as a money renter life is getting better everyday with rates coming down again this week, 

do they also go down on savings accounts?

thankyou
robots


----------



## nunthewiser (1 November 2008)

yep ive noticed a few of the mud slingers keep forgetting how they pay for the roof over there heads or mention the figures involved in renting compared to buying and the asset that its building for the future as well as not mentioning at the end of day paying rent for ten years returns you 0 % ..

robots i have a task for you my good man .,,,,,,,,,,,,,,,, please or anyone actually provide some data for tasmania or a link regarding homesales at least , been searching cant fiind any charts or up to date data 

thankyou in advance


----------



## Glen48 (1 November 2008)

say 300PW x 52 = $15.600 PA, divided by 12 =1,300 PM x 150 Your house should be worth $195,000


----------



## robots (1 November 2008)

nunthewiser said:


> yep ive noticed a few of the mud slingers keep forgetting how they pay for the roof over there heads or mention the figures involved in renting compared to buying and the asset that its building for the future as well as not mentioning at the end of day paying rent for ten years returns you 0 % ..
> 
> robots i have a task for you my good man .,,,,,,,,,,,,,,,, please or anyone actually provide some data for tasmania or a link regarding homesales at least , been searching cant fiind any charts or up to date data
> 
> thankyou in advance




hello,

yes no worries nunthewiser, I am here to help and will do my best to investigate the data you are after,

maybe Smurf can give us some info there,

anybody else need assistance then let me know,

thankyou
robots


----------



## mantronic (1 November 2008)

Beej said:


> Wow! So the Melbourne median house price is back to where it was sometime between March and June this year... ho hum.
> 
> Re 150 x 1 months rent, that means you expect to buy a place on a gross rental yield of 8%! Not likely in Sydney or Melbourne! More like 4% is the norm, so therefore multiply your months rent by 300 and you would get there.




Ho hum indeed. What of the chances of that ever happening again in the  next 30 years?  Anyway the easy way to calculate 5% return is weekly rent and throw     "000"     on the end.  Only properties with little chance of capital gain will give you that or more as prices jump and yeilds falls as buyers factor in expected gains.


----------



## So_Cynical (1 November 2008)

Glen48 said:


> say 300PW x 52 = $15.600 PA, divided by 12 =1,300 PM x 150 Your house should be worth $195,000




$250 a week x 52 = 13000 PA...so the unit where i live should be $162.450

But old 1 bedroom units like mine...in this area sell for between 195.000 > 215.000 

so your formula is a little out for Sydney.


----------



## mantronic (1 November 2008)

These numbers are all over the place.  Does this mean $5 houses in Albert Park within 9 months?  No.  They are either unreliable, or there is extreme volatility in the market, which can only point to further increases.

Albert Park dropped by a massive 39 per cent, from $1,525,000 to $929,000, followed by Armadale, which fell by 32 per cent from $1,477,000 to $1,005,000. 

Canterbury, Elwood and Brighton also recorded drops of at least 20 per cent.

In contrast, the more affordable suburbs were least affected, and performed the best in the June-September quarter. 

Fitzroy was a star performer, with the median house price jumping by 24.3 per cent from $643,750 to $800,000. 

Beaconsfield increased by 23 per cent from $378,000 to $465,000, while Williamstown jumped by 19.3 per cent from $668,778 to $798,000.


----------



## robots (1 November 2008)

hello,

http://www.reit.com.au/property_sales_data/market_activity

this is the Real Estate of Tasmania website, the reports are like those of Melbourne but not as up to date, look like you have to buy for latest

yes Mantronic, amazing stats, and humble St Kilda rocketing up by 14.7% for the quarter, what a return on investment, the numbers are just mind blowing down there by the seaside

even with all the skanks, pimps, hippies, crack addicts, walkabouts, yuppies, the place is still kicking 

what a day

thankyou
robots


----------



## nunthewiser (1 November 2008)

robots said:


> hello,
> 
> http://www.reit.com.au/property_sales_data/market_activity
> 
> ...





yeah cheers m8 , already got that one , thanks for the effort tho


----------



## robots (1 November 2008)

hello,

yes no worries, try Somersoft also

some real fanatics there and many subscribe to a lot of sites, rpdata, apm etc

thankyou
robots


----------



## Reealjrd (1 November 2008)

instead of going for a rented house why not purchase it. Going for a rented house means your money is dead. You cannot do anything of that money if you are in need.


----------



## gav (1 November 2008)

robots said:


> hello,
> 
> http://www.reit.com.au/property_sales_data/market_activity
> 
> ...




Robot, how many houses were sold in St.Kilda this quarter?  And is that 14.7% up from last quarter, or 14.7% up from the same quarter last year?  Just trying to gauge the statistics involved in those percentages..


----------



## robots (1 November 2008)

gav said:


> Robot, how many houses were sold in St.Kilda this quarter?  And is that 14.7% up from last quarter, or 14.7% up from the same quarter last year?  Just trying to gauge the statistics involved in those percentages..




hello,

14.7% from last quarter, less than 30 sales for St Kilda that quarter,

so Jun08 - Sept08,

thankyou
robots


----------



## robots (1 November 2008)

hello,

stop the press, stop the press,

http://www.reiv.com.au/home/inside.asp?ID=142&pnav=141

wow, fantastic results with 64% going going gone, just a run of the mill result the RBA will be happy with,

thankyou
robots


----------



## gfresh (1 November 2008)

nunthewiser said:


> as not mentioning at the end of day paying rent for ten years returns you 0 % ..




You should also mention then..  Only if you piss the difference up against the wall.. Put aside that $200-400 difference and invest it even conservatively and it will also give you good returns equal to property over the long run. 

However, if the banks are desperate enough to lend me hundreds of thousands at 6.5% I'll go lock it in for 15 years thanks. No brainer at that point. At 8-9%? not so attractive. 6.5% rates will be great.. if we get there that is. 



Reealjrd said:


> instead of going for a rented house why not purchase it. Going for a rented house means your money is dead. You cannot do anything of that money if you are in need.




As above, only dead if you do absolute nothing with the rest.. anybody with half a brain would put into savings, giving them plenty aside for emergencies such as a job loss. I'd rather be tapping into a bank account than asking the bank for a line of credit.


----------



## Mofra (1 November 2008)

Reealjrd said:


> instead of going for a rented house why not purchase it. Going for a rented house means your money is dead. You cannot do anything of that money if you are in need.



Non-deductable bank interest is also dead money, and as a proportion of expense represents a higher proportion of a typical monthly budget.


----------



## Pommiegranite (2 November 2008)

robots said:


> hello,
> 
> stop the press, stop the press,
> 
> ...




***NEWS ALERT***
Only about 100 properties sold on saturday!!! 80% down from last week!!! Talk about capitulation.


----------



## gav (2 November 2008)

robots said:


> hello,
> 
> 14.7% from last quarter, less than 30 sales for St Kilda that quarter,
> 
> ...




Thank-you for your reply Robots.  What have been the figures on St.Kilda for the last few quarters?  Also, is the 14.7% increase the median house price or the average house price?

thankyou


----------



## robots (2 November 2008)

hello,

you can check REIV and get a graph for the year which will show the results for the previous quarter,

i am not too good at posting those graphs, not sure about average or median

thankyou
robots


----------



## generalofthearmy (2 November 2008)

I think Robots and others have the right idea.

If your house price goes down, who cares? You still own the same amount of land and have a roof over your head.

If your companies go under however in the scam-market, sorry, stock-market you really are in the gutter. 

You know why most companies rely on `sophisticated investors'. It's for suckers becasue you're certain to lose! I thought I could trust the gigantic companies however. I was wrong and will never make that mistake again. There are too many Alan Bonds, who are never punished.

I regret buying stocks in the POS Aussie shock market. I am thankful I was lazy enough not to cash out of my RE to do so however!


----------



## gav (2 November 2008)

robots said:


> hello,
> 
> you can check REIV and get a graph for the year which will show the results for the previous quarter,
> 
> ...




I just checked the website.  Its measured my median, which doesnt exactly give a very accurate description.  For example, lets just say St.Kilda had 7 sales this quarter.  Those houses sold for:
$200K, 220K, 225K, 400K, 405K, 405K, 420K

Median price would be $400K.  Yet the average would be $325K.  Thats a big difference!

Also, if the median is up 14.7%, all it merely shows is that *for those houses sold* it was up 14.7%.  And with only 30 houses sold, how can this paint a picture for all of St.Kilda?  How many houses are in St.Kilda?  Those 30 houses that were sold could have been the best 30 houses in all of St.Kilda, yet it only drove the median up 14.7%?  That would not be good news for property owners in that area... But on the flip side, they could have been the worst 30 houses in St.Kilda which would bring alot of confidence to property holders...

I dont know alot about property, but I would be taking those so called "statistics" with a grain of salt...  Statistics can be measured in many different ways, and paint a very bleak or very promising outlook.  It's funny how people only take notice of the statistics that suit their own blind ambitions...


----------



## arco (2 November 2008)

.
Interested in what people think might happen to residential prices on the Sunshine Coast  - say Caloundra to Noosa 

rgds - arco


----------



## Indie (2 November 2008)

robots said:


> hello,
> 
> someone shouted "oh what about an annual return", make of as you wish,
> 
> ...





How about that big fat deposit you put down for the house? You get no return on that either. It just sits there as collateral as you pay enormous amounts of rent for the $$ you have borrowed from the bank. All ok if you are getting capital growth or positive rental yield. But what about when prices are falling? I dunno, I can only speak from personal experience. You can't live anywhere for free, so you're either renting a home or renting the money to live there.

I have sold and now rent a house in Middle Park. I'm pretty sure the house I live in is worth at least double the city median price. I make more than enough investing the proceeds from the sale to pay the rental. Much more in fact. And I don't pay rates, land tax, maintenance, etc. I'd pay the bank more in interest if I borrowed even a third of the money for home I live in. In other words, it would cost me over 3x as much to live here if I borrowed the money. If I go for a smaller loan and put in my cash as a deposit, then I lose any return I would get from putting it somewhere else - even a lowly term deposit.

The way I look at it, if I come back to the market in a few years after the inevitable pullback in prices, I can borrow less, make more money now, and take advantage of better buying conditions.

All assuming prices keep heading south. We're only in the 1st inning, but so far so good....


goodluck
Indie


----------



## robots (2 November 2008)

gav said:


> I just checked the website.  Its measured my median, which doesnt exactly give a very accurate description.  For example, lets just say St.Kilda had 7 sales this quarter.  Those houses sold for:
> $200K, 220K, 225K, 400K, 405K, 405K, 420K
> 
> Median price would be $400K.  Yet the average would be $325K.  Thats a big difference!
> ...




hello,

thats fine, the drops are all irrelevant and inaccurate as well

http://www.anz.com/aus/promo/homeessentials008/property1.asp

a different view about mean and median here to Gav, with view that median is quite a good indicator

i think the disadvantages are quite irrelevant

thankyou
robots


----------



## robots (2 November 2008)

Indie said:


> [/COLOR]
> 
> How about that big fat deposit you put down for the house? You get no return on that either. It just sits there as collateral as you pay enormous amounts of rent for the $$ you have borrowed from the bank. All ok if you are getting capital growth or positive rental yield. But what about when prices are falling? I dunno, I can only speak from personal experience. You can't live anywhere for free, so you're either renting a home or renting the money to live there.
> 
> ...




hello,

yes goodluck to you brother, I will persist with being a money renter and you can rent the property, no big deal

its a free country here in Aus, you can walk the street, talk to the neighbour, get a latte, ride the trains or just plod along in utopia

thankyou
robots


----------



## gav (2 November 2008)

Thank-you for that link Robots, very informative.  It will be interesting to see the yearly median of house prices, as this will give a much more accurate outcome.

Meanwhile I'll get a good view of St.Kilda properties, I just accepted a job in St.Kilda


----------



## robots (2 November 2008)

hello,

good stuff gav, i have been here for 13yrs now and girlfriend for 20yrs, 

goodluck and stack as much away as you can,

thankyou
robots


----------



## Beej (2 November 2008)

Indie said:


> [/COLOR]
> 
> How about that big fat deposit you put down for the house? You get no return on that either. It just sits there as collateral as you pay enormous amounts of rent for the $$ you have borrowed from the bank. All ok if you are getting capital growth or positive rental yield. But what about when prices are falling? I dunno, I can only speak from personal experience. You can't live anywhere for free, so you're either renting a home or renting the money to live there.
> 
> ...




You have to look past the short term and into the longer term - Ie to the time when you don't have the mortgage anymore, AND don't have to pay rent. At that point you get way way ahead every year owning property. So you pay MORE than renting initially yes (that's why the rental yield is usually less than the interest rate), but if you own, over time your interest payments get less and less in both absolute (as you pay the loan off), and in real terms (due to the fact rent and property prices increase over the long term). Ie if you own, the MOST EXPENSIVE time is the first year of ownership, and it only get's cheaper after that. With renting, the first (or current) year will always be the CHEAPEST over the rest of your life (all other factors being equal). Look at the amount of before tax earnings needed in each case and this becomes even more the case. It's real ants vs grasshopper stuff IMO (if you know that fable) 

Sure you can *try* and time the market for a short term benefit, but good luck being successful with that, especially when you factor in the buying/selling costs. And I wouldn't be too certain about those "inevitable price falls" either. Over the long term, property capital appreciation will AT LEAST equal inflation and a small amount, and that return on your invested capital is of course tax free, so it is a true inflation hedge.

PS: If you reckon that the cost of servicing the mortgage on the place you rent is 3 times the rental cost, then you are either over-estimating the value of the property, or you pay VERY low rent. Based on a 4% gross rental return (which is typical for most of Sydney and Melbourne), and an interest rate of say 7.5% (should be current rate by end of this week!), the rental cost multiple to own should be somewhere around 1.9x to 2x tops, including other ownership costs like rates etc. Then it's all downhill from there over time.....

PPS: I believe the trick is to never over-extend, only borrow (and thus buy!) what you can EASILY pay off in a 5-ish year timeframe, and live rent free for a few years after that mortgage has been paid off, save the spare cash, and then upgrade applying the same princible. Repeat as required to achieve desired lifestyle and location etc.

Cheers,

Beej


----------



## Glen48 (2 November 2008)

Most people who buy share sell them when they go up and collect the profit, Home owners pay off some thing they are Brainwashed into believing they appreciate for ever and hold on to them when they go down, Why not sell on a high collect the Tax free Loot and buy back in when they go down like they are doing now?.


----------



## chops_a_must (2 November 2008)

Beej said:


> PPS: I believe the trick is to never over-extend, only borrow (and thus buy!) what you can EASILY pay off in a 5-ish year timeframe,
> 
> Cheers,
> 
> Beej



But that's just it though isn't it?

How many people could do that? And if not many can, you can't get capital appreciation.

It means realistically on that formula that people on a slightly above average wage, would really only be able to afford something in the low 200k range. And that's if they put probably everything into it.

And then of course, the likelihood that over a 10, 15, 20 year time period you are going to be unemployed for a chunk of that time regardless of training and education.

That's the particular risk that I think is waaaayyyy under priced in the current market. There hasn't been threat of skilled people losing jobs until recently, so over the long term, that income insecurity has been completely removed from pricing.


----------



## CamKawa (2 November 2008)

I reckon this seems to be a balanced article from Business Speculator.

10:18 AM, 27 Oct 2008 

Robert Gottliebsen
*Unreal real estate*

What is a 'ridiculous price' for a house? Leaving aside local factors, we are seeing a series of major selling and buying forces developing in the Australian housing market. 

The biggest force pushing the market down is the much tighter rules for bank credit. Accordingly we have seen lots of buyer interest at lower priced housing sales given the prospect of lower interest rates and, (at the bottom end of the market), the increased home buyer's grant. But vendors and real estate salespeople do not always understand that while the buyers are interested, they do not have as much money in their pocket. 

I found_ Business Spectator_'s Isabelle Oderberg interview with the CEO of the Real Estate Institute of Victoria Enzo Raimondo fascinating (_What goes up must come down_, October 24). 

That interview was on the eve of Melbourne’s 1,100 house auction sale weekend. Raimondo was hoping for a 60 per cent-plus clearance. The market gave only a 53 per cent clearance so there is now a big overhang. Melbourne prices are already down and they will fall further because, like most other Australian housing markets, the banks have restricted their lending and the non banks are out of the market. 

Nevertheless, the good news is that there are buyers out there – albeit at a price. The bad news is that there is a group of sellers who need to get out. And, especially at the expensive end, their numbers will increase. 

Among the sellers about to multiply are executives who no longer have job security because of their overinflated salaries and who have been punting the share market and lost. They are now selling investment properties and holiday houses. Soon they will be selling their expensive homes. 

Let me illustrate what is to come in the near future with an incident that took place in the last three weeks. 

A friend of one of my colleagues is shifting from Sydney to Melbourne and he attended a Melbourne auction for an expensive well-located house. There were no bids at the auction and the agent, knowing the Sydneysider was a genuine buyer, asked him why he did not bid. 

The Melbournian-to-be said he thought the asking price was too high. The agent asked him what he would pay for it and the Sydneysider quoted what he thought was a ridiculous price. The agent also thought it was ridiculous and laughed uproariously at him. Two days later the agent was on the phone saying that the vendor would not sell at that “ridiculous” price. The trouble is that the Sydneysider must now sell his harbour suburb house and may be forced to take a “ridiculous” price himself, given that parts of Sydney are falling at some of the fastest rates in the country. 

In 1990, expensive houses, including expensive holiday houses, fell 50 per cent. Hopefully that won’t happen this time, but it might. 

At the low end of the market there are large numbers of unfortunate people who were told by advisors or friends to mortgage (sometimes second mortgage) their homes and punt investment properties which are now falling in value. 

Many of these people now have lower incomes and will be forced sell their investment properties and lick their wounds as they pay off their homes all over again. It’s a horrible experience, but you must be able to hang on during these times. 

Source: http://www.businessspectator.com.au/bs.nsf/Article/Real-estate-ridicule-KSUCB?OpenDocument&src=mp​


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## Beej (2 November 2008)

chops_a_must said:


> But that's just it though isn't it?
> 
> How many people could do that? And if not many can, you can't get capital appreciation.
> 
> ...




Well for a start, there will always be winners and losers in life - if you are on an average wage your whole life then you can't expect to end up at the top of the real estate heap now can you?? 

Having said that, there are plenty of starter places that can be had in Sydney for $200k-ish - eg decent 2 bed units in various western suburbs and so forth. Buy one, pay it off, live rent free for a few years, and then do it again and voila you are buying a median $400-$500k property (in today's money) as your 2nd purchase, on an average wage, and 5 years later again you own it outright and live rent free until and of course after you retire.

Now if you aspire to more, well then, you better figure out how to earn more than the average hadn't you??  Then you can start out higher up the ladder.

As for periods of potential unemployment, well it would be better to experience that at a point where you are living rent free in a property you own wouldn't it than at a time where you have to pay ever-increasing rent??

PS: CamKawa - interesting article!

Cheers,

Beej


----------



## chops_a_must (2 November 2008)

Beej said:


> Well for a start, there will always be winners and losers in life - if you are on an average wage your whole life then you can't expect to end up at the top of the real estate heap now can you??
> 
> Having said that, there are plenty of starter places that can be had in Sydney for $200k-ish - eg decent 2 bed units in various western suburbs and so forth. Buy one, pay it off, live rent free for a few years, and then do it again and voila you are buying a median $400-$500k property (in today's money) as your 2nd purchase, on an average wage, and 5 years later again you own it outright and live rent free until and of course after you retire.
> 
> Now if you aspire to more, well then, you better figure out how to earn more than the average hadn't you??  Then you can start out higher up the ladder.



Not indicative of where I am in my life  just saying.

And no, I would never buy in western Sydney at any price probably.



Beej said:


> As for periods of potential unemployment, well it would be better to experience that at a point where you are living rent free in a property you own wouldn't it than at a time where you have to pay ever-increasing rent??
> 
> PS: CamKawa - interesting article!
> 
> ...



Not always. You own a home and you wont get any benefits.


----------



## robots (2 November 2008)

hello,

you still get benefits if you own your own home or have mortgage,

Newstart payment and concession cards etc and so you should, most pay taxes all there life and should get benefits,

the bludgers should get nothing

thankyou
robots


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## Mofra (2 November 2008)

chops_a_must said:


> Not always. You own a home and you wont get any benefits.



PPOR is excempt from means testing for retirees, not too sure about Newstart (dole) but the only unemployed these days are generally the unskilled who don't aspire for too much more than to survive until the next paycheck.


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## r34ztune (2 November 2008)

The beauty of property is the ability to leverage 
My last deal -
- bought a unit in Brisbane March last year
- had enough equity to borrow the full amount of 125k it didn't cost me 1 cent
- borrowed 125k @ 7% IO = interest payments of $168 p/w.
- unit was renting @ $180, after 3months lease ended so I increased rent to $200- so from day 1 the unit was cashflow positive.
- After waiting 1 year sold for just over 200k., gross profit of approx 80k, I can tell you alot better than working.

Of course I have to pay CGT however this property did not cost me 1 cent to buy or maintain, so you do the math 
And yes the market has changed, and I doubt this kind of deal could be made right now. However this kind of opportunity HAS been available for the last 7-8 years.
I own my own PPOR so really I couldn't care if it falls in price, and it's comforting when all my mates are complaining about their landlords increasing rents


----------



## jonojpsg (2 November 2008)

r34ztune said:


> The beauty of property is the ability to leverage
> My last deal -
> - bought a unit in Brisbane March last year
> - had enough equity to borrow the full amount of 125k it didn't cost me 1 cent
> ...




Are you serious???  Where did you find a unit in Brisbane for $125k???  Mate, that would definitely be worth buying - you can't even get a unit in Hobart for that price!!!


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## r34ztune (3 November 2008)

jonojpsg said:


> Are you serious???  Where did you find a unit in Brisbane for $125k???  Mate, that would definitely be worth buying - you can't even get a unit in Hobart for that price!!!




The suburb is Woodridge, 18months ago. Still plently within 30km of cbd North and South under 200k which would make them close to neutral geared. Lots of good buys coming up 
Here is 1 example.
http://www.realestate.com.au/cgi-bi...r=&cc=&c=42383979&s=qld&snf=rbs&tm=1225657980


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## Beej (3 November 2008)

chops_a_must said:


> Not indicative of where I am in my life  just saying.




Oh yea I meant to say that I was using "you" figuratively in my previous post  Ie my comments were meant to be more just an example rather than being directed to you or anyone else specifically! 



> And no, I would never buy in western Sydney at any price probably.




Neither would I, but that's mainly because I don't have to. If my circumstances were different I would have no problem buying/living out west if that's what I felt I needed to do to a) provide adequate housing for myself and my family and b) get ahead in the long term.

Cheers,

Beej


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## Indie (3 November 2008)

[QUOTE=r34ztune;356987]The beauty of property is the ability to leverage 
My last deal -
- bought a unit in Brisbane March last year
- had enough equity to borrow the full amount of 125k it didn't cost me 1 cent
- borrowed 125k @ 7% IO = interest payments of $168 p/w.
- unit was renting @ $180, after 3months lease ended so I increased rent to $200- so from day 1 the unit was cashflow positive.
- After waiting 1 year sold for just over 200k., gross profit of approx 80k, I can tell you alot better than working.

Of course I have to pay CGT however this property did not cost me 1 cent to buy or maintain, so you do the math 
And yes the market has changed, and I doubt this kind of deal could be made right now. However this kind of opportunity HAS been available for the last 7-8 years.
I own my own PPOR so really I couldn't care if it falls in price, and it's comforting when all my mates are complaining about their landlords increasing rents [/QUOTE]


That's a beautiful set of numbers, well done. You obviously timed things nicely.

No one can argue that huge amounts of money have been made from property over the credit boom phase and it's hard to get the same leverage and tax benefits from other investments. What can the govt do now to keep the bull running? Abolish CGT all together? They need something bigger than an increase in the 1st HB grant to prop this market up. Something for the investor market. Not sure that interest rate cuts will do it this time as banks are tightening lending practices regardless of where interest rates are heading. Remember, lending has to stay at or above peak levels just to keep prices at par levels.


----------



## YChromozome (3 November 2008)

Official ABS stats today show Australian Houses fell 1.8% in value over the September Quarter. 

Updated Graph :


----------



## Pommiegranite (3 November 2008)

YChromozome said:


> Official ABS stats today show Australian Houses fell 1.8% in value over the September Quarter.
> 
> Updated Graph :




Thanks Y, the Aussie property worm has certainly turned, and has now decided to follow the rest of the world. 

I expect rate of falls to increase quarter by quarter. 2010 should be a great year to get a bargain. I'll have untold choice in St Kilda.


----------



## gfresh (3 November 2008)

Full stats: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument

Brisbane worst as at -3.3% for September quarter. As pointed out a couple of days ago, Brisbane is showing the warning signs. Gold Coast? really going to get thumped. 

Perth down 4.1% over the year. 

As the dying months of the boom roll off, going to be some nastier YOY figures appearing next year for the other cities too. 

So far we've had... 

1. House prices never fall, things are different here!!

2. Possibly final acceptance house prices are falling somewhat, heavier in some areas. 

3. Stats starting to appear to show what some have been suspecting. 

4. Realisation that Australia won't get off this credit crisis very lightly.. still 6-12 months time for the worst .


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## Glen48 (3 November 2008)

Look up You Tube I. O. U. S. A and then decide what to do next.The list your house if it is not to late.


----------



## sinner (3 November 2008)

YChromozome said:


> Official ABS stats today show Australian Houses fell 1.8% in value over the September Quarter.
> 
> Updated Graph :




If this chart is accurate it really proves that Australian RE market is not independant of the international one just like some people are claiming. 

Aussie banks have been posting record growth and profits on the backs of foreign credit Fun times ahead.


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## robots (3 November 2008)

hello,

great news, down 1.8% yes 1.8% wow what a result

its a bit like stock picking isnt it, you just got to get on the right one

st kilda up 14.7% for the Sept08,

we accept all here at st kilda pommie, specuvestors, the affordability crew, renters anyone 

well done to all the brothers in Adelaide, great effort over there for those doing the hard yards

thankyou
robots


----------



## Happy (3 November 2008)

robots said:


> hello,
> 
> great news, down 1.8% yes 1.8% wow what a result




Higher it goes, lower it will fall, only matter of time.


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## saiter (3 November 2008)

Happy said:


> Higher it goes, lower it will fall, only matter of time.




I can't wait, if this happens in the next 3 or 4 years then I'll have enough for a deposit and be in a great position for a 23 year old.


----------



## robots (3 November 2008)

saiter said:


> I can't wait, if this happens in the next 3 or 4 years then I'll have enough for a deposit and be in a great position for a 23 year old.




hello,

same here man, and with costs getting closer to rent every day another one could be on the cards next year, kicking it

thankyou
robots


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## theasxgorilla (3 November 2008)

robots said:


> st kilda up 14.7% for the Sept08,




Gains like this in a premium area like St Kilda explain why people who want to buy in these areas can be happy if they get a 5% discount off market value...10% and you got the bargain of a lifetime...IMO, of course.


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## Reealjrd (3 November 2008)

robots said:


> hello,
> 
> you still get benefits if you own your own home or have mortgage,
> 
> ...




Hello Friend,

Are you serious about the falling market. Here the people invested in real state are scared about this news and falling real state sector.


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## nunthewiser (3 November 2008)

LOL i remember a time when STkilda , yarraville (melbourne), redfern ( sydney ) bayswater (perth ) and various other now in "vogue" suburbs could be bought for a dime a dozen because of the socio economic views of the areas ( junkies , crime etc etc ) funny how times change. well done to those that saw the potential and now are sitting pretty


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## robots (3 November 2008)

hello,

yes nunthewiser, another classic was the workers cottages in Port Melbourne and South Melbourne

yes get down to Centrelink and see what you can get if in difficulty, everyone who pays taxes are entitled to get down there and get assistance if possible

the best thing people can do is sit tight, pay down everything, spend on basics only, hang in there

tell the kids you love them and working on this as a family 

before you know it you out of the woods man, every year gets quicker and quicker and the affects of those procedures will be telling

any questions fire away

thankyou
robots


----------



## aleckara (3 November 2008)

chops_a_must said:


> Not indicative of where I am in my life  just saying.
> 
> And no, I would never buy in western Sydney at any price probably.
> 
> ...




I'm sorry. You are complaining of not getting benefits and yet you are above Western Sydney?

Btw even in Western Sydney there is some very nice properties - in fact some of them I would prefer than the city life simply for the enjoyment if not the convenience. Western Sydney is so vast and so spread out that there is a variety of properties just like everywhere else and there is a lot of people that don't want to live near the city and prefer wide open spaces. I know a few western sydneysiders that hate places such as the Inner West and the cramped houses. If you don't work in the city then it can be a much better area. It's all about location and tastes.

Here is an example.

http://www.realestate.com.au/cgi-bi...er=&cc=&c=6183654&s=nsw&snf=rbs&tm=1225704548

You sound young (possibly a city uni student) and quite used to a certain living standard probably close to the city. Even my parents had to suffer and sacrifice to save for their first house. Everyone does; and as other posts have alluded to you need to climb the ladder to build up your equity.

I also hope house prices can go down - they are overvalued in my opinion and it would be good for me since I am looking for a first house as well. But I'm not above any area if it is the only one i can afford.


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## nunthewiser (3 November 2008)

robots said:


> hello,
> 
> yes nunthewiser, another classic was the workers cottages in Port Melbourne and South Melbourne
> 
> ...




LOL im a long way from needing to claim cednterlink payments m8 but will keep in mind for a rainy day .........


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## robots (3 November 2008)

hello,

sorry, i missed typing in Reealjrd at the start of the second sentence

please accept my deepest apology regarding this matter and may the sun shine bright for you tomorrow

thankyou
robots


----------



## nunthewiser (3 November 2008)

robots said:


> hello,
> 
> sorry, i missed typing in Reealjrd at the start of the second sentence
> 
> ...




hahahahahah apology accepted and may your cockles be warmed on a daily basis


----------



## Glen48 (3 November 2008)

Well its started house prices in Brisbane have fallen by 3.3% the biggest since records were started Sydney and Melbourne not far behind. They will now continue to go down for the next 2-3 years To those who sold and made a profit congrats. to those stuck with a new Liability sorry.

So much for de coupling from USa the good thing is once USa turns we will know when to buy back in.
MY new Land lord is now down 12 K in two months.


----------



## robots (3 November 2008)

Glen48 said:


> Well its started house prices in Brisbane have fallen by 3.3% the biggest since records were started Sydney and Melbourne not far behind. They will now continue to go down for the next 2-3 years To those who sold and made a profit congrats. to those stuck with a new Liability sorry.
> 
> So much for de coupling from USa the good thing is once USa turns we will know when to buy back in.
> MY new Land lord is now down 12 K in two months.




hello,

RE: Robots post #1561

please forward to your landlord, if doing it tough he/she should get down to centrelink and see what they can sort out, 

maybe a concession card or mortgage assistance package a bit like what they do with farmers,

we all here to help

thankyou
robots


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## gfresh (3 November 2008)

nunthewiser said:
			
		

> LOL i remember a time when STkilda , yarraville (melbourne), redfern ( sydney ) bayswater (perth ) and various other now in "vogue" suburbs could be bought for a dime a dozen because of the socio economic views of the areas ( junkies , crime etc etc ) funny how times change




Woodridge is probably a good example for Brisbane - ztune guy made a good amount of money investing there, but god, tell anybody you were planning on living there and you'd be put in the dark corner by any friends or family. It's still the cheapest realestate in Brisbane.. if you are game.   

Jonnie Thurston's uncle got bashed and killed there the other day by a gang of nine, but you know, these things happen in the big city 

200+ properties there for sale under $350k, still a handlful under $200k.. knock yourself out (before somebody else there does)


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## nunthewiser (3 November 2008)

gfresh said:


> 200+ properties there for sale under $350k, still a handlful under $200k.. knock yourself out (before somebody else there does)




LOL nah i think i,ll give it a miss , done my time investing and defending property in balga (perth ) many years ago  ....... intresting to say the least but was that close to the city was only a matter of time before it got noticed and rerated .must say tho it was a breath of fresh air moving out of there


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## nulla nulla (3 November 2008)

no offense, but anyone thinking real estate prices will fall for the next consecutive three or more years in inner Sydney or Melbourne Suburbs, is dellusional. There may be a tightening in the glamour waterfront suburbs where a $6million overdeveloped waterfront property will trade for $5.1million, but this will more than likely be a reality check because the wally that paid $6million for it overpaid. The rest of the inner City suburbs will consolidate then continue to appreciate. Outer suburbs are the ones most likely to experience real falls in value, as again, like the US sub prime, they have been developed and sold at inflated prices often with 100% mortgages.


----------



## saiter (3 November 2008)

nulla nulla said:


> no offense, but anyone thinking real estate prices will fall for the next consecutive three or more years in inner Sydney or Melbourne Suburbs, is dellusional. There may be a tightening in the glamour waterfront suburbs where a $6million overdeveloped waterfront property will trade for $5.1million, but this will more than likely be a reality check because the wally that paid $6million for it overpaid. The rest of the inner City suburbs will consolidate then continue to appreciate. Outer suburbs are the ones most likely to experience real falls in value, as again, like the US sub prime, they have been developed and sold at inflated prices often with 100% mortgages.




If people are unable to afford a house in the inner west and if there are home owners needing cash, then prices will fall.


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## r34ztune (3 November 2008)

gfresh said:


> Woodridge is probably a good example for Brisbane - ztune guy made a good amount of money investing there, but god, tell anybody you were planning on living there and you'd be put in the dark corner by any friends or family. It's still the cheapest realestate in Brisbane.. if you are game.
> 
> Jonnie Thurston's uncle got bashed and killed there the other day by a gang of nine, but you know, these things happen in the big city
> 
> 200+ properties there for sale under $350k, still a handlful under $200k.. knock yourself out (before somebody else there does)




I personally wouldn't live in Woodridge, doesn't mean it's a bad investment. 
If prices drop more, most properties will be close to neutral or positive geared, so they won't cost you a cent to own.
Some of my best tenants are from Woodrige, alot are long term and look after the place as their own.


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## kotim (4 November 2008)

GEEZ some fo the property bulls here better go to the doctor and ask for a reality shot.  The bigger the boom the biger the bust and it has never been any different.  

Ask the shareholders in the stock market if a year ago they would have thought that the current situation could occur and 99% would say no, but history says it happens.

I know so many people who bought property and just refuse to accept a fall in property of any degree becasue they have ultimatley never looked into it. and just don't want to think about it.  If history for eg says average 25% fall then this is the minimum average we will experience on this occasions.

We have had such a huge property boom built ultimately on hope and now that hope is dissapearing.

Have a think about an 8% unemployment rate, that alone will cause a collapse in prices and 8% is not a historically high rate that would be unlikely to occur.

Just accept the fact that we are going to have 20%+ fall in prices (on average) and prepare for it.

There is so much credit extension out there on a personal level that much lik the share market.  In Qld today the state gov't offered the ambos 4.5% pay rise for the first year and then 4% thereafter., now after allowing for tax the real pay increase is really about 2.5-3%.  Yet this year alone inflation has run at over 5%.  For the next couple of years we are going to see a real decrease in peoples money and then add unemployment.

Don't forget that the average house loan out there needs both hubby and wife to work more or less full time to pay the mortgae etc, so take away a few jobs or hours worked in relation to the jobs and then the measley interest rate deductions will never make up for the loss of wages.

Look to history for the outcome.


----------



## arco (4 November 2008)

*Financial crisis set to claim Australian jobs*

AUSTRALIAN employers have signalled they will start firing staff in a bid to stem the growing impacts of the global financial crisis on their businesses.
An Australian Industry Group survey, to be released today, warns businesses are in for a "rough ride", with three in five revealing they had substantially felt the effects of the economic meltdown.

The survey of 303 manufacturing, services and construction businesses in October found that "companies are revising their business plans, lowering employment and cutting costs".

http://www.news.com.au/couriermail/story/0,23739,24591503-3122,00.html

_In the boom leading up to the Great Depression of the 1930s, most Americans did not borrow money to buy a home. Variable rate mortgages didn't exist. And Wall Street investors rarely got involved in the business of financing homes. Home prices did fall dramatically. But those price declines came mostly after the stock market crashed, after the economy shrunk and after millions of workers had lost their jobs.
_


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## nulla nulla (4 November 2008)

Come back to this thread in 3 years and we will see who is right. Whether it is Inner West, Inner North, Inner East or Inner South, property values will consolidate rather than plunge. The better houses in the better streets will continue to appreciate, average houses in average streets will hold their value or experience negligible dips and the rundown houses in less desirable locations will go for their land value. Instances of people needing to sell to cash up will not be the majority of sales in the inner suburbs and are unlikely to be enough to give the picture of falling prices.


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## chops_a_must (4 November 2008)

nulla nulla said:


> Come back to this thread in 3 years and we will see who is right. Whether it is Inner West, Inner North, Inner East or Inner South, property values will consolidate rather than plunge. The better houses in the better streets will continue to appreciate, average houses in average streets will hold their value or experience negligible dips and the rundown houses in less desirable locations will go for their land value. Instances of people needing to sell to cash up will not be the majority of sales in the inner suburbs and are unlikely to be enough to give the picture of falling prices.




I'm sorry.

I didn't realise the only city to exist in Australia was Sydney.


----------



## numbercruncher (4 November 2008)

Im giggling so hard at these RE permabulls that keep saying prices are on the up swing .... news in the real world seems to get worse by the day ....




> THE biggest fall in house prices in *30 years *and manufacturing output dropping to recession levels will leave the Reserve Bank board with no alternative but to cut interest rates again today.




http://www.theaustralian.news.com.au/story...617-601,00.html


----------



## xoa (4 November 2008)

Bad news for speculators, good news for young Aussie families.

Prices will continue to fall in coming years, bringing the great Aussie dream back in reach of hard working Aussies.


----------



## Pommiegranite (4 November 2008)

numbercruncher said:


> Im giggling so hard at these RE permabulls that keep saying prices are on the up swing .... news in the real world seems to get worse by the day ....
> 
> 
> 
> ...




Yes number, its all in the mainstream media these days, unlike a couple of months back. 

Even Robbie has now resorted to comparing asset groups to make him feel better, and talking about riding out the hard times. Whereas a couple of months ago he was saying "BUY BUY BUY". All I know is that a massive lump sum in a 3year 8%+ term deposit is feeling mighty good to me now.

We should move onto how long and how deep the falls will be.

I expect a 20% minimum off average house price in ALL Australian cities by the end of 2010. Any predicting further out than this would just be guessing. However, if I were to make a guess, I would say 35% off from peak to trough. The thing is that the bottom could flatline for many year, but we'll cross that broken bridge when we get to it.


----------



## Mofra (4 November 2008)

Pommiegranite said:


> Yes number, its all in the mainstream media these days, unlike a couple of months back.



Exactly, media contrarions have possible the best timing mechanism known for market (sell when the media say to buy, and vice versa).

Amazing that after 3+ years and 3 seperate threads, the permabears are jumping for joy at a single quarter of negative growth. In the meantime, how many properties have become positively geared, noting on this day the RBA are likely to cut rates again? 

Holding an asset for 20+ years, positively geared, and we're supposed to be worried about a single quarter of negative growth (although many suburbs still appreciated during the quarter)? Okay then...


----------



## ROE (4 November 2008)

All I know is in the long run everything reverse to average.
Average long term housing is 3-4 times earning... currently 6-7 times

so whether price drop or stay stable for the next 10-20 years for salary to catch up.

so if you buy at 6-7 times earning and hold for a long time expect average price to return at 3-4 times earning.

I got my property when its was 3x earning I wait till the cycle return to 3-4 times then get some more  mean while just ignore the noise and the bull and bear


----------



## Mofra (4 November 2008)

ROE said:


> I got my property when its was 3x earning I wait till the cycle return to 3-4 times then get some more  mean while just ignore the noise and the bull and bear



Well done, you have a plan that has worked in the past and hopefully works for you again.

Personally I don't see the point in selling positively geared property, and not a single bear argument yet has touched on anything like a real world scenario, apart from the broad assumption that most property is a "median" value, owned by single income average income earners and almost all have been bought in the last 12 months.


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## nunthewiser (4 November 2008)

lol yep . tis a funny ole thread at times


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## numbercruncher (4 November 2008)

Permabears ?

Jumping for joy ?


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## Glen48 (4 November 2008)

[ «] Money and Markets 2008 Archive View This Issue On Our Website [ »] 

The Great American Housing Nightmare: Next Phase 
by Martin D. Weiss, Ph.D. 


One of the greatest blunders of our time is made by those who blindly assume home prices are so low they couldn't possibly go any lower.

In reality, home prices don't stop going down at some particular level that appears to be "cheap." Nor do they stop falling because they match some historical price that was previously a low.

The end of the decline in home prices will come only when there are no new economic forces driving them down.

When will that be? I'd love to say it's just around the corner. But everything I see tells me that, despite the sharp declines already recorded, a steeper plunge in home values is dead ahead.

The reason: So far, most of the troubles in the housing market have been caused by bad mortgages going sour. Meanwhile,

the more common causes of housing slumps ”” high interest rates, rising unemployment, and recession ”” are just starting to kick in. And ...


the most powerful causes ”” depression and deflation ”” are still on the horizon. 

In the 1920s, my father (left) and uncles never dreamed of borrowing to buy a home. Home mortgages were rare. 
In the boom leading up to the Great Depression of the 1930s, most Americans did not borrow money to buy a home. Variable rate mortgages didn't exist. And Wall Street investors rarely got involved in the business of financing homes. Home prices did fall dramatically. But those price declines came mostly after the stock market crashed, after the economy shrunk and after millions of workers had lost their jobs.

The crux of the problem today: That phase of the housing crisis still lies ahead. Moreover, this time, because of massive debts, the pressure to abandon or sell homes is far greater. 

Conclusion: If the U.S. sinks into a depression, home price declines could be as deep as, or deeper than, those of the Great Depression, especially in the hardest hit regions of the country.

It is a frightening thought. Yet, on the positive side, a sharply reduced price for the average home is the only fundamental, enduring mechanism for making homes more affordable and restoring demand ”” especially if the days of easy credit are gone.


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## Mofra (4 November 2008)

numbercruncher said:


> Permabears ?
> 
> Jumping for joy ?






numbercruncher said:


> Im giggling so hard



Nothing personal, but not too much poetic licence I hope?


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## Glen48 (4 November 2008)

Already, in 2008, one in ten American homeowners has defaulted on their mortgage or lost their home in foreclosure. Nearly four in ten owe more than their home is worth. 

And all this is before the recession deepens and before we experience the next phase of the Great American Housing Nightmare.

Why This Was One of the Biggest 
Speculative Manias of All Time

The Great American Housing Nightmare has no precedent; no historical roadmap to guide you, no proven pathway to follow. 

No one can tell you with precision how far U.S. home prices will decline, when they will hit bottom, how many homeowners will lose their homes, or how soon a real recovery will begin. Getting to a recovery could take many years.

In fact, to throw some light on the speculative frenzy and panic that have swept through the U.S. housing market, the most relevant precedents I could find have nothing to do with homes at all. They are the Dutch speculative mania of the 1630s, the South Sea Bubble of the 1700s and the stock market panics of the early 1900s.

In those boom-and-bust episodes, the objects of speculation were tulips, slaves and stocks. This time, it was the American home. But despite that key difference, the critical boom-bust elements that helped create the speculation ”” and the depth of the losses which ensued ”” were roughly similar.

Boom-Bust Element #1: Debt

Debt is the fuel of speculation. Without it, speculative bubbles cannot emerge. With it, prices can be inflated beyond the wildest imagination.

In seventeenth century Holland, investors speculated wildly on tulips, putting up as little as 2.5% of their own cash. Similarly, in early 20th century stock market booms, investors put up as little as 10% of their own money, using borrowed funds for up to 90% of their purchases.

But in many respects, the borrowing mania that created the Great American Housing Nightmare makes all previous debt manias pale by comparison.

By mid-year 2008, the Federal Reserve reported a grand total of $14.8 trillion in U.S. mortgages outstanding ”” 40% more than the entire national debt and triple the total of all the mortgages in America just a dozen years earlier.

Sadly, it was not just the overwhelming quantity of debt that was so dangerous. Even more dangerous was the substandard quality of the debt. Consider the facts:

 In all prior speculative bubbles in history, investors were required to put up at least some of their own money to buy into the boom. Even in the tech stock mania of the early 2000s, investors had to put up a minimum of 50% cash for their stock purchases.

But in the frenzy that preceded the Great American Housing Nightmare, millions of Americans bought homes with zero money down!

Lenders didn't merely look the other way while home owners borrowed the down payment; they actively encouraged it. Homebuyers without enough cash to buy a $500 TV set were declared the proud new owners of $500,000 luxury homes. Many took it one step further with serial purchases of homes, leapfrogging with glee from one free ride to the next.

 In all prior speculative bubbles, borrowers were invariably required to make payments of interest and principal in full and without fail, with zero tolerance for any other arrangement.

In contrast, during the Great American Housing Nightmare, millions of homeowners were allowed to pay interest only or even less than full interest.

So it should come as no surprise that the majority opted to make the smallest payments allowed, while the lender added the unpaid amounts to the loan balance. As with credit cards, the more that time went by, the deeper into debt the borrowers fell.

 In prior historical episodes of rampant speculation, loans were almost invariably held by the lenders, who, in turn, had a vested interest in making sure the borrower's finances were sound and their payments were kept current.

But in the Great American Housing Nightmare, the mortgages were mostly held by non-lenders ”” institutions and investors that were far removed from the borrowers.

 In earlier manias, investors speculating with borrowed funds were required to document that they were worthy of the loans. They invariably had to present hard evidence of income, proof of assets, or both.

But in the Great American Housing Nightmare, even that was not the case. Millions were allowed to borrow huge sums without a scintilla of proof that they had the wherewithal to make the payments.

 In earlier manias, the bubble was generally confined primarily to one debt sector.

Not this time around! Beyond the $14.8 trillion in residential and commercial mortgages in America, there are another $20.4 trillion in consumer and corporate debts. This meant that mortgages represent only 42% of the private-sector debt problem in the country.

Result: Americans are not only under tremendous pressure to sell their homes due to burdensome mortgages, they are also squeezed by huge credit card balances and by layoffs from employers equally addicted to debt.

By virtually every measure, the debts piled up prior to the Great American Housing Nightmare are far bigger and worse than any debt pile-up ever witnessed in history.

Boom-Bust Element #2: Investor Frenzy



In 1637, at the height of the tulip mania, just one Semper Augustus bulb changed hands for 12 acres of land. Another bulb was sold for a massive collection of goods, including 160 bushels of wheat, 160 bushels of rye, four oxen, twelve swine, two hogsheds of wine, four casks of beer, two tons of butter, 1,000 pounds of cheese and more. But just a few months later, similar bulbs were practically worthless.

In 1720, investors drove up shares in the South Sea Company from 125 to 960 in six months and back down again to 180 in less than three months.

In 1929, the Dow Jones Industrials surged from 213 in 1928 to 381 in 1929, only fall to 41 in 1932.

In each case, millions of investors and speculators ”” most with little experience in the market ”” were caught up in a wild buying frenzy, only to dump nearly everything in an even wilder selling panic.

Unfortunately, we witnessed a similar pattern prior to the Great American Housing Nightmare. As the buying frenzy heated up, homes and condos were flipped faster than hotcakes. Prices were driven through the roof. And even mortgages themselves were transformed into securities that were riskier than some of the riskiest stocks in the world.

At the peak of the housing bubble, the average price of existing home reached nearly five times the total yearly income of its owners, the highest in history. At the same time, the affordability of each home plunged to its lowest level in history.

Once set in motion, the speculative fever spread quickly. From Miami to Phoenix to San Diego to Las Vegas, investors camped outside housing developments to snap up three, four, five, or more units at a time. Condominium developers built gleaming towers in major cities, based almost exclusively on anticipated bids from investors and speculators and with no evidence of real underlying demand. From coast to coast, investors signed on to millions of pre-construction contracts, only to flip them before the first shovels touched the ground.

This kind of speculation was traditionally just a small niche in the giant U.S. housing market. But at the peak of the housing boom, it nearly took over: An astounding 40% of houses and condos were bought as second homes or investments. The yearly rate of appreciation on existing homes catapulted from 3.6% in January 2001 to 16.6% in November 2005. On new homes, meanwhile, it surged from 4.8% in to 18.1%.

Fueling the bubble, government agencies like Ginnie Mae, government-sponsored enterprises like Fannie Mae and Freddie Mac, and private investment banks bundled up mortgages and resold them as securities that could be traded much like stocks and bonds. These securities, in turn, were bought by banks and investors in the U.S., Europe and Asia. The total amount of mortgages transformed into these securities: $4.8 trillion, 60% more than the total value of all the stocks in the Dow Jones Industrial Average.

In just one year ”” 2006 ”” $2.4 trillion in new mortgage-backed securities were created, more than triple the amount of just six years prior. Even in past investment manias, there was no such structure. Even the wild and wooly speculators of the 1600s, 1700s and the early 1900s did not take the madness to that extreme.

Boom-Bust Element #3:
Government-Created Monopolies,
Corruption, Fraud and Cover-Ups

Some of the largest speculative bubbles of all time were born out of government-sponsored monopolies, nurtured by government-bred bureaucrats and kept alive beyond their time by government-inspired corruption, fraud and cover-ups.

In the South Sea Bubble of 1711, the English government needed to find a way to fund the huge debts it had incurred in the War of Spanish Succession. So the Lord Treasurer, Robert Harley, created the South Sea Trading company to help finance the government's debts. The company got exclusive trading rights in the South Atlantic plus a perpetual government annuity of over a half million pounds per year. In exchange, its investors agreed to assume responsibility for about £10 million of the government's debt.

It seemed like a win-win. But the government's sponsorship and the company's monopoly led to big trouble. The company's managers, thinking they had the government's largesse to fall back on, were complacent and ignored signs of economic troubles. They took excessive risk. And ultimately, investigations turned up massive fraud at the company and pervasive corruption in the government.


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## Glen48 (4 November 2008)

When the entire structure collapsed, there was nothing the government could do except to pass what later become known as the "Bubble Act" aimed to prevent a future recurrence.

Similarly, in the early 1900s, the Panic of 1901 occurred in the wake of a failed attempt to create a massive railroad monopoly; the Panic of 1907 followed a failed attempt to corner the copper market; and the Crash of 1929 resulted, to a large degree, from collusion among brokers, bankers and tycoons.

In nearly every case, the government gave select companies or individuals special privileges, waived critical regulations and encouraged great concentration of power. And in nearly every case, the government made desperate attempts to salvage the boom long after the bust began. But it was ultimately powerless to avert a collapse in the very structures it had helped to create.

Unfortunately, the same, or worse, could happen in the Great American Housing Bubble: The U.S. government created two monopolies that made England's eighteenth century South Sea Company and America's twentieth century industrial monopolies look small by comparison. Their names: Fannie Mae and Freddie Mac.

The U.S. Government gave these companies monopolistic control over America's largest debt market ”” mortgages. And then, beginning in the early 2000s, the government spurred these monopolies to compete aggressively with private subprime lenders.

Not surprisingly, the results were similar to those of earlier bubbles: Extreme complacency, excessive risk-taking, and, ultimately, fraud.

In September 2004, the Office of Federal Housing Enterprise (OFHE), Fannie's and Freddie's primary regulator, issued a special report revealing massive accounting irregularities. And four years later, in September 2008, the companies had still not cleaned up their act, prompting the Securities and Exchange Commission to launch new investigations into accounting deceptions.

The biggest deception of all: In their official filings and public pronouncements this year, Fannie and Freddie consistently and wildly overstated their capital, while understating their risk. Supposedly built with mortar and steel, Fannie and Freddie were actually houses of cards in disguise.

Repeatedly, the company executives swore on oath that they had more than enough capital. And even on the eve of their demise, their regulators testified before Congress that the companies were solvent.

Based on their smoke-and-mirrors accounting, perhaps. But based on the basic rules that you and I must abide by, not even close. For longer than anyone cared to admit, Fannie and Freddie had been insolvent. Meanwhile, their chief executives hid behind carefully camouflaged facade, marched into riskier corners of the mortgage market, and trashed the trust of millions of Americans with no sign of restraint and little expression of regret.

Between 2005 and 2008, for example, Fannie Mae purchased or guaranteed at least $270 billion in subprime mortgages ”” high-fee loans to high-risk borrowers. That was more than three times as much as it had bought in all its earlier years combined.

Yet no one seemed to bat an eyelash.

Quite the contrary, Wall Street and Washington cheered loudly, encouraging them to take on even more risk.

Why such enthusiasm? Because the rapid growth in fees supercharged Fannie's stock price. Because big revenues meant huge bonuses for executives ”” $90 million for one, $30.8 million for another, and $10 million for a third. And because the easy money flowing to unqualified borrowers indirectly helped politicians buy millions of votes.

Suddenly, however, in September 2008, it was finally recognized that all the financial statements and all the sworn testimony about solvency were unabashed lies. Suddenly, the two largest mortgage lenders on earth, supposedly rich and prosperous, were thoroughly bankrupt. And suddenly, underscoring the depth of their demise, each company needed an unprecedented $100 billion injection of government funds just to keep it alive.

The potential bill to taxpayers: $200 billion. But that figure assumes an end to the credit crunch, no more debt collapses, no recession, and certainly no depression. If any of these assumptions should prove wrong, $200 billion will barely cover what is fast becoming history's largest cesspool of sinking debts and commitments ”” $5.2 trillion in mortgages guaranteed or owned by the two companies, their $1.5 trillion in debts, and their $2 trillion in derivatives.

Boom-Bust Element #4: Collapse!

How much could home prices ultimately decline in the Great American Housing Nightmare? We have no way of knowing with certainty. But we can draw some lessons from similar bubbles and crashes throughout history:

In the Dutch Tulip Mania, investors lost nearly all of their money if they bought for cash; more than all of their money if they bought on the slim margin of just 2.5%.


In the South Sea Bubble, the cost of the shares investors bought fell from a peak of 1,000 to less than 100, a loss of 90% or more.


In the Crash of 1929 and the ensuing 3-year bear market, investors lost 89% of their money even in America's largest industrial stocks.


In the tech wreck of 2000-2002, when a myriad of Internet and technology companies collapsed, investors lost 78% of their money invested in the average Nasdaq stock; and 100% in companies that went under.


In Japan's long bear market, which stretches from 1990 to the present, investors have lost 82% of their money from peak to trough in companies that make up the Nikkei average, and much more in smaller companies.


And in the financial crisis of 2008, investors lost 99% or more of their money in some of America's most respected financial institutions. 
My argument: The speculative bubble in U.S. homes is as extreme as each of these historic examples; and in the most hard-hit regions, the resulting price collapse could be equally extreme. Indeed, the Great American Housing Nightmare is progressing in three phases:

Phase 1. The bust in the subprime mortgage market. This is now history.

Phase 2. A severe U.S. recession. As of this writing, this phase is just beginning.

Phase 3. Depression and deflation. Still ahead.

Therefore, no matter how far home prices in your area have already fallen and no matter how cheap they may appear, they could still fall a lot further.

In the hardest hit regions, an individual home that was once priced for $400,000 at its peak could fall to as low as $200,000 by the end of Phase 1. But don't blindly assume that's the bottom. In Phase 2, it could fall in half again, to $100,000. And in Phase 3, it could fall by at least half for a third time, to as low as $50,000 or $40,000.

Homes with peak prices of $1 million could sell for as little as $100,000; some, originally priced for $10 million may have no buyers at all ”” even with asking prices as low as $1 million.

Nationwide, the median home price will not fall nearly that far. But that factoid alone will do nothing for homeowners in bubble areas like Florida, Nevada or California. Nor will it help those in blighted regions where factories are closed and unemployment rises far above the national average.

Never before in history have we witnessed home price declines of this magnitude! But that fact alone does not make them implausible, let alone impossible.

Remember: Never before in history has so much debt, speculation, government manipulation, fraud, corruption and consumer abuse been heaped onto any housing market! And if there's one thing that history teaches us, it's that unprecedented causes lead to unprecedented consequences.

Lessons To Learn Now Before It's Too Late

Lesson #1. Don't blame yourself. Virtually every realtor and expert in America told you that investing in homes was a "sure bet"; and any lender in the country that accepted your loan application was, in effect, telling you that you had the means to make the payments.

Lesson #2. Don't look back. Forget what your property was worth at its peak. And try to forget what you paid for it as well. That's water under the bridge. Instead, look at what's happening today ”” in the headlines, in your neighborhood, at companies in your area.

Lesson #3. Don't count on the government to save the day. There are bound to be a series of public programs to help some people some of the time. But they will be spotty; they won't turn the housing market around; and you may not qualify. For example, the FHASecure program rolled out in late 2007 essentially created three classes of homeowners with mortgages:

Homeowners current on their mortgages and not at risk of foreclosure were mostly not eligible for federal assistance;


Those already in foreclosure were also not eligible; and ...


Ironically, only home owners falling behind in their mortgage payments could get government help. 
Not only did that make it very difficult for most people to qualify, but it also gave a strong incentive to households to deliberately fall behind on their mortgages. People asked: "Why should I cut my food budget or give up on my nights out when my neighbor is having all the fun, skipping his mortgage payments and getting rewarded by the government for his imprudent behavior?"

Ultimately, these kinds of government programs are fundamentally flawed and doomed to fail.

The most important lesson of all: Don't underestimate the potential depth, speed and duration of the decline. As the debts are unraveled, the economy comes unglued and the deceptions are uncovered, home prices could continue to plunge much further.

If you are able and willing to sell your properties, do so now. Don't wait.


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## ROE (4 November 2008)

Mofra said:


> Well done, you have a plan that has worked in the past and hopefully works for you again.
> 
> Personally I don't see the point in selling positively geared property, and not a single bear argument yet has touched on anything like a real world scenario, apart from the broad assumption that most property is a "median" value, owned by single income average income earners and almost all have been bought in the last 12 months.




My stock positive gear from day one ..why would I buy negative gear asset? 

I don't buy anything negative gear doesn't matter about future potential
you take a lost for something that may or may not eventuate.

Every year you fall behind, you got to make more money next year to break even.

I like old fashion way, invest if you got money else pay off your mortgage 

People bankrupt or broke not because they have little money but because they have big debt or negative gears asset.


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## Pommiegranite (4 November 2008)

Hey Mofra, didn't you start the 'house prices to *rise for* *years* thread? Is it still around? Instead, you should have called it 'house prices to rise for one more year'




Mofra said:


> Amazing that after 3+ years and 3 seperate threads, the permabears are jumping for joy at a single quarter of negative growth.




Once a RE trend is established, it runs for many quarters. Look to booms/ busts in this country and abroad. There are many current examples. RE prices don't spin on a dime like stock prices.



Mofra said:


> In the meantime, how many properties have become positively geared, noting on this day the RBA are likely to cut rates again? .



 This thread is about capital depreciation ie house price falls. Why buy today and be negatively geared/heading for negative equity, when you can onstead buy in the future for far less and be positively geared and in postive equity?



Mofra said:


> Holding an asset for 20+ years, positively geared, and we're supposed to be worried about a single quarter of negative growth (although many suburbs still appreciated during the quarter)? Okay then...



If you bought years ago, then you might not feel the pinch. However, put yourselves in Mr and Mrs Speculator who bought 1 year ago in Perth and now are in negative equity. With deflation and job losses looming, expect interest rate cuts to be more than offset by decreases in rental income. They will be seriously negativly geared.



Mofra said:


> Well done, you have a plan that has worked in the past and hopefully works for you again.




Investing 101: Past performance is no guarantee to future performance.



Mofra said:


> Personally I don't see the point in selling positively geared property.




Err...I did many months ago...and could now buy back cheaper if i wanted to and be even more postively geared. Did I make a mistake?



Mofra said:


> and not a single bear argument yet has touched on anything like a real world scenario.




As above...straight from the real world.



Mofra said:


> apart from the broad assumption that most property is a "median" value, owned by single income average income earners and almost all have been bought in the last 12 months.




It's all about getting the best returms at a particular moment in time. Property speculators foolishly think that an extra hundred taxable bucks a month in their pockets can offset tens of thousands of unrealised capital losses a year.

It's all in the maths. You can either do it or you can't.


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## Mofra (4 November 2008)

Pommiegranite said:


> Hey Mofra, didn't you start the 'house prices to *rise for* *years* thread? Is it still around? Instead, you should have called it 'house prices to rise for one more year'



Nope wasn't me. Was that thread only one year ago, or was the stagnate thread the 3 year tale? Either way, we have a long way to go before this is proved correct.



Pommiegranite said:


> Once a RE trend is established, it runs for many quarters. Look to booms/ busts in this country and abroad. There are many current examples. RE prices don't spin on a dime like stock prices.






Pommiegranite said:


> Investing 101: Past performance is no guarantee to future performance.



Wait, are you using past performance to predict the likelyhood of a trend following?
Or are you using past performance of the 7x earnings graph?
Which contradiction are you using?



Pommiegranite said:


> This thread is about capital depreciation ie house price falls. Why buy today and be negatively geared/heading for negative equity, when you can onstead buy in the future for far less and be positively geared and in postive equity?



I wouldn't buy today, unless the deal was exceptional. Far more value in equities, just waiting for the smoke to clear.



Pommiegranite said:


> If you bought years ago, then you might not feel the pinch. However, put yourselves in Mr and Mrs Speculator who bought 1 year ago in Perth and now are in negative equity. With deflation and job losses looming*, expect interest rate cuts to be more than offset by decreases in rental income*. They will be seriously negativly geared.



This is where we differ. I don't believe there will be decreases in rental income in areas close to the CBD and with access to infrastructure/public transport. By the way, is this an example of circumstances actually being different for different investors? 
You've grasped the concept, now try explaining it to a few of the permabears here; I'm not sure they understand.



Pommiegranite said:


> Investing 101: Past performance is no guarantee to future performance.



Unless you're a bear apparently 



Pommiegranite said:


> Err...I did many months ago...and could now buy back cheaper if i wanted to and be even more postively geared. Did I make a mistake?



Congratulations. If you're happy with the sale, it is certainly not a mistake. The sleep factor is (arguably) the most important factor in any investment.
(Sorry, couldn't find an appropriate emoticon)



Pommiegranite said:


> It's all about getting the best returms at a particular moment in time. Property speculators foolishly think that an extra hundred taxable bucks a month in their pockets can offset tens of thousands of unrealised capital losses a year.
> 
> It's all in the maths. You can either do it or you can't.



Yep - triggering a huge captial gains event, adding in the acquisition costs on re-entry, the value you place on your time in selling, all part of the maths.


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## Pommiegranite (4 November 2008)

Mofra said:


> Yep - triggering a huge captial gains event, adding in the acquisition costs on re-entry, the value you place on your time in selling, all part of the maths.




This was foremost in my mind (and excel spreadsheet), however I took the view that buying/selling costs can be offset by purchasing far below market value during a property market recession. Just have to be ruthless when the time is right.

ps...good to have decent discussion Moffie.


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## Mofra (4 November 2008)

Pommiegranite said:


> This was foremost in my mind (and excel spreadsheet), however I took the view that buying/selling costs can be offset by purchasing far below market value during a property market recession. *Just have to be ruthless when the time is right.*



Ah pragmatism... the surest way to financial success over the longer term. 
In any event, what is right for one person may not be right for the other. 
The fact that you examined the cost/benefit scenario (I assume that's what the spreadsheet was for) probably puts you ahead of 95% of the pack.



Pommiegranite said:


> ps...good to have decent discussion Moffie.



Yup - amazing what can be discussed when the trolls are away, and people are honest & civil (the occasional joking aside of course )


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## cuttlefish (4 November 2008)

So what's everyone think about rents and vacancy rates in the inner/middle ring of Sydney?   Rents still seem to be rising and supply seems tight - is this going to continue or is everyone going to start living 6 to a room because they've got no jobs?  With little new supply coming in aren't all the home sellers going to have to turn around and compete to rent them back from whoever bought them off them?


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## robots (4 November 2008)

cuttlefish said:


> So what's everyone think about rents and vacancy rates in the inner/middle ring of Sydney?   Rents still seem to be rising and supply seems tight - is this going to continue or is everyone going to start living 6 to a room because they've got no jobs?  *With little new supply coming in aren't all the home sellers going to have to turn around and compete to rent them back from whoever bought them off them?*




hello,

yes, have seen numerous ads on realestate.com of late with that exact proposal in the sale ad,

"rent back for 3-yrs", yummy yummy i say

75 basis pts, CBA cut 58 already

surely we must get 0.3% IR's soon as thats what Japan has, dont we follow the rest of the world?

thankyou
robots


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## generalofthearmy (4 November 2008)

`If you are able and willing to sell your properties, do so now. Don't wait.'

sorry, that's total BS. You don't know what you're on about. You don't trade property like stocks. property is a keeper, even with a downturn. The reason is that it's difficult to catch the upturn, which can come unexpectedly. Property ALWAYS goes up in the long turn. It may be prudent to wait a little before buying, if you are cashed up, but you should bet against a rising phallus of strength.


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## Mofra (4 November 2008)

generalofthearmy said:


> but you should bet against *a rising phallus of strength*.



I have no idea what that really means, but I'm pretty sure that's the title of a movie I once saw that I _wouldn't_ show the kids


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## robots (4 November 2008)

hello,

http://www.theage.com.au/national/murky-statistics-cloud-slump-in-house-prices-20081103-5h0c.html

some more great reading on this fine day in australia,

and Pommie, find a post of mind that says "buy buy buy", you wont

thankyou
robots


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## gfresh (4 November 2008)

Genuine question - what is the lowest they expect *real* mortgage rates to go here? Not RBA.. 

Our UK friends sure are having trouble lowering the rates to the borrowers. http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5076547.ece

US Banks aren't passing on the rate drops to the customer. .. 

So what happens here? I'm thinking 7% fixed may be it, variable may float down a little under 7% for a while, but that will only be so long as the economy is seen as "distressed". 

As a potential borrower, while 5-6% real mortgage rates would be nice, reckon there is snowball chance of it happening.


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## Beej (4 November 2008)

gfresh said:


> Genuine question - what is the lowest they expect *real* mortgage rates to go here? Not RBA..
> 
> Our UK friends sure are having trouble lowering the rates to the borrowers. http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5076547.ece
> 
> ...




After this latest cut, the ACTUAL rate I'm paying (permanent variable rate, not fixed or honeymoon etc) will be just about 7% flat already, maybe even under that (watch this space), assuming all banks drop by about .6% as the CBA has just announced. The highest rate I paid was 8.87% earlier this year. We will see 6.x% by later this year easy I reckon, and lower again by next year.

Cheers,

Beej


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## gfresh (4 November 2008)

Thanks.. So you think we may actually see under 6% by some banks next year? that would be nice. Even I'll admit, I don't know who would be crazy enough to rent when those rates were available... 

The difference would be $150 at most.


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## Pommiegranite (4 November 2008)

gfresh said:


> Thanks.. So you think we may actually see under 6% by some banks next year? that would be nice. *Even I'll admit, I don't know who would be crazy enough to rent when those rates were available... *
> 
> The difference would be $150 at most.




I know who: The people 'crazy' enough to realise that a homeloan is for 25-30 years and that a cut in interest rates doesn't protect you from hikes 2 years down the line.

Hey on that subject, does anyone know whats the fixed rate for 25 years?


----------



## Mofra (4 November 2008)

Another 50 points predicted for December (bottom of article)

http://www.news.com.au/business/money/story/0,25479,24602041-14327,00.html

Would expect the banks to keep some of the most recent 75 point cut following CBA's lead, but no complaints nonetheless.


----------



## Mofra (4 November 2008)

gfresh said:


> Thanks.. So you think we may actually see under 6% by some banks next year? that would be nice. Even I'll admit, I don't know who would be crazy enough to rent when those rates were available...
> 
> The difference would be $150 at most.



I'm renting at under market rates, and don't see the point in renting money unless the gummint is giving me a nice fat tax deduction on the interest.

Just a few simple sums, using market rents as average, will show you that for a median property you are *thousands* of dollars better off a year by buying the property next door, becoming a landlord, and continuing to rent yourself.


----------



## gfresh (4 November 2008)

Pommiegranite said:


> I know who: The people 'crazy' enough to realise that a homeloan is for 25-30 years and that a cut in interest rates doesn't protect you from hikes 2 years down the line.
> 
> Hey on that subject, does anyone know whats the fixed rate for 25 years?




No way I would go variable.. that's why I'm interested to see the lowest fixed rates could actually go  Most of that funding is sourced from o/s, that's why I have my doubts they'll go too much lower. But hey, we'll see.. 

The thing is all those screaming over "high" interest rates 6 months ago no doubt will fail to fix at the best opportunity in maybe 10 years. Ahh.. if only they would fix for 25 years eh.. They're not stupid. 



Mofra said:


> Just a few simple sums, using market rents as average, will show you that for a median property you are *thousands* of dollars better off a year by buying the property next door, becoming a landlord, and continuing to rent yourself.




This is probably what I'll be doing.. but for most PPOR people, who like the idea of living in their own house, they don't see these things.


----------



## robots (4 November 2008)

hello,

oh, did i mention St Kilda up by *14.7%* for last Sept 08 Quarter, 

whats the title of this thread again?

thankyou
robots


----------



## awg (4 November 2008)

Oz still runs a very high current account deficit.

meaning we need to attract foreign funding to support our lifestyle.

As at least 30% of housing funding is sourced OS, they need a reason to do this.

Our currency has flattened very hard, so that means foreign banks will not wish to invest in Oz unless they get a good interest rate.

In Iceland for example interest rates are now 17% +

GMAC and GE have pulled out of new finance in Oz due to poor margins.

I would be surprised if this affect did not start to bite the banks hard, meaning rates may not fall as much as people think they may.

for me personally I prefer relatively stable interest rates, as I have both investment property and cash/term deposits.

Constantly having to re-jig is a pain in the ars#


----------



## robots (4 November 2008)

hello,

g, i have been on variable since starting loans, and will most likely stay that way until end

first up was around 5.5% i think, has moved up in recent years so i pumped some cash in to keep "weekly" payment running at same level, may take cash out may leave in will see what happens

thankyou
robots


----------



## MR. (4 November 2008)

ROE said:


> My stock positive gear from day one ..why would I buy negative gear asset?
> 
> I don't buy anything negative gear doesn't matter about future potential
> you take a lost for something that may or may not eventuate.
> ...




and that just comes down to Greed............

I have never been for negative gearing.  Don't like the risk even if property was at 3-4 times income. Positive geared with a good buffer is another story but not at 7 times annual income.   

Funny how buyers are offering property sellers stupidly low prices at the moment!  I guess some buyers have waited for some time for properties to drop.  The 0.75% drop in interest rates today will not help these (also) "Greedy" bargain hunters.  They'd love to see some tall poppies fall. 
Greed is everywhere, just looking for some level ground.


----------



## Indie (4 November 2008)

awg said:


> Oz still runs a very high current account deficit.
> 
> meaning we need to attract foreign funding to support our lifestyle.
> 
> ...





This is a very salient point. Australia is running up a sizable current account deficit which needs to be funded by foreign capital. Aussie banks need to keep a healthy margin in place to sell their bonds to foreign investors. The RBA can cut the cash rate all it wants, but the banks will be more and more selective about what they pass on as the rate comes down.


----------



## Indie (4 November 2008)

MR. said:


> Funny how buyers are offering property sellers stupidly low prices at the moment!  I guess some buyers have waited for some time for properties to drop.  The 0.75% drop in interest rates today will not help these (also) "Greedy" bargain hunters.  They'd love to see some tall poppies fall.
> Greed is everywhere, just looking for some level ground.





Come on, greedy? This is how the market prices things. Something is only worth what someone else is willing to pay for it. Ask stock holders what those apples taste like atm.

It seems that many property owners have gotten so used to annual price increases that they feel it's their God given right to get more of the same year in, year out. Greedy buggers!


----------



## Reealjrd (4 November 2008)

Hello Friends,

Housing prices are falling this year too. This decade the housing prices are going to come down more rapidly.


----------



## Glen48 (4 November 2008)

Sorry I predicted rates would come down 1% but we only got .75 but next month they will come down another .5% to try and stem the Fire ball but to no avail.
Got another boost by renting as house prices have come down 3.3 % here so my landlord has lost that of the "Investment" scoff, so inflation has to go up a lot before I am loosing.


----------



## Glen48 (4 November 2008)

I see banks are offering 7-8% in an effort to attract money, how much will the banks pass on from the last adjustement?
When will rents start to go down as we get flooded with unsold Houses?


----------



## robots (5 November 2008)

Glen48 said:


> Sorry I predicted rates would come down 1% but we only got .75 but next month they will come down another .5% to try and stem the Fire ball but to no avail.
> *Got another boost by renting as house prices have come down 3.3 % here so my landlord has lost that of the "Investment" scoff, so inflation has to go up a lot before I am loosing.*




hello,

landlord should get down to st Kilda glen48, pass him on a note since you so interested in his/her life

i'm not sure if I have mentioned it, *St Kilda up +14.7%* for Sept 08 Quarter results, the money i rent just got cheaper too, and a new letter typed up for rent increase to the tenant

great being on month by month lease with tenant as I can maximise the return, would be silly as a landlord to go for a yearly Glen48

utopia, 

did someone say St Kilda?,

enjoy the day, spend up for the country

thankyou
robots


----------



## Mofra (5 November 2008)

Glen48 said:


> When will rents start to go down as we get flooded with unsold Houses?



In a mining town as the commodities boom ends? Pretty soon.
In a capital city, 5kms from the CBD with access to mutiple forms of public transport? Wouldn't want to bet on rents falling.


----------



## MR. (5 November 2008)

Indie said:


> Come on, greedy? This is how the market prices things. Something is only worth what someone else is willing to pay for it. Ask stock holders what those apples taste like atm.
> 
> It seems that many property owners have gotten so used to annual price increases that they feel it's their God given right to get more of the same year in, year out. Greedy buggers!




There is greed and greed.... What I mean is that property owners would be happy with growth of 5-10% year on year, but the buyers (at the moment) are offering -40% on valuations of our property of a month ago.  A -10% drop  now would be considered perhaps fair but not -40% and its not just one or two offers. News in Melbourne claimed yesterday the drop in the last month has been 3-5% in property prices.  

Guess I should have owned in St Kilda.  I heard the prices there may have increased.... hey "bots".  (Its a new type of bot trading!)


----------



## gfresh (5 November 2008)

MR. said:


> but the buyers (at the moment) are offering -40% on valuations of our property of a month ago.  A -10% drop  now would be considered perhaps fair but not -40% and its not just one or two offers.




Ouch. What end of the market? Inner or outer suburbs? Thing is now all the buyers expect the slump, and believe the Steve Keen -40% type figures. Seems more than anything sentiment in the market has changed to start believing the D&G scenarios...whether they are actuality or not.

Then again..



> Mr Swan's projections, contained in the Government's mid-term economic forecasts, include an expected rise of the jobless rate to *5% by June next year and to 5.75% one year later. *That compares with a jobless rate of 4.4% expected when October data is released tomorrow.




I'd be inclined to believe in this environment the Government is still being optimistic there, so if those are the blue sky projections..


----------



## Pommiegranite (5 November 2008)

gfresh said:


> Ouch. What end of the market? Inner or outer suburbs? Thing is now all the buyers expect the slump, and believe the Steve Keen -40% type figures.* Seems more than anything sentiment in the market has changed to start believing the D&G scenarios*...*whether they are actuality or not.*
> 
> Then again..
> 
> ...




Spot on. When has any the RE market NOT been about sentiment. Let's face it, house prices have never been solely about fundamentals. Future capital growth has been overfactored into current prices due to sentiment. Now for the unwinding until sentiment changes again.

I'm just waiting for it to shoot to oversold before I buy in.


----------



## Beej (5 November 2008)

Pommiegranite said:


> Spot on. When has any the RE market NOT been about sentiment. Let's face it, house prices have never been solely about fundamentals. Future capital growth has been overfactored into current prices due to sentiment. Now for the unwinding until sentiment changes again.
> 
> I'm just waiting for it to shoot to oversold before I buy in.




That's a very sensible approach - but just be careful to not over-estimate the amount of correction that may or may not occur, and end up missing out on an opportunity when it presents itself. Remember, it can take months just to find the house you are prepared to buy/live in long term, and a lot can happen in the market place in between, so you have to watch things very closely - actually "on the ground", not just from the newspaper articles, abs stats and web blogs etc 

Cheers,

Beej


----------



## Pommiegranite (5 November 2008)

Beej said:


> That's a very sensible approach - but just be careful to not over-estimate the amount of correction that may or may not occur, and end up missing out on an opportunity when it presents itself. Remember, it can take months just to find the house you are prepared to buy/live in long term, and a lot can happen in the market place in between, so you have to watch things very closely - actually "on the ground", not just from the newspaper articles, abs stats and web blogs etc
> 
> Cheers,
> 
> Beej




Thanks. I have always kept an eye on the market. I do agree that anecdotal evidence can be very useful. Hopefully though, many dream houses will be coming onto the market, so I will have a choice.

There is a general consensus that we are in for a raft of bad economic data over the next 12-18 months. This should counteract any positivity taken from interest rate reductions.


----------



## sinner (5 November 2008)

Meanwhile, Bureau of Statistics data showed dwelling approvals fell by 7.2pct to 11,167 in September - the weakest reading in seven years. Approvals in NSW slumped by 26.2pct in September to 43 year lows. “The release of the latest reading on building approvals highlights the importance of the increase in the first home owner’s grant and the substantial interest rate cuts. Investors and homebuyers have been spooked by the sharp falls in house prices overseas and the global economic slowdown. The flow of negative news has been long and exhaustive and home buyers are happier staying on the sidelines,” CommSec Equities Economist Savanth Sebastian.


----------



## robots (5 November 2008)

sinner said:


> Meanwhile, Bureau of Statistics data showed dwelling approvals fell by 7.2pct to 11,167 in September - the weakest reading in seven years. Approvals in NSW slumped by 26.2pct in September to 43 year lows. “The release of the latest reading on building approvals highlights the importance of the increase in the first home owner’s grant and the substantial interest rate cuts. Investors and homebuyers have been spooked by the sharp falls in house prices overseas and the global economic slowdown. The flow of negative news has been long and exhaustive and home buyers are happier staying on the sidelines,” CommSec Equities Economist Savanth Sebastian.




hello,

yes great news Sinner, its a real catch twenty2 out there at the moment

the private "developers" are keeping things ticking over, now whether thats oversupply or undersupply time will tell,

thankyou very much
robots


----------



## Reealjrd (5 November 2008)

Hello Friends,

There is huge rate cut in interest rates by the banks for home loans. And the real state sector is snipping down. This snipping down has created stress on the big construction companies and builders. Persons having big land and houses are now i\under pressure. Now the time is coming when every low class person can afford a house through banks.


----------



## robots (5 November 2008)

hello,

yes we still here in the lucky country my friend, the land of opportunity where you dont have to *pack heat* just to go to the milkbar/7-eleven,

thankyou
robots


----------



## awg (5 November 2008)

rents dont usually fall much, even when lots of people are trying to sell.

it is much more difficult to sell a place that has tenants, cause it looks very messy.

tenants dont want to live in a house that is for sale, and hate prospective buyers traipsing thru...pretty obvious

although a nice quick sale of a long term tenanted house can be good for everyone, it rarely works that way, in my experience.

mostly sold vacant..i know one gut trying to sell has had place vacant 18 months! (crazy)

My experience of people who have done very well from RE, is that they have non-anglo backgrounds and offer very low prices...they sniff out desperados.

fairly heartbreaking for the vendor, but if you NEED to sell, then you must take the best available offer.

The RE always tries to fluff it up, but the really hard-nosed person is not at all swayed by sentiment or sales tactics..have dealt with Greek and Chinese people...they know the meaning of hard negotiation tactics.

If I was an investor at the moment, I would be making offers 30% below asking


----------



## Glen48 (5 November 2008)

Patrick.net housing crash news | bubble blog
Forrest Gump Explains Mortgage Backed Securities

Mortgage Backed Securities are like boxes of chocolates. 

Criminals on Wall Street stole a few chocolates from the boxes and replaced them
with turds. 

Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade
chocolates.  These boxes were then sold all over the world to investors.
Eventually somebody bites into a turd and discovers the crime.  Suddenly nobody
trusts American chocolates anymore worldwide. 

Hank Paulson now wants the American taxpayers to buy up and hold all these
boxes of turd-infested chocolates for $700 billion dollars until the market
for turds returns to normal. 

Meanwhile, Hank's buddies, the Wall Street criminals who stole all the good
chocolates, are not being investigated, arrested, or indicted. 

Mama always said: "Sniff the chocolates first, Forrest".


----------



## cuttlefish (5 November 2008)

Glen48 said:
			
		

> These boxes were then sold all over the world to investors. Eventually somebody bites into a turd and discovers the crime.





The Coogee Bay Hotel must have bought some to use in their desserts.


----------



## ROE (5 November 2008)

gfresh said:


> No way I would go variable.. that's why I'm interested to see the lowest fixed rates could actually go  Most of that funding is sourced from o/s, that's why I have my doubts they'll go too much lower. But hey, we'll see..
> 
> The thing is all those screaming over "high" interest rates 6 months ago no doubt will fail to fix at the best opportunity in maybe 10 years. Ahh.. if only they would fix for 25 years eh.. They're not stupid.
> 
> ...




You cant get fix loan in Australia that last 25 years, because we structure them differently..

In America when they say 25-30 years fix loan, that exactly what it is

you stick your neck in for exact 25-30 years and you can not pay off the loan earlier than 25-30 years period.

Here I borrow the loan for 25 years variable but I usually knock it of between 7-10 years.

I think in Australia you cant fix it for more than 5 years.

Crazy to fix anyway because history show variable rates ALWAYS win over fix rate over the term of the loan so have it on variable knock it off in 7-10 years due to the fact rates goes up on the escalator and down with the lift


----------



## singlefished (5 November 2008)

ROE said:


> I think in Australia you cant fix it for more than 5 years.




Just had a quick look at WBC & CBA - WBC can fix for 10 years, CBA can fix for 15....

I don't see the point in fixing for so long - get in and pay it off ASAP as per your advice. Keep up the payments when interest rates are on the way down and you'll be taking years off your mortgage.

I can't believe the media hasn't jumped all over this - keep up your repayments as if the interest rates cuts didn't happen and get out of jail that much faster... all they keep on about is the "savings" and how the pressure will apparently be off working families and home buyers. Now's a great time to keep the pressure on and pump as much in as you can afford into the mortgage and be done with it instead of frittering away the monthly savings on frothy coffee in some cafe down St Kilda way....


----------



## ROE (5 November 2008)

singlefished said:


> Just had a quick look at WBC & CBA - WBC can fix for 10 years, CBA can fix for 15....
> 
> I don't see the point in fixing for so long - get in and pay it off ASAP as per your advice. Keep up the payments when interest rates are on the way down and you'll be taking years off your mortgage.
> 
> I can't believe the media hasn't jumped all over this - keep up your repayments as if the interest rates cuts didn't happen and get out of jail that much faster... all they keep on about is the "savings" and how the pressure will apparently be off working families and home buyers. Now's a great time to keep the pressure on and pump as much in as you can afford into the mortgage and be done with it instead of frittering away the monthly savings on frothy coffee in some cafe down St Kilda way....




Nothing wrong with frothy coffee, I have them every day and love it
it just you dont have it  with other things: like a new car, an LCD TV, a 4 beddie house where 2 beddies stores junks.

give and take just dont take and take then you be ok


----------



## gfresh (5 November 2008)

I've always assumed the "you're better off under variable" applies if you jump in at any random point in time with fixed, you may well be worse off. 

However, the average RBA cash rate from 1990 is 6.6%. Add 1% or so for bank mortgage rates, and we have avg ~7.6%. The period where the cash rate has been under 5% is a handful of months at best - 1993, 1998, and 2001/02. If somebody can fix under that I fail to see how they won't be better off - unless I've missed some huge advantage to variable???

Personally I like to keep as many of my costs fixed in my weekly budget and know exactly how much I have left.


----------



## singlefished (5 November 2008)

gfresh said:


> Personally I like to keep as many of my costs fixed in my weekly budget and know exactly how much I have left.




True enough - but as you say, these times are few and far between when fixed rates are that compelling... and you also may not be in a position to fix within this short few month time frame (eg: already locked in, stuck in a honeymoon period, don't want to fix, etc...)

You could still effectively "fix" your repayments to suit monthly budget by paying say $200 over the current minimum variable repayments (what you've just saved in monthly repayments over the last few months for example) and absorbing the costs of future rate increases within this $200 buffer...

_(Note to self - granny dearest already knows how to suck eggs - just throwing up some thoughts and stating the obvious  )_

Anybody think the cash rate will be below 5% before the June home buyer grant "bonus" expires? If these particular moons did align then we could see a fair bit of activity during the second quater for those so inclined - regardless whether prices are still heading south or not.


----------



## arco (6 November 2008)

.
*Migrants next target as slowdown bites* 

The fed govt will consider cutting its migrant intake as it prepares for a spike in unemployment. Immigration Minister Chris Evans said tougher global economic conditions could lead to a smaller migrant intake next year, a move that could have serious implications for sectors short of skilled workers, such as resources, housing and hospitality. The HIA stressed the need to ensure that the most needed skilled migrants arrived in Australia. During hearings Senator Evens flagged the creation of state migration plans as part of a broader effort to ensure the migration system was more targeted.

The Australian Financial Review, Page 3, 22 Oct 2008

*Australian economy set to slow* 
The economy is set for a prolonged downturn as business investment slows on faltering Chinese growth, compounding the effect of weak household spending. Access Economics warns that although Australia is likely to avoid a recession, growth is likely to slow to just 2.1% this financial year.

The Australian Financial Review, Page 10, 24 October 2008


----------



## Aussiejeff (6 November 2008)

cuttlefish said:


> The Coogee Bay Hotel must have bought some to use in their desserts.




"Waiter! There's some poop in my scoop!!"


----------



## ROE (6 November 2008)

gfresh said:


> I've always assumed the "you're better off under variable" applies if you jump in at any random point in time with fixed, you may well be worse off.
> 
> However, the average RBA cash rate from 1990 is 6.6%. Add 1% or so for bank mortgage rates, and we have avg ~7.6%. The period where the cash rate has been under 5% is a handful of months at best - 1993, 1998, and 2001/02. If somebody can fix under that I fail to see how they won't be better off - unless I've missed some huge advantage to variable???
> 
> Personally I like to keep as many of my costs fixed in my weekly budget and know exactly how much I have left.




yeah depend on your situation I guess but for me variables all the way as I can pay off stuff faster .... I usually double my repayment.. I never borrow to a point where I just scratch the repayment... at least 50% buffer for me., then I'm all in to that point and increase them if I can month after month 

I called it accelerate repayment, compound interest in reverse


----------



## robots (6 November 2008)

hello,

good evening, what another great day

ABC gone gone  gone, shares outperform direct property yeah right, another donkey

one of these in the portfolio and its no better than cash in the bank

the certificates just keep piling up for people in the draw most likely

thankyou
robots


----------



## numbercruncher (6 November 2008)

lol Robi .....

Im thinkin that Eddy has been bloke will lose his house too ....


----------



## robots (6 November 2008)

hello,

investors should of got a place in sunny St Kilda numbercuncher, I heard 14.7% for 3mths, what a return

might even send S.Keen a note about that performance

safe a houses, 

plenty of cafe lattes down here, i go to an Asian Bakery on chapel st for the 3x hit each day, Atomica brand, the most consistent and reliable one on the whole street

thankyou
robots


----------



## MrBurns (6 November 2008)

robots said:


> hello,
> 
> good evening, what another great day
> 
> ...




Thousands of ABC centers to be sold, families lose one breadwinner as they have to stay home and look after the kids, lose their houses, real estate prices CRASH across the whole of Australia.

Great day for cash in the bank.


----------



## nunthewiser (6 November 2008)

nothing crashing in the lovely huon valley tasmania....... houses hitting the market getting sold in days / weeks if they valued right , quite inspiring actually . must be the value for money factor and currently tasmania unemployment levels going down instead of rising like the rest of oz .....

mind you it is a lil bit backwards here on some things so i dare say we just will keep going up until we overpriced in line with the rest of the nation


----------



## robots (6 November 2008)

hello,

wow, what a crash +14.7% for 3mths, 

or is that another prediction, just sent email to S.Keen cant wait for reply although I dont think I will get one, 

thankyou
robots


----------



## MrBurns (6 November 2008)

robots said:


> hello,
> 
> wow, what a crash +14.7% for 3mths,
> 
> ...




Yes but when the prostitutes move out when businesss goes off the prices will plumet, a downward spiral like nothing else witnessed on the face of the earth. -50% for starters.

Thank goodness for money in the bank.


----------



## sammy84 (6 November 2008)

A lot of this thread is a major ramp down. It seems to be the same contributors consistently. 
The lesson has been learnt from America and we will not let our market plummet like theirs. There is still a lot of room to lower i/r further, and a significant room of spending before the budget is in deficit. I'm not advocating that this is right is the right way to go about it, just trying to even up the bias in this thread.


----------



## MrBurns (6 November 2008)

sammy84 said:


> A lot of this thread is a major ramp down. It seems to be the same contributors consistently.
> The lesson has been learnt from America and we will not let our market plummet like theirs. There is still a lot of room to lower i/r further, and a significant room of spending before the budget is in deficit. I'm not advocating that this is right is the right way to go about it, just trying to even up the bias in this thread.




There's a lot of positive stuff in here too, like robots, so it's a bit of fun and a bit of star gazing, everyone thinks they're right, almost no one is.

There is always a residential property crash after a share collapse with a lag time of 12 months or so but now we have increasing population pressures on the plus side but high unemplyment looming on the negative side.

One things for sure the crunch hasn't hit main street yet and when it does watch for retail figures to decline and the residential housing market will go for sure, commercial property is already a wasteland.

Lower interest rates wont change anything, may help some existing owners to hang in there.


----------



## numbercruncher (6 November 2008)

> Blue chip dip
> Median price (six months to September)      Change
> Melbourne
> Toorak              $1.7 million                                                        -24%
> ...




http://http://www.news.com.au/business/money/story/0,25197,24610167-14327,00.html


Toorak down 24pc for the half - not bad, youll get all the hillbillies movin in at that rate ! haha .... Seems Toorak might be filled with over leveraged gamblers huh ?


----------



## robots (6 November 2008)

hello,

yes Number, look at Melton 207k median what a price, 35km from Melbourne and a house easy affordable, 

what a day, the path to gold just out my front door, sure thats right +14.7% for St Kilda? 

thankyou
robots


----------



## Glen48 (6 November 2008)

How Adolf got caught:


http://www.youtube.com/watch?v=bNmcf4Y3lGM


----------



## So_Cynical (6 November 2008)

Glen48 said:


> How Adolf got caught:
> 
> 
> http://www.youtube.com/watch?v=bNmcf4Y3lGM




Thanks Glen...very funny, lets hope robots gets a laugh too.


----------



## awg (6 November 2008)

robots said:


> hello,
> 
> wow, what a crash +14.7% for 3mths,
> 
> ...




14.7% per quarter = 58.8%pa 

could be a St Kilda bubble?


----------



## robots (6 November 2008)

hello,

no just a quality clean neighbourhood, affordable to the masses, great services and infrastructure

+14.7% for Sept08 quarter, who knows what will happen next quarter but you can guarantee it wont be a donkey like ABC, ALLco, MFS etc

if only the No. 1 colonel was still here, but hey, I will have a warm beer for you anyway

thankyou
robots


----------



## awg (6 November 2008)

congrats on your good selection

as u r a building worker, you can probably add value, over time


----------



## Naked shorts (6 November 2008)

i was talking to a brisbane property investor the other day. I told him to get his money out... Yet he remined confident that the decline in brisbane property prices is just a small down trend before it starts up trending and reaching new highs. (medium term timeframe).

He reminded me that there is 2000 new people to brisbane every week, and only 500 new properties come on the market. 

since im not a property investors, i dont know if he is insane or not. Any other brisbane investors take the same stance as him?


----------



## wallyt99 (6 November 2008)

I was thinking prices were going down and down and down.....but now I think that the burst has been averted.


The markets seem to be slowly recovering and interest rates are going down. Unemployment seems steady.





Could we have missed the perfect buying opportunity already?


----------



## singlefished (6 November 2008)

*Pressure on banks to become landlords*
_Thursday November 6, 2008, 8:10 pm_

http://au.biz.yahoo.com/081106/31/2192t.html

Thought I'd pop this up before it drops off the bottom of Yahoo Finance News page and everybody misses it. Interesting...


----------



## Mofra (6 November 2008)

numbercruncher said:


> Toorak down 24pc for the half - not bad, youll get all the hillbillies movin in at that rate ! haha .... Seems Toorak might be filled with over leveraged gamblers huh ?



Only 14 sales, not too much of a sample unfortunately. Those figures are about as reliable as the figures for St Kilda :


----------



## Glen48 (6 November 2008)

That old Furphy about people moving into QLD is not correct what is happening is people move BUT no one works out where they came from so some one moving out of one city is not counted but once they arrive in another city they are counted.
Bit like House prices double every 7 yrs.
Or Rents will go up but as things get worse they come down. 
Good for a laugh but sad for the victims of RE fraud.


----------



## robots (7 November 2008)

Glen48 said:


> That old Furphy about people moving into QLD is not correct what is happening is people move BUT no one works out where they came from so some one moving out of one city is not counted but once they arrive in another city they are counted.
> Bit like House prices double every 7 yrs.
> Or Rents will go up but as things get worse they come down.
> *Good for a laugh but sad for the victims of RE fraud.*




hello,

good morning, what a day on the cards

i think you getting RE confused with shares Glen48, keep up the posts fantastic writings

you received a letter from the landlord yet reducing the rent?

ah, paradise here in St Kilda up 14.7% for Sept 08 quarter and all that just for wacking the key in the door and enjoying life,

paradise, have a great day

thankyou
robots


----------



## Warren Buffet II (7 November 2008)

robots said:


> hello,
> 
> good morning, what a day on the cards
> 
> ...





I thought this was a serious forum where informed people discuss about shares and property.

But this guy is a clown, he just keep speculating and blafing without an end.

Moderators please keep up your game and exclude this type boring repetitive crap.

WBII


----------



## MrBurns (7 November 2008)

Warren Buffet II said:


> I thought this was a serious forum where informed people discuss about shares and property.
> 
> But this guy is a clown, he just keep speculating and blafing without an end.
> 
> ...




If they did that the place would be empty.

Everyone knows St Kilda will defy the odds world wide and spiral upwards despite everything else going down, why just this morning I heard the British PM saying in an interview that if only Britain could follow the St Kilda model all would be well with their housing market, they figure if they can fill all the houses with helium that might help keep things up, but Gordon Brown was desperately trying to contact robots for the "secret" to defying gravity in a property crash.


----------



## CamKawa (7 November 2008)

Warren Buffet II said:


> I thought this was a serious forum where informed people discuss about shares and property.
> 
> But this guy is a clown, he just keep speculating and blafing without an end.
> 
> ...



He has been discussed a few times before. I wouldn't hold your breath for the mods to suspend/delete his account. They do moderate some of his *really* ridiculous posts though. Maybe do what I have done and add him to your ignore list in the User CP.


----------



## JackC (7 November 2008)

MrBurns said:


> If they did that the place would be empty.
> 
> Everyone knows St Kilda will defy the odds world wide and spiral upwards despite everything else going down, why just this morning I heard the British PM saying in an interview that if only Britain could follow the St Kilda model all would be well with their housing market, they figure if they can fill all the houses with helium that might help keep things up, but Gordon Brown was desperately trying to contact robots for the "secret" to defying gravity in a property crash.





Priceless


----------



## Steve Austin (7 November 2008)

Warren Buffet II said:


> I thought this was a serious forum where informed people discuss about shares and property.
> 
> But this guy is a clown, he just keep speculating and blafing without an end.
> 
> ...




Couldnt agree more. This thread is becoming a disgrace to the forum.  And there is even a thread about spam elsewhere - do the mods even know what spam is? 

They must keep him here because the site gets paid or rated by clicks and posts no matter how retarded but its really bringing the place down.  And it keeps lurkers land new people ike me away.  

And st kilda is not going up. The miniscule 14 properties sold last quarter just happened to be worth more than those the previos quarter.  St kilda is a hole and will be worth hole money one the debt giddyness wears off.


----------



## nunthewiser (7 November 2008)

Personally enjoys robots posts , always polite , always courteous , no abuse 

hey if ST kilda flyin good luck to him , i think a few that like to abuse robots just a lil upset that they cant get a bite outta him 

i do enjoy his one eyed views and reckon it provides a balanced view against those that like to slag of property investment on a daily basis too


pps , mr burns , your post was awesome


----------



## cuttlefish (7 November 2008)

Up until recently Robots lived on balmoral slopes didn't he? Bit of a move down to St Kilda there - things getting a bit tough? 


On a more serious note, how have the bread and butter inner suburbs in places like london or new york, where there is nearly always high accomodation demand and limited supply, faired in the overall property slump in the UK and USA?  How much have prices come down, what has happened to rents etc.

According to an article I read yesterday NSW housing approvals have slumped to levels not seen since WWII.  This means little new supply in a state that typically scores a fair whack of the immigration intake - especially in Sydney.  People have to live somewhere - what effect will this have on rentals - particulary combined with a flood of people selling and turning around to rent.

Also anyone got a view on what effect a weaker aussie dollar has on property prices, if any?


----------



## nunthewiser (7 November 2008)

cuttlefish said:


> Also anyone got a view on what effect a weaker aussie dollar has on property prices, if any?





makes it a darn sight more attractive to overseas buyers


----------



## gfresh (7 November 2008)

If they're not flat broke and out of a job... 

Initially I found robots annoying, but now I find his rantings somewhat amusing, at least he is steadfast  There does need to be some counter-arguments to all the d&g.. 

Nice and sunny on the GC and Brisbane, hard to be too depressed about the economy in a place such as this  People in general are still positive in the sunshine state.


----------



## MrBurns (7 November 2008)

gfresh said:


> If they're not flat broke and out of a job...
> 
> Initially I found robots annoying, but now I find his rantings somewhat amusing, at least he is steadfast  There does need to be some counter-arguments to all the d&g..
> 
> Nice and sunny on the GC and Brisbane, hard to be too depressed about the economy in a place such as this  People in general are still positive in the sunshine state.





Yeah it's amazing what a bit of sunshine can do to your mood, it's dark here in Melbourne, just effects your mood. 

I think robots is actually in Qld, he's always so bright and St Kilda is depressing, last time I was there many many years ago.

There must  be a ray of sunshine that actually shines specifically on St Kilda and keeps the property values up, whoops I see storm clouds watch it robots.


----------



## Pommiegranite (7 November 2008)

cuttlefish said:


> Up until recently Robots lived on balmoral slopes didn't he? Bit of a move down to St Kilda there - things getting a bit tough?
> 
> 
> On a more serious note, how have the bread and butter inner suburbs in places like london or new york, where there is nearly always high accomodation demand and limited supply, faired in the overall property slump in the UK and USA? How much have prices come down, what has happened to rents etc.
> ...




Cuttle,

The only thing that was increasing prices in the RE market was positive sentiment.

Now we are in a viscious cycle of bad economic data leading to doom and gloom in the public and businesses, which in turn leads to more bad economic data. This cycle will continue for at least a couple of years.

So you can forget, currencies, interest rates etc etc. Joe Public feeds on fear. Its best not to fight it and try picking a bottom. 

Meanwhile....over in St Kilda, hookers are now offering 2 for the price of 1.


----------



## gfresh (7 November 2008)

Hookers are never out of work in Grey Street, guess that is why the values are holding up 

Robots will have fun when he pops in at his usual time


----------



## cuttlefish (7 November 2008)

Pommiegranite said:


> Cuttle,
> 
> The only thing that was increasing prices in the RE market was positive sentiment.
> 
> ...




Sure, I'm just trying to get a balanced view on the amount prices could fall in these areas where there is typically high demand for accomodation and limited supply, and how much, if any, this might be counterbalanced by rental increases.


----------



## Temjin (7 November 2008)

It's funny that how his standard post reply template,

"Hello

......
....

Thank you"

have recently become more and more imitated by those who are looking to make sarcastic comments. It certainly does create a kind of mini-cultural revolution on this forum, and not necessary a bad thing either.  

Regardless, I do give him the credit for keeping calm and not resort to abusive comments even after the gigantic amount of s--t we are giving him. Most would have given up already.

And sorry for the off-topic cos what I want to say in this thread has already been repeated a zillion times already. heh


----------



## Pommiegranite (7 November 2008)

cuttlefish said:


> Sure, I'm just trying to get a balanced view on the amount prices could fall in these areas where there is typically high demand for accomodation and limited supply, and how much, if any, this might be counterbalanced by rental increases.




House prices will fall 20-30% over the next 2-3 years. 

My view is that rents will now stay stagnant for some time. There will be less pressure on landlords to increase rents due to falling costs. However, there is also a strong possibilty that we may even see some falls in rents depending on the unemployment situation, and net immigration falling. 

Any increase in yields are more than offset by capital losses. Time in the market? NO. Timing the market is far more important in times such as these.

Home ownership will fall. The fear factor is growing so much that people would rather take a loss of a few hundred bucks a year renting than risking massive capital losses and high interest rates a couple of years down the track. 

People are quickly realising that China is not the Goose and Australia is certainly not a golden egg. It will take years for confidence to be rebuilt. 

Until then....tick....tick...tick


----------



## Glen48 (7 November 2008)

MR. P.G.
My View is exactly the same as your view.


----------



## nunthewiser (7 November 2008)

Pommiegranite said:


> The fear factor is growing so much that people would rather take a loss of a few hundred bucks a year renting




LOL where are u renting ? ....... even in the boondocks of tassy they still paying $200/week = $10,400/year

let alone what they paying me in geraldton , currently $300/week 

bit more than a few hundred bucks a year to rent a place these days


----------



## robots (7 November 2008)

hello,

hey hey brothers, fantastic day here in Melbourne with plenty of rain coming through, 

great opinion Pommie, who knows what will happen I certainly dont but I am in for the long haul, 

the thing is we all still friends, through thick and thin, in the bunkers together

thankyou
robots


----------



## Pommiegranite (7 November 2008)

nunthewiser said:


> LOL where are u renting ? ....... even in the boondocks of tassy they still paying $200/week = $10,400/year
> 
> let alone what they paying me in geraldton , currently $300/week
> 
> bit more than a few hundred bucks a year to rent a place these days




LOL....reread my post. No one else seems to questioning it.


----------



## Underpants Gnome (7 November 2008)

Pommiegranite said:


> House prices will fall 20-30% over the next 2-3 years.
> 
> My view is that rents will now stay stagnant for some time. There will be less pressure on landlords to increase rents due to falling costs. However, there is also a strong possibilty that we may even see some falls in rents depending on the unemployment situation, and net immigration falling.




My experience would indicate otherwise. I'm looking for a new place to rent in Brisbane and prices seem to have gone through the roof. The place I'm in now is increasing from $280/w to $310/w and the landlord has absolutely refused to negotiate, saying that it's in line with the current market.

I've been looking for a month now and $310/w is starting to look really good! This is for a 2br apartment in Toowong. Most places I've inspected have been 1br for $350+, both in the inner west as well as New Farm/Valley/Teneriffe.

I've talked to other people who's rent is increasing by much more - some by up to $80 or $90 a week!

This is anecdotal of course but I can't see anything to suggest rents will go down anytime soon. Happy to be proven wrong though


----------



## nunthewiser (7 November 2008)

Pommiegranite said:


> LOL....reread my post. No one else seems to questioning it.




i did hence my quesrtion on where u living ? cupla hundred bucks a year in rent sounds great


----------



## cuttlefish (7 November 2008)

Whats Pommie's saying is that people will for example pay $700 a week rent in a place that they could be paying off the full loan for at $500 a week. 

 i.e. investors will have positive geared property from the outset because sentiment is so bad due to falling prices and low confidence that people would prefer to pay $200 a week more to rent vs buying, rather than risk taking a big loan for something that will fall in value.

I think that the scenario is likely but it usually comes about through both a combination of falling prices, fallilng interest rates and rising rents all working together - its not solely caused by the price falls alone.    The balance varies depending on location.


----------



## nunthewiser (7 November 2008)

cuttlefish said:


> Whats Pommie's saying is that people will for example pay $700 a week rent in a place that they could be paying off the full loan for at $500 a week.
> 
> i.e. investors will have positive geared property from the outset because sentiment is so bad due to falling prices and low confidence that people would prefer to pay $200 a week more to rent vs buying, rather than risk taking a big loan for something that will fall in value.
> 
> I think that the scenario is likely but it usually comes about through both a combination of falling prices, fallilng interest rates and rising rents all working together - its not solely caused by the price falls alone.    The balance varies depending on location.




thanks cuttlefish


----------



## generalofthearmy (7 November 2008)

JackC said:


> Priceless




Actually, I think it's more a philosophy on life. Everytime I freak out about my stocks being -70% I just think `STOP! St Kilda is actually up 14.5% for the quater nothing to fear, I'll put my money in the St Kilda bubble! Yay'.

Q: Mummy! Where do babies come from? A: `Well, St Kilda is up 14% darling, does that explain things?'

Makes good pub conversation too. Keeps the ladies entertained for hours. Just the other day I had this girl give me the look after only several minutes of expounding upon the virtues of `St Kilda up 14%'. She started tossing her hair and making all the moves. After that evening's horizontal entertainment I resumed my discourse, and promised to set her up with Robots, the founder of this profound philosophy. It can really change your life.


----------



## gfresh (7 November 2008)

Underpants Gnome said:


> My experience would indicate otherwise. I'm looking for a new place to rent in Brisbane and prices seem to have gone through the roof. The place I'm in now is increasing from $280/w to $310/w and the landlord has absolutely refused to negotiate, saying that it's in line with the current market.




Yeah, low $300's seems to be the going rate in inner Brisbane for something like that, well same down here too. You could move though and shove it up their ****, what's a few km out?? inner city in any city in Oz is exxy.. people in Bris have just had it easy for a long time. 

I think people like to read the papers and go "oh goodie, it says in the Courier Mail there is a rental  crisis! let's jack up the rent by 10%". Of course though, people just have to pay the price, renters don't have a say unless they have the upper hand. Again, one where sentiment rules. 

You can buy in Toowong for low 300's.. That's why I'm starting to think inner city will hold up fine in that bracket, but hey, who knows in 6 months time, we'll be in recession then  It'll sort the indebted and comfortable quite quickly. 

To be honest, I haven't experienced too much pressure on the coast. They wanted to up my last place by 4.5% (inflation, woopdee). Moved a month or so ago, looked at two places, got one right away.. few bucks more, but take out petrol saved and it worked out about even. Then again, I'll move 10's of km away if the distance/price equation is compelling enough, I don't fall in love with suburbs, but I guess that's not the norm these days.


----------



## chops_a_must (7 November 2008)

Underpants Gnome said:


> The place I'm in now is increasing from $280/w to $310/w and the landlord has absolutely refused to negotiate, saying that it's in line with the current market.



hello,

have you tried stealing his underpants?

after all, we're here to help

thankyou,
chopbots

p.s. - cool username. *thumbs up*


----------



## awg (7 November 2008)

gfresh said:


> Hookers are never out of work in Grey Street, guess that is why the values are holding up
> 
> Robots will have fun when he pops in at his usual time





maybe thats why St Kilda is up 14% 

good cheap place to run non-approved brothels

isnt that supposed to be a counter recesionary industry


----------



## robots (7 November 2008)

hello,

just a reminder, St Kilda up 14.7% for Sept 08

whats the title of the thread?, the contributions have been great today and I hope everyone has a smile on their face

keep the goodwill going strong brothers, spend up tomorrow

get that new pair of shoes, plasma, bag of lollies, slab of ruskies whatever gives you that tingly feeling

thankyou
robots


----------



## numbercruncher (7 November 2008)

Did we have some sort of official article showing St Kilda up 14.pc in sept or ?

how many sales ?


thankyou


----------



## robots (7 November 2008)

hello,

just keep in mind Number, people here are celebrating the negative results of this document

g man posted it earlier, probably pg80 or so

so its only fair that all figures are considered factual,

actually same document that has Toorak down +20% and Melton up 6%


thankyou
robots


----------



## Warren Buffet II (8 November 2008)

robots said:


> hello,
> 
> just keep in mind Number, people here are celebrating the negative results of this document
> 
> ...




News!!! News !!! St. Kilda down 50% in 2008, check the latest RE report. Melbourne council is receiving property for a fee from owners which properties are now worth 1/10 of their mortgage. Also Commonwealth just set up a new real estate office to put all their foreclosure properties for sale or lease. Leasing a 5 bedroom with 4 baths for $200 a month. This is real check with robots the latest CBA report page 102.

Australia down 40% in 2009 check the previous report from HGF page 52.

What a piece of crap this thread, no fundamentals and this guy robots just keep posting crap and crap and the worst thing is that is ALL FALSE. I did not know confine psychiatric hospital have internet this days.

Keep up your game mods and make this a worth forum.

WBII


----------



## nunthewiser (8 November 2008)

Warren Buffet II said:


> News!!! News !!! St. Kilda down 50% in 2008, check the latest RE report. Melbourne council is receiving property for a fee from owners which properties are now worth 1/10 of their mortgage. Also Commonwealth just set up a new real estate office to put all their foreclosure properties for sale or lease. Leasing a 5 bedroom with 4 baths for $200 a month. This is real check with robots the latest CBA report page 102.
> 
> Australia down 40% in 2009 check the previous report from HGF page 52.
> 
> ...





please provide links or verification of your claims otherwise u just another jive talkin honky in my book chief

ps do u really have to resort to attacks in every post or is normal courtesy and manners beyond your reach 

thanks champ


----------



## Warren Buffet II (8 November 2008)

nunthewiser said:


> please provide links or verification of your claims otherwise u just another jive talkin honky in my book chief
> 
> ps do u really have to resort to attacks in every post or is normal courtesy and manners beyond your reach
> 
> thanks champ




Well, well, well, that is the kind of crap that you and robots keep posting day after day. No fundamentals, no links juts crap.

WBII


----------



## nunthewiser (8 November 2008)

Warren Buffet II said:


> Well, well, well, that is the kind of crap that you and robots keep posting day after day. No fundamentals, no links juts crap.
> 
> WBII




LOL ok my turn to be attacked now hey ??? blessya son ..but if u scroll back i have not ramped property in fact pointed out numerous times the opposite .

now look darl , just because im the only one left on this forum u havent attacked yet dont mean ya can .ok ?


----------



## sinner (8 November 2008)

http://www.abc.net.au/news/stories/2008/11/06/2412630.htm



> Real estate agent Adrian Gordon, who is the licensee of Lifestyle Choice Realty in Sydney's north-west, says he is seeing property prices fall by as much as 15 to 20 per cent in his area, well above the national average.




An interesting statistic...



> But he says landlord status, even if only for a temporary period, is not part of the core business of St George, and economic conditions in Australia have not deteriorated as much as they have in the UK and US.
> 
> "Our first priority is to keep the homeowner in the house," he said.
> 
> ...


----------



## Warren Buffet II (8 November 2008)

nunthewiser said:


> LOL ok my turn to be attacked now hey ??? blessya son ..but if u scroll back i have not ramped property in fact pointed out numerous times the opposite .
> 
> now look darl , just because im the only one left on this forum u havent attacked yet dont mean ya can .ok ?




Nunthewiser is not about you, it is about the crap that people keep repeating time after time and which is false and does not add anything to the forum.

The reality is prices are going down as simple as that.

WBII


----------



## nunthewiser (8 November 2008)

Warren Buffet II said:


> News!!! News !!! St. Kilda down 50% in 2008, check the latest RE report. Melbourne council is receiving property for a fee from owners which properties are now worth 1/10 of their mortgage. Also Commonwealth just set up a new real estate office to put all their foreclosure properties for sale or lease. Leasing a 5 bedroom with 4 baths for $200 a month. This is real check with robots the latest CBA report page 102.
> 
> Australia down 40% in 2009 check the previous report from HGF page 52.
> 
> ...






Warren Buffet II said:


> Nunthewiser is not about you, it is about the crap that people keep repeating time after time and which is false and does not add anything to the forum.
> 
> The reality is prices are going down as simple as that.
> 
> WBII




well your first post is false in my book as you cannot verify it via a link or any other credible means

i dont think your constant abuse of posters here is adding much value to the forums

i think you running to the mods asking for ppl to be banned for posting there opinions because you dont like them offers anything to the forums either

i have never disputed house prices falling 

thankyou and that is the end of our discussion as im going back to bed


----------



## CamKawa (8 November 2008)

Warren Buffet II said:


> Nunthewiser is not about you, it is about the crap that people keep repeating time after time and which is false and does not add anything to the forum.
> 
> The reality is prices are going down as simple as that.
> 
> WBII



I agree, all they post is rhetoric and they look past facts. It's called confirmation bias and it's a powerful force.


----------



## CamKawa (8 November 2008)

By the sounds of things they are having trouble virtually giving houses away.

They come, they look and they leave as buyers beware

The last paragraph sounds about right IMHO

"At Highlands in Craigieburn, you can get a house and land deal for just $249,000. They will even throw in a $5000 shopping voucher if you buy before November 9. Enough to buy a LCD television, but it probably won't help much if you sign up for a mortgage then lose your job."


----------



## ROE (8 November 2008)

Wise men learn by other men's mistakes, fools by their own. 

A fool sees not the same house that a wise man sees


----------



## robots (8 November 2008)

CamKawa said:


> I agree, all they post is rhetoric and *they look past facts*. It's called confirmation bias and it's a powerful force.




hello,

fact:

st kilda up 14.7% for sept08 Quarter, 

have a great day man

thankyou
robots


----------



## gfresh (8 November 2008)

I agree it has turned into a bit of a chat thread recently, but still there are facts and figures posted in here when available. 

Latest fundamentals.. number of listings going up, and up, and up.. RP Data says "this is a sign vendor confidence has well and truly improved". Really, sure it doesn't mean no homes are selling and people are desperately trying to sell up regardless?  

We've seen this exact same thing right before prices tumbled in the US and UK, so could be a warning signal.


----------



## MrBurns (8 November 2008)

gfresh said:


> RP Data says "this is a sign vendor confidence has well and truly improved". Really, sure it doesn't mean no homes are selling and people are desperately trying to sell up regardless?




Thats absolute crap, listings are up because - 


It's spring, the selling season

Many vendors are now stressed and need to sell.

Listings left over from previous weeks low clearance rates (especially in St Kilda)

Vendor confidence has improved ??????????? what planet are these people on ?


----------



## robots (8 November 2008)

hello,

great article from RBA man,

http://www.domain.com.au/Public/Art...o need to fear house price dive, says Reserve

i think his comment about "flattening" in 03 is spot on, man we miles ahead of US & UK, 

the UK has just gone through the BTL debacle, we passed that in 03-04, the majority of views are behind the times

gee property creates so much emotion doesnt it? the great divide is on and on and its fantastic many are still here

i would like to take this time out to thank some of the contributors still kicking it on the property threads: gman, the nun, chops, beej, tysonBoss, NC, explod, steve austin, robots, camkawa, glen48, mr burns and all others 

look forward to the next 30yrs, 

thankyou
robots


----------



## kotim (8 November 2008)

Property in general is going down and that is a fact, no ifs or buts about it, the only parameter left to debate is how much.  We should have an idea mid next year, but by then it will partly be hindsight.

As more statistics come out, then there will be more comparisons with the past, which ultimatley is all we as humans have to go on.  So if the stats were to come out showing that historically we are in for a 25% fall, then expect a fall of that magnitute or whatever history tells us.  

Greed feeds upon itself to extend booms and fear feeds upon itself to deepen busts.  

Mind you, we are lucky that we can discount our interest rates a lot, however what everyone should remember is this,  If Mcdonalds offer you half price slop, the prudent thing to do is save 50% but what nigh on everone does is say I can have twice as much, few eat the same and save the discount. 

So no matter what the gov't does with rates, those who buy will buy to the hilt and guess what, we will have all time low rates but based on houses that are according to wages much expensive still and so when the rates start to go up again, you will have people who have paid big money for property even if we see only a 10-15 fall in prices, that have paid very high prices historically speaking for property.

Every new generation believes they know better and are smarter, but history always tells us otherwise

As the saying goes, a recession is a time for a transfer of money from those who thought they knew what they were doing to those who do know what they are doing.


----------



## CamKawa (8 November 2008)

gfresh said:


> RP Data says "this is a sign vendor confidence has well and truly improved".



Who are RP Data - Rismark?

Well lets have a quick look. 

1. RP Data have significant interests in the mortgage market through Rismark who received an award for “Non-Bank Lender or Mortgage Manager of the Year – 2008”.

2. RP Data's share price (RPX) is under the pump at bit, down 64% trading at on all time low of just 0.70 cents and well below its listing price on the 15th of Dec 2006.

Could they be talking up their own book?


----------



## nunthewiser (8 November 2008)

ROE said:


> Wise men learn by other men's mistakes, fools by their own.
> 
> A fool sees not the same house that a wise man sees




excellent quote



MrBurns said:


> Thats absolute crap, listings are up because -
> 
> 
> It's spring, the selling season






BINGO!


----------



## gfresh (8 November 2008)

CamKawa said:


> Who are RP Data - Rismark? Well lets have a quick look.
> Could they be talking up their own book?




I don't trust too much of what RPdata releases, but many use it to see just how much money their property was worth on paper during the boom. Most agents throughout the country subscribe to their data. Their weekly newsletter has some interesting data sometimes, such as the auction results and total listings. The rhetoric is sometimes amusing though, there is never a negative. 

Large listings just the usual Spring selling? Look at the same period last year on the tail end of that chart for Spring 2007, half what it is now


----------



## grace (8 November 2008)

Know personally of a house in Brisbane that has been on the market this year (on, then off, then on again).

Highest bid at auction today 40% lower than offer received at beginning of 2008.

Nice, inner city house.  Not in the very top end market, but above average value range.

Brisbane is really starting to take a dive.


----------



## singlefished (8 November 2008)

grace said:


> Know personally of a house in Brisbane that has been on the market this year (on, then off, then on again).
> 
> Highest bid at auction today 40% lower than offer received at beginning of 2008.
> 
> ...





Like yourself, we've been keeping tabs on the Brisbane market... We first saw a smallish but fairly adequate house on 405sq.m in Wooloowin middle of last year - passed in at auction with a bid of 800K. Readvertised for sale again the following week looking for offers over 1.15M. Guess what - didn't sell....

Appeared again in April this year for a few months and finally sold in July. Just Checked "onthehouse.com" and the sale price 780K.

Not a bad result when "the market" valued it at 800K last year and "the market" has revalued it at 780K as of July this year. Pretty dire result however when you compare the eventual sale price to the vendors initial expectations though....

Plenty of lessons in there all of which I've read about elsewhere on the net... just goes to show that emotions should play no part in any financial transaction (buying or selling) and property purchase should be treated as a pure business decision regardless whether it's for investment or PPOR.

The poor bugger who was selling the house could have taken the 800K offered a year ago, stuck it in a term deposit at 8% for a year and come out with about 866K... With hindsight being 20/20, he'd have now been 86K better off before even considering the $$$ he'd have been pumping in over the last year paying back on the initial rented money....


----------



## Beej (9 November 2008)

singlefished said:


> Like yourself, we've been keeping tabs on the Brisbane market... We first saw a smallish but fairly adequate house on 405sq.m in Wooloowin middle of last year - passed in at auction with a bid of 800K. Readvertised for sale again the following week looking for offers over 1.15M. Guess what - didn't sell....
> 
> Appeared again in April this year for a few months and finally sold in July. Just Checked "onthehouse.com" and the sale price 780K.
> 
> ...




So all that story proves is that someone was "dreaming" about their house value (ie vendor expectation totally unrealistic as you state) - if the market valued it at $800k a year ago and $780k today, then that means prices have been essentially flat (or maybe -2.5%) since things were last booming in that area, all other things being equal.

Re putting the money in a term deposit, 1) 8% is an historically high cash return rate which is now all but gone and 2) he would also have to pay tax on that $66k of up to $30k, which really eats into the numbers quite a bit. The long term gains that will be made on PPOR property are all tax free.....

Cheers,

Beej


----------



## cuttlefish (9 November 2008)

singlefished said:


> Like yourself, we've been keeping tabs on the Brisbane market... We first saw a smallish but fairly adequate house on 405sq.m in Wooloowin middle of last year - passed in at auction with a bid of 800K. Readvertised for sale again the following week looking for offers over 1.15M. Guess what - didn't sell....
> 
> Appeared again in April this year for a few months and finally sold in July. Just Checked "onthehouse.com" and the sale price 780K.
> 
> ...





Just curious - what sort of weekly rent would a place like that in Brisbane be fetching?  $400/week?  $600/week? $300/week?


----------



## robots (9 November 2008)

hello,

its no different to banging a car on carsales.com for a "huge" price is it?

or putting a swiss army knife on ebay for a "huge" buy it now price?

havent noticed 5000+ blogs carrying on about those issues

thankyou
robots


----------



## cuttlefish (9 November 2008)

For an investors perspective the idea of selling in that scenario makes sense.  For a home owner perspective the numbers there wouldn't yet justify the emotional upheaval involved in moving a house, kids, pets, vegie gardens, cubby houses, sand pits, green houses, skate ramps, basketball nets whatever the ingredients of a "home" are.  

Thus given how attached home owners are to their abodes, the most likely cause of a move would be job losses creating a forced selling situation - the Australian way from past recessions is to try to tough it out when it comes to the family home - even if its a 20 year slog.    Thus historically there have been sticky prices in patchy, inefficient markets that don't reflect the true values that supply/demand would normally dictate.  (affecting historical price data probably in a way that makes things look better than they were I guess).


----------



## Glen48 (9 November 2008)

In Sat. Courier Mail they was an article about parents trying to force their children to buy a house while times are good.
Wonder is the kids can sue their parents when their house values collapse or have them charged with child abuse.?


----------



## generalofthearmy (9 November 2008)

generalofthearmy is now guessing there will be a long term price slump.

this is not simply a correction based upon current economics, but a long-term bubble.

generalofthearmy has just been reading that houses are twice as affordable in Canada as here. This must be eventually corrected? Have a look at this interesting report. (Warning: It's written by an economist)

http://www.ampcapital.com.au/K2DOCS...s_edition-15_house-prices-and-debt.pdf?DIRECT

I wouldn't put money on it though, cos who knows when the discreptancy will be corrected. Could take many years or decades, right?

Generalofthearmy does not trust RBA predictions that the property prices have already popped. These seem based upon boom era fundumentals. If we have a depression, anything could change.

I once read a book by Janet Mcalman which stated that after the Melbourne 1880's land bubble popped, prices in Hawthorn did not return to boom heights until the early 1980's. NINETEEN EIGHTIES. (but don't quote me on that)

Cheerio.


----------



## YChromozome (9 November 2008)

generalofthearmy said:


> Have a look at this interesting report. (Warning: It's written by an economist)
> 
> http://www.ampcapital.com.au/K2DOCS...s_edition-15_house-prices-and-debt.pdf?DIRECT




Cool Report. An updated version of the first graph in the report was posted here showing Australia is now following suit.

I'm a little more bearish than the report on Real House Prices being overvalued 32% above the trend or more precisely the trend doesn't go back far enough to be of any use. When you have a look at Robert Schiller's (US) and Nigel Stapledon's (AUS) real house price indices (Australian vs US Real House Prices) you see the trend line for the US is almost flat. This is what it should be, house prices should not rise faster than inflation or wage growth, otherwise eventually people will not be able to afford them.

When you look at the Australian graph you see the bubbles of 1950, 1970 and especially 1990 did not fully correct. There are some explanations behind this like the two income trap where the Australian Household now has two incomes to service the mortgage, not one. Others are increased household income from other investments (which should do well during a recession). 

I note the AMP graph presented show real house prices (i.e. corrected for inflation) actually increase in value over time. If the trend line was to continue, it does mean at some stage in the future house prices will be priced out of reach of the majority - i.e. they increase faster than the owners ability to service them. Also never ignore the power of compounding. As the trend continues, it gets worse much faster.

It would be interesting to see if the AMP Capital Investors data goes back earlier than 1926. I also notice the peaks are not consistent with Nigel Stapledon's data set, no to say one is incorrect over the other. What is consistent is in the 2nd half of last century house prices did trend up in Australia (ignoring the current super bubble), which is not consistent with many other countries and skews the "overvalued by 32%" argument. 

I also have to laugh at the shortage of house argument. Are people still using that?


----------



## singlefished (9 November 2008)

Beej said:


> So all that story proves is that someone was "dreaming" about their house value (ie vendor expectation totally unrealistic as you state) - if the market valued it at $800k a year ago and $780k today, then that means prices have been essentially flat (or maybe -2.5%) since things were last booming in that area, all other things being equal.




As suggested, either the vendor was dreaming about their house value, the advising agent was dreaming about their house value or vendors on-the-hole in this part of town (do you know Brisbane well? - Wooloowin is a neighbour to some of the most exy burbs in the state) generally have until now had unrealistic expectations. I would suggest the latter as properties are not moving fast, if at all, around here so expectations need to come down to see a bit more liquidity.

On the ground, I'm seeing plenty of feet doing plenty of miles around the glut of properties on the market at the moment.... still hasn't translated into sales as yet.

The example would also go to show that at the end of the day in this current climate it's the buyers who have the initiative in setting prices, not the vendors. The properties won't sell unless vendors are prepared to meet the market (or some idiot with the $$$ burning a hole in their pocket  )




Beej said:


> Re putting the money in a term deposit, 1) 8% is an historically high cash return rate which is now all but gone




I'm not comparing historical averages here - I'm using market data appropriate to this time frame. Yes, high rates have gone, good for borrowers, not good for savers.... and your point is????




Beej said:


> 2) he would also have to pay tax on that $66k of up to $30k, which really eats into the numbers quite a bit. The long term gains that will be made on PPOR property are all tax free.....Beej




I'm certainly not going to comment the vendors tax liabilities - my example is purely hypothetical based on what feasibly "could" have been done with the proceeds of the sale from a year ago.

The hypothetical 66K interest earned may have been taxed in an unworking partners name that would only attract just over 13K of tax if there was no other taxable income (income splitting the ATO calls this).... nowhere near your 30K as suggested. This interest earning scenario would also suggest that the sold property was an investment and not a PPOR so would have been subject to substantial cap gains prior to even earning the 66K interest.

Or possibly this was a PPOR and the proceeds from the sale a year ago could have been sunk into another property and then subsequently lost 2.5% or more! 

We will never know.... 





cuttlefish said:


> Just curious - what sort of weekly rent would a place like that in Brisbane be fetching?  $400/week?  $600/week? $300/week?




I'd be guessing for this property in particular about $450/week... could be wrong though.


----------



## Glen48 (9 November 2008)

$450 PW then the house is worth $292,500.00
Strange how economist are doubting the Fed's figures on growth and saying the Fed's  are too high, first time i have seen that.


----------



## gfresh (9 November 2008)

I repeat the basics again: 

FHOB, entry level $330k unit (Brisbane):

Minus $14k - $30k deposit = $286k loan
$466/wk (7%)+$26 rates+$30 bodycorp = $522/wk

Rental Equiv: $300/wk. 

Savings of $222 over mortgage put into bank x 52 weeks = $11,544

Deposit of $30k x lowly 5% interest x 0.70 (mid-bracket) = $1,050 interest

Total at end of year 2009 renter: $12,594

FHOB: 3% x $330k = $9.9k cap gain. Even a small possibility of a 2-3% fall, puts you a few behind, and likely $20k behind the lowly renter. It is quite a risk, never mind a bad case of 10% fall in 2009 were to take place. 

To be honest, I doubt most FHOB do these sort of sums purely on dollars, although maybe some are starting to. 

I think this, more than ever has stalled price rises this year -- there is no rush. There is no "I better buy now or it will cost me 10% more next year", or "I will never be able to afford my own place". This was the fear last year, this is what kept people buying. 

Until that returns, the status quo will remain - low ballers, window shopping, but little buying. Then maybe the herd will take over, and when they see others buy in great numbers, they will buy. 

As we saw after the recession in 1991, it was a good few years until that took place again.


----------



## joeyr46 (9 November 2008)

Glen48 said:


> $450 PW then the house is worth $292,500.00
> Strange how economist are doubting the Fed's figures on growth and saying the Fed's  are too high, first time i have seen that.




By my reckoning that works out at 8% before we  minus rates insurance (agents fees) and maintenance (leaving interest out of the equation) Only reason to buy to rent is for capital gain and after so many good years you'd have to expect some sort of correction if only flat.
I was always taught that you should get $40 dollars (Rent) for every $16000 dollars spent.    (292500/16000 *40=731.25 per week)
As this hasn't been the case for years something is out of whack and as history shows these things always come into the norm one way or another ie rents rise house prices fall or a bit of both :
292500 is a long way from $780000 and if we return to historic lows it could fall even further 
And of course interest rates coming down is not neccesarily bullish for property as we saw from Japan since 87


----------



## Pommiegranite (9 November 2008)

gfresh said:


> Savings of $222 over mortgage put into bank x 52 weeks = $11,544




Don't forget the interest that the renter will receive on this money (which I can't be bothered to work out!)


----------



## robots (9 November 2008)

gfresh said:


> I repeat the basics again:
> 
> FHOB, entry level $330k unit (Brisbane):
> 
> ...




hello,

great work Gfresh, its a very interesting situation and relies on the savings being made,

after Yr1 for renter things also slowly change as rent increases, sure not a heap but it does creep,   

in both techniques, buying or renting  the discipline is crucial and those on the rent should be killing it at the moment with rents so low,

over a 20-30yr period both are on the stash and thats what i look for because its really only around the corner

thankyou
robots


----------



## sinner (9 November 2008)

http://www.abc.net.au/news/stories/2008/11/08/2414228.htm


> New home buyers in New South Wales are set to get a $3,000 boost in next week's mini-budget.
> 
> The State Government will increase the first home owners grant for people buying newly constructed properties in next Tuesday's mini-budget.
> 
> ...




More text not quoted

I find it amusing that the one thing that people are saying is saving our house prices from the fate shared by other countries is a lack of supply when compared to demand...which might be true, fair enough.

Except now the Government prop of $24,000 for the next 150,000 new first home owners simply = a $3.6bn bailout to the property developers. You gotta be kidding me. They say the only thing that saving us is lack of supply so you wanna prop up the supply?!


----------



## arco (9 November 2008)

Cant see much of a shortage

_The number of new listings advertised across the market nationally during the last week has again increased, cementing the fact that vendor confidence has well and truly improved following six consecutive weeks of new listings increases. Over the last week, *15,610 new properties were advertised for sale which sees new listings now sit well above the 12 month average. *


_

RPdata


----------



## robots (9 November 2008)

sinner said:


> http://www.abc.net.au/news/stories/2008/11/08/2414228.htm
> 
> 
> More text not quoted
> ...




hello,

gotta spread the love sinner, cant just have the car industry, farmers and other manufacturers always getting the handout

thankyou
robots


----------



## sinner (9 November 2008)

Actually robots, in my opinion, those are the only people that should be getting handouts. 

Keeping manufacturing and commodities skills (i.e. productivity) in the country is essential to stop us from ending up in the same situation as the US (although we are obviously well on our way) where now almost everyone is a consumer and the whole economy revolves around the consumer.

Obviously it's not so clear cut but you can't deny the trend.

There is already the Howard govs perpetual home owners grant (aka bailout) of $10k, Rudds finite package is just a cash injection into a market that needs to fall.


----------



## nunthewiser (9 November 2008)

sinner said:


> Actually robots, in my opinion, those are the only people that should be getting handouts.
> 
> Keeping manufacturing and commodities skills (i.e. productivity) in the country is essential to stop us from ending up in the same situation as the US (although we are obviously well on our way) where now almost everyone is a consumer and the whole economy revolves around the consumer.
> 
> ...




The building industry and all the industrys that supply the products to them is absolutely huge


----------



## robots (9 November 2008)

hello,

no worries sinner

thankyou
robots


----------



## sinner (9 November 2008)

nunthewiser said:


> The building industry and all the industrys that supply the products to them is absolutely huge




I really don't want to appear like I'm harping on, just wanted to link an article really.

But despite the truth in what you say, you also have to consider that we can't exactly export a glut of houses to developing nations like we can with extra grain or other commods. 

Even if we all believe in robots view that there is still a housing boom (or at least not a bust) going on then why oh why would you want to push the last of our industries which is in said good shape into oversupply territory?


----------



## kotim (10 November 2008)

Robots, rent does not always go up, have a look at past recessions etc and you will see decreases in rent or sideways for a long time.


----------



## Judd (10 November 2008)

sinner said:


> I really don't want to appear like I'm harping on, just wanted to link an article really.
> 
> But despite the truth in what you say, you also have to consider that we can't exactly export a glut of houses to developing nations like we can with extra grain or other commods.
> 
> Even if we all believe in robots view that there is still a housing boom (or at least not a bust) going on then why oh why would you want to push the last of our industries which is in said good shape into oversupply territory?




Not too sure where robots gets his/her data from but this is some infor from RP data which uses, I understand, Vic Gov sales data.
	Median Sales Price

  	St Kilda 

	Rpdata
	median price 

Sep-08	$328,750
Aug-08	$360,000
Jul-08	$396,000
Jun-08	$350,000
May-08	$354,000
Apr-08	$405,500
Mar-08	$423,000
Feb-08	$365,000
Jan-08	$463,000
Dec-07	$420,000
Nov-07	$380,000
Oct-07	$380,750


So where is the 14%+ increase in St Kilda which robots espouses?  Evidence and clarification please


----------



## robots (10 November 2008)

hello,

http://data1.reiv.com.au/trendchart/default.aspx

found info from rp data, 

thankyou
robots


----------



## gfresh (10 November 2008)

I thought you owned an IP Unit?  Source: http://www.realestateview.com.au/po...1&suburbname=st kilda&state=vic#median-prices 

However, a quarter-by-quarter perspective isn't that reliable I will agree.. next year will see how the numbers are panning out properly.


----------



## robots (10 November 2008)

robots said:


> hello,
> 
> look out great results here:
> 
> ...




hello,

please see post 1491, 

is that a 40% drop?

thankyou
robots


----------



## ROE (10 November 2008)

I like history, let see how it pan out in 2002 in the US. they love housing back then, a virtual to riches 

this is written by a nobel price winner on economic PAUL KRUGMAN

http://www.nytimes.com/2002/08/16/opinion/16KRUG.html?ex=1226466000&en=d96db334cae99ceb&ei=5070

the year is now 2008 .... how good is this guy... when smart people speak you listen  and those ignore do so at their own peril


----------



## gfresh (11 November 2008)

Yawn:



> BRISBANE house prices suffered the biggest fall in the country in the three months to September, dropping 5.2 per cent, according to Australian Property Monitors.
> 
> Its latest data shows the median house price for Brisbane at $415,963 down from $438,805 in the June quarter.




http://www.news.com.au/couriermail/story/0,23739,24632190-952,00.html


----------



## finnsk (11 November 2008)

An article from Bloomberg
http://www.bloomberg.com/apps/news?pid=20601087&sid=asd0.p2Zg9EA&refer=home
Dont think this is positive


> drop in shipments is also bad news for Australia's indebted consumers. The mining boom fueled a 30 percent surge in household incomes in the past five years, more than any other developed economy, according to the central bank.
> 
> Many households used the cash to take on debt, which almost doubled since 1999 to around 160 percent of incomes, a higher ratio than the U.S. and U.K., according to Shane Oliver, senior economist at AMP Capital Investors in Sydney. The median national house price soared about 140 percent in the same period.
> 
> ``Australian households are very vulnerable, which partly explains why the central bank has been so aggressive'' lowering rates, Oliver said.


----------



## Glen48 (11 November 2008)

George Soros is predicting a drop of house prices by 90% in USa ( same here) he did not realise how bad this could get and has admitted it is much bigger than he ever thought it could get to.


----------



## cuttlefish (11 November 2008)

Glen have you got a link to an article - it would be an interesting read.


----------



## MrBurns (11 November 2008)

cuttlefish said:


> Glen have you got a link to an article - it would be an interesting read.




Got to admit the news all round is getting worse almost by the day, hate to think whats ahead.


----------



## Glen48 (11 November 2008)

Try this:
GeorgeSoros.com.
GM share are worth $0 are here we are trying to support the cars industry.
This is moving so quickly it is like some one has a sore throat, gets worse, goes to bed, goes to Hospital at 3AM and is dead the next night


----------



## ROE (11 November 2008)

Stop talking non-sense house price double every 7 years,
some double quicker than other


----------



## Beej (11 November 2008)

Glen48 said:


> George Soros is predicting a drop of house prices by 90% in USa ( same here) he did not realise how bad this could get and has admitted it is much bigger than he ever thought it could get to.




Seriously LOL LOL LOL 90%??? !!! ??? Yeah right LOL LOL!!!!!

PS: Do you know how much it costs even to BUILD a house, even if the land is free?????

This thread is getting more ridiculous by the day - a fall in NATIONAL MEDIAN prices of a few percent, on low volume particularly in high end, as has happened many many times before, with no real impact on the long term growth prospects for property values, and yet now we are up to predictions of 90% falls from the previous 30-40% predictions!!

Beej


----------



## Glen48 (11 November 2008)

Try this:
GeorgeSoros.com.
GM share are worth $0 are here we are trying to support the cars industry.
This is moving so quickly it is like some one has a sore throat, gets worse, goes to bed, goes to Hospital at 3AM and is dead the next night


----------



## Pommiegranite (11 November 2008)

Glen48 said:


> Try this:
> GeorgeSoros.com.
> GM share are worth $0 are here we are trying to support the cars industry.
> This is moving so quickly it is like some one has a sore throat, gets worse, goes to bed, goes to Hospital at 3AM *and is dead the next night*




As nice as that?

How about 'patient in a an ambulance on his way to hospital for emergency treatment. Ambulance runs out of fuel in ghetto neighbourhood of St Kilda. Ambulance, paramedics and patient get robbed and attacked with knives. End result: 3 dead, kidneys and eyeballs stolen. Ambulance stripped and now a smouldering wreck'.


----------



## Temjin (11 November 2008)

Glen48 said:


> George Soros is predicting a drop of house prices by 90% in USa ( same here) he did not realise how bad this could get and has admitted it is much bigger than he ever thought it could get to.




I do follow George Soros stuff quite closely but I don't think I have come across with him predicting a 90% drop in house prices BOTH in the US AND in Australia.

Would be great if you could give us a direct link on that. 



			
				Beej said:
			
		

> Seriously LOL LOL LOL 90%??? !!! ??? Yeah right LOL LOL!!!!!
> 
> PS: Do you know how much it costs even to BUILD a house, even if the land is free?????
> 
> ...




Yes, you can ignore the 90% prediction.

But do you know who George Soros is??

He is more than rich enough and have made many HIGH PROFILE (and accurate) predictions leading to this global financial crisis to NOT take him seriously.

I do not think you are in any way experienced / educated enough to judge George Soro's predictions. He was right on the spot on the S&P 500 prediction made 10 years ago and was only off by merely 3 days. It's pretty well known too. 

But like I said, I do not believe George Soros has mentioned a 90% drop in house prices. So don't take it as if we "doom and gloom" ppls believe it will happen and quickly come into a conclusion how "ridicious" this thread is because it DOES NOT FIT your believe.


----------



## ROE (11 November 2008)

"People who talk about a bubble are blowing smoke," said real estate economist Michael Carney. It was February 2005 and Carney was confident that house prices in California wouldn't fall. But by the end of the year the market turned. And between August 2007 and August 2008, California house prices fell by more than 40%.


Let see if Aussie Steven Keen is blowing smoke or not


----------



## ROE (11 November 2008)

We have a supplied problem here so price wont drop 


"Even as the US bubble reached bursting point, commentators there insisted that there was no problem because there was no evidence of oversupply. As James Smith, chief economist for the Society of Industrial and Office REALTORS, wrote in 2004, "One indicator of a bubble is a rapid increase in the supply of the asset in question. [But] housing inventories have been at very low levels for over five years suggesting there is no excess supply of houses."

I have a few collection of pre-bubble quotes  time to use them.


----------



## ROE (11 November 2008)

Temjin said:


> I do follow George Soros stuff quite closely but I don't think I have come across with him predicting a 90% drop in house prices BOTH in the US AND in Australia.
> 
> Would be great if you could give us a direct link on that.
> 
> ...




Let be realistic  90% come George you are getting a little old but a modest 20% - 30% dropped with high unemployment will wiped out almost all property investor let alone 90% 
remember 80% of property investors has income of $80,000 and less.

Be afraid, be very very afraid


----------



## DowJones (11 November 2008)

ROE said:


> We have a supplied problem here so price wont drop
> 
> 
> "Even as the US bubble reached bursting point, commentators there insisted that there was no problem because there was no evidence of oversupply. As James Smith, chief economist for the Society of Industrial and Office REALTORS, wrote in 2004, "One indicator of a bubble is a rapid increase in the supply of the asset in question. [But] housing inventories have been at very low levels for over five years suggesting there is no excess supply of houses."
> ...




Remember Econmics 101 - its about SUPPLY and DEMAND. From what we are seeing in the deteoration of the global economy, its an educated guess to expect the other side of the equation to curtail. 

People will demand less housing - things people do are to move to cheaper housing areas (away from cities), move back in with parents and have more people living in each house.

This has to have a material effect on housing prices.


----------



## arco (11 November 2008)

DowJones said:


> Remember Econmics 101 - its about SUPPLY and DEMAND. From what we are seeing in the deteoration of the global economy, its an educated guess to expect the other side of the equation to curtail.
> 
> People will demand less housing - things people do are to move to cheaper housing areas (away from cities), move back in with parents and have more people living in each house.
> 
> This has to have a material effect on housing prices.




Agree.

Also many other factors can come into play.

e.g.

Oldies are now 'flatting'

6 people sharing can put an extra 5 houses on the market. This is already happening in NZ

_Flatting for Oldies
Many fear old age but like it or not we are all going to face it. What do you do when you reach the reality we all dread - where will I live, will I grow old alone, will I have enough money to live with dignity? A new alternative in lifestyle for the elderley is called Abbeyfield and there are Abbeyfields all over New Zealand. The complexes allows older people to go flatting at a fraction of the price of a rest home.  _


----------



## cuttlefish (11 November 2008)

Pommiegranite said:


> As nice as that?
> 
> How about 'patient in a an ambulance on his way to hospital for emergency treatment. Ambulance runs out of fuel in ghetto neighbourhood of St Kilda. Ambulance, paramedics and patient get robbed and attacked with knives. End result: 3 dead, kidneys and eyeballs stolen. Ambulance stripped and now a smouldering wreck'.




The theives used the money they stole to put a deposit on a nice little 2 bedroom apartment being offloaded by a panicking property investor after prices slumped 14.7% wiping out all his capital gains.  It was well located close to transport and had a brothel conveniently located at the end of the street.  

LJ "Hooker" representative Tammy BlingBling Smythe said that there were a lot of crooks taking advantage of the property slump to buy into the area - helping to reinforce the suburbs colourful character.

A mechanical looking man was heard groaning "every seven years I tell you brother" in the background, after which he politely said "thankyou".


----------



## robots (11 November 2008)

hello,

i think you have the wrong suburb brothers:

http://www.theage.com.au/national/shooting-victim-staggers-to-toorak-flats-20081111-5lvm.html

we clean as now, safe and sound anywhere in sunny St Kilda

thankyou
robots


----------



## Glen48 (11 November 2008)

Supply and demand is all this goes on just another bubble in the long history of bubbles from Tulips to Pine Forest to Amway to Liam's.
What happens when the 200K + + working in the car business all loose their jobs  are they still going to keep paying of a house or walk out like they are now doing up the road from my place?
50% -90% so what! it is all bad news, Think I will dial 911 and wait for the Ambo.
 I hope my Land lord is not to stressed knowing Her "Investment" pfffft is worth less than she owes and more to come of the value next month.


----------



## Glen48 (11 November 2008)

World debt:
http://blog.mint.com/blog/finance-core/visualizing-uncle-sams-debt/?ref=patrick.net


----------



## Glen48 (11 November 2008)

Denial of House prices.
http://www.msnbc.msn.com/id/27648884?ref=patrick.net


----------



## Pager (11 November 2008)

Like all bubbles and i think there has been a price bubble in property the past 10 years, it will burst, hopefully not dramaticly but i wont hold my brath on that one, surely though prices will deviate back to long term averages as over the next few years wages grow a little and house prices go down, maybe in another 10 years your average house will be back to around 4 times the average annual salary for working Australians ?, for Sydney at present thats about $260,000 (4x $65000) rather than the current $530,000 the mediun house price is.


----------



## So_Cynical (11 November 2008)

Maybe its time to invest in Caravan parks, all them evictees are gona need somewhere low rent to live.

Are there any listed company's with trailer park assets?


----------



## Glen48 (11 November 2008)

We will end up like the Yanks with Trailer parks/ demountable  or Acre's or Caravans. I remember in the 80's nearly every second house had Caravan in the back yard for some innerspring Matress relation..


----------



## singlefished (11 November 2008)

Glen48 said:


> Denial of House prices.
> http://www.msnbc.msn.com/id/27648884?ref=patrick.net




Interesting article - Our perspective of US realty will be tainted by how our media providers portray it to us ~ all we hear about the US economy is concentrated bad news whenever we turn on the TV.... This focus is obviously undiluted when it's served up as special commentary by the likes of Alan Kohler and other such economic analyists. In the US they'll be mixing this news in with the regular day-to-day local news (car jacking, court ruling, sports & lottery winner stories) and many people wont be bothering to listen I imagine. 

Ignonance is Bliss!!!

I can understand this attitude however and as an example of how the ignorance can be facilitated, do you ever find yourself asking the following question - *I'm too busy for the country to be going down the tubes - how can it all be bad news when my life remains generally unaffected and I'm not really seeing much of this doom and gloom out there?* Business confidence however is at lows not seen for a few decades so the hot tip would be to prepare for bad times and avoid the blindside cover ignorance can provide.

A lot of truth in the article though and you can see some of this attitude filtering through via the nonchalant _"pftt, only a couple of percent down on low volumes... blah, blah, blah"_ style responses whenever the bad news bears gleefully provide commentary on the steadily declining Aussie housing market.

The offenders will of course *DENY* this but that's only to be expected, it's in their nature


----------



## So_Cynical (12 November 2008)

dhukka said:


> Interesting interview with Robert Shiller on the &:30 report a couple of nights ago.  Shiller saw a lot of the current mess coming years ago and called the tech bubble back in 200.




dhukka posted this in the imminent and severe thread...though it was relevant here, as the 
expert said 12 million houses in the states are worth less than there mortgages and there's 
10000 foreclosures per month....US futures predicting further falls.


----------



## jeflin (12 November 2008)

I think we should thank all the creators of the wonderful CDOs for pumping up home prices. The real beneficiary of this boom and eventual bust is probably the top management of investment banks. 

They walk away with golden parachutes after getting their firms, global investors and businesses into a fine load of ****.


----------



## Warren Buffet II (12 November 2008)

*St. Kilda robber*



Pommiegranite said:


> As nice as that?
> 
> How about 'patient in a an ambulance on his way to hospital for emergency treatment. Ambulance runs out of fuel in ghetto neighbourhood of St Kilda. Ambulance, paramedics and patient get robbed and attacked with knives. End result: 3 dead, kidneys and eyeballs stolen. Ambulance stripped and now a smouldering wreck'.




I bet the guy that assaulted the ambulance and paramedics at St Kilda was a guy who calls himself robots (He is well knows around that area). He was a believer that the way of house prices was always up and now is living in a container in an empty lot at St. Kilda. . Actually, he was always ramping about his investments there and he never had anything. Funny guy. i am not sure if I should laugh or cry for him.



WBII


----------



## robots (12 November 2008)

hello,

great posts keep the coming, I wont be getting listed on the "missing ASF person" thread, 

i wont be calling for the ban of anyone either just for having a different outlook or opinion,

have a great day brothers, 32 here in Melbourne, just about to start pedalling for a cafe latte on chapel st, and can see the hot air ballons going over the suburbs

utopia, enjoy the day and tell the family you love them 

thankyou
robots


----------



## ROE (12 November 2008)

Glen48 said:


> Denial of House prices.
> http://www.msnbc.msn.com/id/27648884?ref=patrick.net




What are you smoking let me repeat the quote
"house price double every 7 years" 

I know people a few years back, and I still do, they tell me Property is going to make them retire early and rich  and I said cool, that's really nice so I ask casually how do you manage that when you are negative gear, meaning you pump more $$$ in than you collect in rent, aren't you going broke if you don't have a job or cant service the mortgage?

they said no house price double every 7 years sometimes sooner 
last year I talk again and I ask how's going is your house price doubling soon?
they say well maybe double every 10 years but not 7 , Some months ago I ask how's going.... they then ask me do you think house will stay flat for a while  ...I smile and said I think so 

then some weeks ago I ask how is it going?.. Doh!! I have to sell a property because I don't want to keep paying into the mortgage plus if I sell I make a small profit and have a life  I hope they make a profit but I know where they will end up ..

To be continued.... 

I have many friends and they all seems to give me advice, some of them as ridiculous as never pay off principles on your property and always use extra equity in the house to buy more houses.

Great formula for going bankrupt but you know I'm a quiet kind of guy and said too complex for me to understand so I don't get involve


----------



## Warren Buffet II (12 November 2008)

robots said:


> hello,
> 
> great posts keep the coming, I wont be getting listed on the "missing ASF person" thread,
> 
> ...




Sorry if I offended you in any way robots. 

Please keep posting so I can keep laughing.

WBII


----------



## nunthewiser (12 November 2008)

robots said:


> hello,
> 
> great posts keep the coming, I wont be getting listed on the "missing ASF person" thread,
> 
> ...




Onya robots,

at least you have obviously the character and strength to be able to accept all opinions here without running to the mods everytime someone posts an opinion you do not agree with 

without differeing opinions the world would be a rather dull place i reckon

have a great day and may your cockles of your heart be warmed and caressed on a daily basis


----------



## numbercruncher (12 November 2008)

Hello Robots .....


Seems that 12pc thing you keep going on about might be one big fat lie - Im sure the people who supplied you that information will call it an error ..... ?


Melbourne is nosediving .....



> Four-bedroom homes in the inner east, which includes suburbs such as Kew, Camberwell, Canterbury, Richmond and Hawthorn, posted a 13.2% fall in the September quarter.
> 
> Three-bedroom inner-east houses have also faired badly, tripling the city median with a drop of 9.9%.
> 
> ...




http://www.theage.com.au/national/premium-suburbs-bear-brunt-as-real-estate-market-reels-20081111-5mjz.html


Wow the inner East is burning equity faster than the average person can earn it !!

So early in the crash to boot ..... oh well everyone had fair warning i guess ...


----------



## Temjin (12 November 2008)

Glen48 said:


> Denial of House prices.
> http://www.msnbc.msn.com/id/27648884?ref=patrick.net




Gold article, even if it was from "mainstream media" that I tend to be critical of.  

My house is better than everyone else! 

The psychological effect is just so simply to understand, yet people still fall into it. I guess we are all human beings after all, and it's difficult for us to be logical at all times. 

This whole "bust" could dragged on for quite long...


----------



## Beej (12 November 2008)

Temjin said:


> Gold article, even if it was from "mainstream media" that I tend to be critical of.
> 
> My house is better than everyone else!
> 
> The psychological effect is just so simply to understand, yet people still fall into it. I guess we are all human beings after all, and it's difficult for us to be logical at all times.




There's nothing new in that - it's the issue that exists in all market conditions - Ie sellers having to adjust their expectations to meet the market - woo hoo big news! I don't see what the big deal is really? Nor what that has to do with how the US housing market problems pan out from here?

Cheers,

Beej


----------



## jonojpsg (12 November 2008)

numbercruncher said:


> Hello Robots .....
> 
> 
> Seems that 12pc thing you keep going on about might be one big fat lie - Im sure the people who supplied you that information will call it an error ..... ?
> ...




I visited my brother in St Kilda a couple of months ago and there was a place for sale down the road - 3-4 bedroom house on small block (are there any large blocks in melb suburbs???) in need of reno and they wanted $700k for it

If you are talking about prices like this falling by 10-15% in short order I can't see why this is a problem.  Who would want to pay that much for a dingy old place in the burbs anyway??  Specially when you can buy a beautiful new house overlooking the river and city in hobart for less than that

However it is the median prices which are the issue - inner city burbs with median prices at the $600k+ level falling by 20% should not have marked effect on median prices as these places are all at the top end of the list - although the flowon effect would see houses in outer suburbs pushed down also but by less %.


----------



## Beej (12 November 2008)

jonojpsg said:


> I visited my brother in St Kilda a couple of months ago and there was a place for sale down the road - 3-4 bedroom house on small block (are there any large blocks in melb suburbs???) in need of reno and they wanted $700k for it
> 
> If you are talking about prices like this falling by 10-15% in short order I can't see why this is a problem.  Who would want to pay that much for a dingy old place in the burbs anyway??  Specially when you can buy a beautiful new house overlooking the river and city in hobart for less than that
> 
> However it is the median prices which are the issue - inner city burbs with median prices at the $600k+ level falling by 20% should not have marked effect on median prices as these places are all at the top end of the list - although the flowon effect would see houses in outer suburbs pushed down also but by less %.




Re the St Kilda house you are kind of missing the point and not seeing the drivers of the market (and thus prices) in an area like that. News flash - people that want to live in a trendy inner city/bay-side suburb like St Kilda aren't usually looking in the Hobart suburbs as well! Would be a pretty long commute from Hobart to your Melbourne CBD job.....

St Kilda is clearly trendy and up and coming. The house you saw may be dingy now, but someone will buy it and spend some fairly serious $$$ renovating it - when done it will be transformed into a most desirable home that would blow your socks off. The fact that it is run down now makes it the perfect "blank canvass" for your typical inner city housing renovation project. It will be worth a LOT more money once completed as well. I bet if you check that place will have sold by now, as it is priced well below the current median price for that area.

As Robots points out, St Kilda prices are on the move: See http://www.homepriceguide.com.au/sn...r Urban&region_code=0301&state=VIC&source=apm which indicates a 21% rise in median values there in the past 6 months.

PS: In Sydney and Melbourne a lot of people don't like "new" houses, as they are poorly built compared to "old" houses. What many people like (especially people with money) are stylishly renovated, well located, and well built old houses (full brick etc).

Cheers,

Beej


----------



## Judd (12 November 2008)

Hmmm.  Buy a place for $1m.  Spend $400k on renovations.  Sell for $1.2m.  Watch a real estate agent cry out "Look at the capital gain of 20%!"

It is all in the perception.


----------



## Beej (12 November 2008)

Judd said:


> Hmmm.  Buy a place for $1m.  Spend $400k on renovations.  Sell for $1.2m.  Watch a real estate agent cry out "Look at the capital gain of 20%!"
> 
> It is all in the perception.




Or buy a place for $350k, spend $350k on it, sell 2 years later for $1.4M, like some good friends of mine did - that's a "perception" I like 

PS: I thought they were mad at the time for spending that much money (on renovations) in the area they were in, but they correctly picked the trend and I had to eat humble pie!

Cheers,

Beej


----------



## numbercruncher (12 November 2008)

Ahhhh War stories from the days of Irrational exhuberance being shared over a BBQ .... love it ....


----------



## Pommiegranite (12 November 2008)

Beej said:


> Or buy a place for $350k, spend $350k on it, sell 2 years later for $1.4M, like some good friends of mine did - that's a "perception" I like
> 
> PS: I thought they were mad at the time for spending that much money (on renovations) in the area they were in, but they correctly picked the trend and I had to eat humble pie!
> 
> ...




Tell them to do it again.

Buy a place for $1.4million, spend nothing on it, sell it in 3 years time for $700k


----------



## Indie (12 November 2008)

[QUOTE=Pommiegranite;360955]Tell them to do it again.

Buy a place for $1.4million, spend nothing on it, sell it in 3 years time for $700k[/QUOTE]

Yes, and the point of this thread lies herein.

Nobody can argue about profits made in the boom years, stocks are the same. The credit market has now topped. No question. The writing is on the wall in every other part of the economy. Anyone who thinks the asset class of property can escape the carnage unfolding in the economy is in denial. Plain and simple.


----------



## MrBurns (12 November 2008)

Beej said:


> Or buy a place for $350k, spend $350k on it, sell 2 years later for $1.4M, like some good friends of mine did - that's a "perception" I like
> 
> PS: I thought they were mad at the time for spending that much money (on renovations) in the area they were in, but they correctly picked the trend and I had to eat humble pie!
> 
> ...





BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.


----------



## Beej (12 November 2008)

Pommiegranite said:


> Tell them to do it again.
> 
> Buy a place for $1.4million, spend nothing on it, sell it in 3 years time for $700k




The difference being, the story I related has actually happened. 



			
				Indie said:
			
		

> Yes, and the point of this thread lies herein.
> 
> Nobody can argue about profits made in the boom years, stocks are the same. The credit market has now topped. No question. The writing is on the wall in every other part of the economy. Anyone who thinks the asset class of property can escape the carnage unfolding in the economy is in denial. Plain and simple.




The point being that there is not, as yet, anything to deny. Has there been a 30-40% crash in prices?? No way, not even close! So far all we are seeing is a vanilla property market slow down, like many that I as a market participant and keen observer for 25 years, have seen several times before. There is no concrete evidence to suggest it is more than that. 

As always in this situation there will be pockets of relative disaster (where price inflation really did get way out of hand), and there will be pockets of relative good performance. Sydney for example is done with falls - it will not go down much from where it is right now - because it hasn't gone up as much as other area's, and the boom here finished 4 years ago in 2004. SEQ/Perth - more falls to come IMO. This scenario is playing out clearly in the latest stats (biggest falls in SEQ and WA, smallest falls in Sydney - mainly top end now, lower price range is actually starting to pick up quite a bit in Sydney). 30%-40% falls to come? I don't think so. Dream on. It is the price crash "dreamers" that are in denial IMO - continuing to justify their own poor decisions of the past (especially since the stock market crashed).

The thing that consistently AMAZES me about this thread is the smugness/ certainty/ "everyone else is an idiot" attitude of many of the bear posters here. The reality is that anyone who had the means and DIDN'T buy into property in that last 10-15 years are the idiot's..... hoping/praying for a massive crash is not going to rectify that mistake!

Those that only now have the means to enter the property market should view the current time and the next year or 2 as a GREAT opportunity with the market at it's most affordable for years. In a decade we will look back at 2008/2009 as we now look back at 1991/1992 in terms of the opportunity.

Even if you subscribe to the "great economic disaster of our times" to come doomsayer view, then you will still need somewhere to live, and property is about the best inflation hedge there is. You may as well park your cash in the best located/fitted out house you can afford, where at least you get a lifestyle benefit out of it (Unlike gold etc), plus a direct financial/cash-flow one (ie, you don't have to pay rent). There is real tangible value in property that short of nuclear war or something similar cannot be destroyed in the way the value of other assets can be.

Life goes on, people are still buying/selling/living in and enjoying property every day as this endless, and mostly irrelevant debate rages on here.

Cheers,

Beej


----------



## numbercruncher (12 November 2008)

> The thing that consistently AMAZES me about this thread is the smugness/ certainty/ "everyone else is an idiot" attitude of many of the bear posters here





No Bears in this thread, just realists ......


Read the paper folks (  if you dont have a net connection  ) .....

Prices are dropping across the entire nation, make that the planet ....


----------



## lioness (12 November 2008)

jonojpsg said:


> I visited my brother in St Kilda a couple of months ago and there was a place for sale down the road - 3-4 bedroom house on small block (are there any large blocks in melb suburbs???) in need of reno and they wanted $700k for it
> 
> If you are talking about prices like this falling by 10-15% in short order I can't see why this is a problem.  Who would want to pay that much for a dingy old place in the burbs anyway??  Specially when you can buy a beautiful new house overlooking the river and city in hobart for less than that
> 
> However it is the median prices which are the issue - inner city burbs with median prices at the $600k+ level falling by 20% should not have marked effect on median prices as these places are all at the top end of the list - although the flowon effect would see houses in outer suburbs pushed down also but by less %.




Jono,

You don't understand demand and supply my friend.

Firsty, no-one wants to live in Hobart and that is why real estate is so cheap.

Every other doomsdayer on here hoping inner city prices will crash 30-50% are dreaming.  I live in Fitzroy North and prices here are even better than St Kilda. Shoe boxes with 5 metre frontages that are renovated sell for 1.2 million(one just sold last week for that). Double fronts sell for 1.5 to 2 million renovated.

Prices have not come down here at all. Everyone living here has high disposable incomes and couples here have 2 income on high income as professional couples. Even when one loses their job, the other kicks in to keep paying the mortgage.

So there is no crash, a SLOWING yes of up to 5-10% MAXIMUM.

You guys just don't get it. Inner city blue chip you will never lose over 7 years.

I have 2 cars and fill each car up once every 2 months, people live here for convenience and lifestyle.


----------



## Mofra (12 November 2008)

ROE said:


> We have a supplied problem here so price wont drop
> 
> 
> "Even as the US bubble reached bursting point, commentators there insisted that there was no problem because there was no evidence of oversupply. As James Smith, chief economist for the Society of Industrial and Office REALTORS, wrote in 2004, "One indicator of a bubble is a rapid increase in the supply of the asset in question. [But] housing inventories have been at very low levels for over five years suggesting there is no excess supply of houses."
> ...



I know you seem to be desperately happy at the notion of a major housing slump, however you seem to have completely missed the massive US construction boom of 2006, which some have estimated to be enough to have housed 50% of the then population.

This quote has been taken from a period before the ridiculous levels of oversupply were even constructed.


----------



## Mofra (12 November 2008)

numbercruncher said:


> Seems that 12pc thing you keep going on about might be one big fat lie - Im sure the people who supplied you that information will call it an error ..... ?
> 
> 
> Melbourne is nosediving .....
> ...



robots has stated he holds units, so 3 & 4 bedroom house prices aren't the best basis for comparison. Personally bang for buck I'm not a fan of the inner East; wrong side of the Yarra for a start 

For the record -0.3% for the quarter in my area; after years of massive gains I can live with one quarter of negative price but hope a small theoretical loss (ie < 30 sales) makes the bears happy nonetheless.


Enjoy the result; after all your research, posting links to articles and the fact that you have never resorted to personal insults you deserve some sort of victory


----------



## MrBurns (12 November 2008)

Crash coming like it or not, already started, inner city will be one of the worst to suffer. Dont argue with me just wait and see.


----------



## ROE (12 November 2008)

lioness said:


> Jono,
> 
> You don't understand demand and supply my friend.
> 
> ...




UK:
Speculation of a pending housing market crash has no foundation. Interest rates still remain historically low, unemployment remains at a record low and incomes are rising strongly. Meanwhile lenders continue to compete vigorously for new business with exceptionally attractive mortgage offers. All the signs suggest that we are heading for a soft landing after the heavy price rises of recent years."
John Wriglesworth, Hometrack Economist	June 2004

"While house prices have certainly risen, as everybody knows, what is also the case is that people's debt servicing payments, mortgage payments as a share of their income are still far lower than they were 10 years ago."
Gordon Brown, Chancellor of the Exchequer	June 2004

"The strength of the market this year has been surprising. Indications are the market will retain significant momentum through the first half of 2007 due to solid economic growth and rising employment."
David Stubbs, RICS economist	December 2006

"At the rate we're seeing so far this year, I can easily see house price inflation hitting 20% this year - twice the level we saw last year."
Miles Shipside, RightMove  April 2004"


the year is now 2008 

I use some of this forum quote in 2011 for Australian Housing.. this is a good one ... I put in my book..and remember the moto

"House price double every 7 years"


----------



## Beej (12 November 2008)

ROE said:


> "House price double every 7 years"




Great straw man quote there - who on this thread has ever actually said that???

Here's a quote you can use - "Over the long term, the price of established houses will ALWAYS increase".

Cheers,

Beej


----------



## gfresh (12 November 2008)

MrBurns said:


> Crash coming like it or not, already started, inner city will be one of the worst to suffer. Dont argue with me just wait and see.




lol.. now there is a solid argument. 

I think some area getting ahead of themselves with the full crash scenario.. best to watch and observe. I'm happy to watch and see what is happening rather than make any huge predictions one way or the other. 

I think 20%+ across the board is pretty out there. That sort of scenario relies on the large-scale collapse of our economy, fall of our major banks, 10% unemployment, people out in the streets, etc.


----------



## ROE (12 November 2008)

Beej said:


> Great straw man quote there - who on this thread has ever actually said that???
> 
> Here's a quote you can use - "Over the long term, the price of established houses will ALWAYS increase".
> 
> ...




is there anything that doesnt increase over the long term?
cash in the bank, bonds, stock market? hell even coca cola drink increase

but I like 

"house price double every 7 years"  some increase faster than other
cos you make lot of money that way  and you can retire rich too
Plenty of double quote here

http://bubblepedia.net.au/tiki-index.php?page=House Prices Double Every X Years

damn in 25 years I cant afford a house in Darwin with all my saving, my super, my current house combine .. that $8 million median price for a house in Darwin when I retire


----------



## MrBurns (12 November 2008)

gfresh said:


> lol.. now there is a solid argument.
> 
> I think some area getting ahead of themselves with the full crash scenario.. best to watch and observe. I'm happy to watch and see what is happening rather than make any huge predictions one way or the other.
> 
> I think 20-40% across the board is pretty out there. That sort of scenario relies on the large-scale collapse of our economy, fall of our major banks, 10% unemployment, people out in the streets, etc.




10% unemployment is already on the cards J P Morgan and other predict it and the Govt is upping their predictions when they "have" to, just watch the news tonight and see who the latest is to go.

40% easy it was 30% in the late 80's and that was a piece of cake compared to this mess.

Major banks don't need to fall to get this across the line just the poor customers who borrowed what seemed to be a reasonable amount then lost their jobs. Negative equity will be common place so miss a payment and the banks move in, they're a predatory lot and have already factored in foreclosures.

You wont be doing too much lol'ing when this hits the fan ole chum.

Watch the Auction results this week, the REIV haven't even released the residential vacancy rates for October becuase they dont want to spoil the Spring sales any more then they already are.


----------



## robots (12 November 2008)

gfresh said:


> I repeat the basics again:
> 
> FHOB, entry level $330k unit (Brisbane):
> 
> ...






robots said:


> hello,
> 
> great work Gfresh, its a very interesting situation and relies on the savings being made,
> 
> ...




hello,

the above two posts from valued ASF members I believe sum up a lot, Gman articulates the current proposal superbly

the day has been awesome, a few cafe lattes on chapel st, plenty out on the world famous strip enjoying life, bars will be pumping tonite with Mr Efron in town as well

have a great day

thankyou
robots


----------



## ROE (12 November 2008)

gfresh said:


> lol.. now there is a solid argument.
> 
> I think some area getting ahead of themselves with the full crash scenario.. best to watch and observe. I'm happy to watch and see what is happening rather than make any huge predictions one way or the other.
> 
> I think 20%+ across the board is pretty out there. That sort of scenario relies on the large-scale collapse of our economy, fall of our major banks, 10% unemployment, people out in the streets, etc.




Actually if you read in depth into how our bank source funding, how inter-banking lending works, debt to income ratio, and what drive Aussie Dollars

you will come to understand all those scenario need not to happen for housing to start going south.


----------



## Indie (12 November 2008)

Beej said:


> The thing that consistently AMAZES me about this thread is the smugness/ certainty/ "everyone else is an idiot" attitude of many of the bear posters here. The reality is that anyone who had the means and DIDN'T buy into property in that last 10-15 years are the idiot's..... hoping/praying for a massive crash is not going to rectify that mistake!
> 
> Those that only now have the means to enter the property market should view the current time and the next year or 2 as a GREAT opportunity with the market at it's most affordable for years. In a decade we will look back at 2008/2009 as we now look back at 1991/1992 in terms of the opportunity.
> 
> ...




I bought and sold a few times over the last 15 years. As a hedge against inflation property was pretty good. The key was negative real interest rates, i.e interest rates being lower than real inflation. It's hard to lose in that environment when you borrow for assets. But where is the inflation now that money supply is being choked in the credit markets? Most real estate bugs don't understand what the main drivers of the boom were so they can't see the crash coming. This is the first time I have exited the property and stock markets entirely in all my adult life. 

What you should be looking for is a hedge against DEFLATION. Like USD or YEN. I have no regrets about getting out of property and investing in these assets. Their performance relative to the Australian property and stock market this year is one warning sign. They have both smashed the Australian property market. 

What AMAZES me is the blinkered approach to investing taken by most of the property bugs on this thread. It's just the sheep mentality, follow the trends blindly. By the time the market turns against you, you've already lost your left nut on the chopping block. But you're right about one thing, it all remains to be seen, so we shall see. It's funny, the stock market bugs told me I was crazy for selling near the top of the market too. You know, "stocks always bounce back" "there's too much demand coming from China" ...etc. 

We're just warning you guys. Don't take your hard earned gains for granted. There are people all over the world trying to work out ways of separating you from your money every day.


----------



## ROE (12 November 2008)

Indie said:


> I bought and sold a few times over the last 15 years. As a hedge against inflation property was pretty good. The key was negative real interest rates, i.e interest rates being lower than real inflation. It's hard to lose in that environment when you borrow for assets. But where is the inflation now that money supply is being choked in the credit markets? Most real estate bugs don't understand what the main drivers of the boom were so they can't see the crash coming. This is the first time I have exited the property and stock markets entirely in all my adult life.
> 
> What you should be looking for is a hedge against DEFLATION. Like USD or YEN. I have no regrets about getting out of property and investing in these assets. Their performance relative to the Australian property and stock market this year is one warning sign. They have both smashed the Australian property market.
> 
> ...




Nice .. I do have properties too but I know when there is a bubble 
same with stock market I know when there is a bubble ..

property investor yet to experience debt deflation  dont worry they learn soon enough mean while I tell people 

"property double every 7 years" to keep the moto going because they been using it for last couple years...I got to keep it up and carry on for the next generation


----------



## ROE (12 November 2008)

Indie said:


> What AMAZES me is the blinkered approach to investing taken by most of the property bugs on this thread. It's just the sheep mentality, follow the trends blindly. By the time the market turns against you, you've already lost your left nut on the chopping block. But you're right about one thing, it all remains to be seen, so we shall see. It's funny, the stock market bugs told me I was crazy for selling near the top of the market too. You know, "stocks always bounce back" "there's too much demand coming from China" ...etc.




I believe the moto for that is  "Stronger for Longer"  hahahaha


----------



## gfresh (12 November 2008)

ROE said:


> Actually if you read in depth into how our bank source funding, how inter-banking lending works, debt to income ratio, and what drive Aussie Dollars
> 
> you will come to understand all those scenario need not to happen for housing to start going south.




Indeed, I'm quite familiar on on many of those things also, probably even posted them up here in the past, read a lot. However, what has surprised me so far, is that banks have still been able to pass on these large RBA rate cuts, nearly in full - when according to these readings, lending should already be failing completely here in Oz.  This has been even as banks have collapsed o/s, nobody trusts anybody, and overseas funding has been difficult to source. 

I've always thought,  the only true crash would happen if rates went back up, or we are at the limit of how low rates can go.. The RBA goes to 3.5% or whatever, and banks stay at 7-8%. When this happens I may think differently, but it hasn't happened yet. 

Now under the near virtual dry-up of lending scenario, which is what has happened in the UK, everybody needs a 20% deposit, nobody will be able to get a loan, banks stop lending and nobody can even buy a property.  Then prices truly crash. 

This is not happening in Australia (yet), and needs to happen for prices to really sink to hell. 

I still believe prices are falling at the moment in many areas, heck, I  know things are very bad out there... but as to how much, depends on lending, and there isn't enough information yet to show how this will pan out. That is why I'm saying calls for the doomsday scenarios are too early. When we get to 10% falls in pricing across the board, unemployment is 6%, etc and there is no signs of recovery, sure, look for the next point. 




MrBurns said:


> 10% unemployment is already on the cards J P Morgan and other predict it and the Govt is upping their predictions when they "have" to, just watch the news tonight and see who the latest is to go.




I read these with interest, but I can't help but be a little skeptical at the same time. After all, JP Morgan, Morgan Stanley, Goldman Sachs, Merrill Lynch have all completely failed to prepare for this crisis - now we expect to believe their downward forecasts as well? They're simply running with the rest of the sheep down the hill now. No doubt suddenly they'll turn all bullish soon as everybody else is.


----------



## MrBurns (12 November 2008)

gfresh said:


> I read these with interest, but I can't help but be a little skeptical at the same time. After all, JP Morgan, Morgan Stanley, Goldman Sachs, Merrill Lynch have all completely failed to prepare for this crisis - now we expect to believe their downward forecasts as well? They're simply running with the rest of the sheep down the hill now. No doubt suddenly they'll turn all bullish soon as everybody else is.




I make a guess (that's all you can do) based on where the info comes from and what I see on the street. JP Morgan and others predict this, those who dont are in the main charged with the reponsibility of not spooking the market so I put less weight on their predictions.

On balance and seeing what is happening I think the odds are for a very large unemployment figure.

You have to reassess these things constantly of course but the news is all bad lately and increasing in intensity.


----------



## Pommiegranite (12 November 2008)

Beej said:


> The difference being, the story I related has actually happened.
> 
> 
> 
> Beej




Yes Beej. Unfortunately for them, the buyers were also real. I wonder what kind of losses they are looking at?


----------



## cuttlefish (12 November 2008)

There was supposed to be a shipment of new land being delivered to my suburb sometime this year but apparently they've stopped making it.


----------



## robots (12 November 2008)

hello,

i hope that happens Gman, no one can get money except for those who can afford it, 

i ask again, who held property during recession? girlfriend had unit in elsternwick and it went through unscathed

who else has example?

before you know it, 10, 15, 20yrs have pasted and those in for the ride reaped the benefits, nirvana

great discussion, looking forward to another rate cut in a few weeks and we still havent reached "neutral" monetary policy from the colonel at the RBA

we must be on the way to 0.3% ir's, thats what Japan has, dont we follow everything else in the world? dont see kids getting around with 9mm's on the pushie in st kilda

thankyou
robots


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## Beej (12 November 2008)

Pommiegranite said:


> Yes Beej. Unfortunately for them, the buyers were also real. I wonder what kind of losses they are looking at?




Hmm let's see - they have had that house for about 5 years now. It's in a great area on the lower north shore of Sydney - close to the city, great restaurants etc - so they probably don't drive much, and would only own a car because they want to, not because they had to. Must have saved a motsa on fuel bills! Their house is awesome - so they have been living in luxury all that time - you name it this house probably has it (thanks to the maga-renovation done by my friends). In the area even in the past month there have been 2 sales of similar class renovated property - one at $1.49M and one at $1.7M (that one was on a busy street too!). I expect if they did decide to sell (but not sure why they would) they would still be looking at a nice capital gain/profit - at least inflation plus a bit, tax free, in addition to all the lifestyle benefits they have gained over the years of ownership.

So yes - looks they will be doing it real tough.... NOT!

Cheers,

Beej


----------



## Indie (12 November 2008)

robots said:


> hello,
> 
> i hope that happens Gman, no one can get money except for those who can afford it,
> 
> ...






No commodities boom to prop up the economy this time around. Also, this will be a global recession. Japan and USA are adopting a ZIP interest rate policy but it doesn't seem to be working because even at zero they will not be negative real interest rates. 

Deflation sucks. In 10, 15, 20 years we can have hyper inflation and real estate will bounce back. Of course you'll be paying 10 times more for a loaf of bread too. But you'll feel rich seeing all those zeros on your balance sheet. And the sun will be shining more brightly than ever due to global warming. And nirvana will be playing on Classic Hits FM. And Australia will still be the greatest place on God's green earth because....well, you can't afford to go anywhere else anyway. And you'll remember a time, long, long ago, when you really were wealthy.

This is not the garden variety recession folks, stop comparing it to others in recent memory. Opportunity is there for those who can be flexible and prepare for the future. Think outside the square. Don't miss your chance, you only live once.


goodluck and watch the debt
Indie


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## MrBurns (12 November 2008)

Indie said:


> No commodities boom to prop up the economy this time around. Also, this will be a global recession. Japan and USA are adopting a ZIP interest rate policy but it doesn't seem to be working because even at zero they will not be negative real interest rates.
> 
> Deflation sucks. In 10, 15, 20 years we can have hyper inflation and real estate will bounce back. Of course you'll be paying 10 times more for a loaf of bread too. But you'll feel rich seeing all those zeros on your balance sheet. And the sun will be shining more brightly than ever due to global warming. And nirvana will be playing on Classic Hits FM. And Australia will still be the greatest place on God's green earth because....well, you can't afford to go anywhere else anyway. And you'll remember a time, long, long ago, when you really were wealthy.
> 
> ...




Thats profound , can you follow it up with something more specific like where to put say $500k cash ?


----------



## Beej (12 November 2008)

Indie said:


> No commodities boom to prop up the economy this time around. Also, this will be a global recession. Japan and USA are adopting a ZIP interest rate policy but it doesn't seem to be working because even at zero they will not be negative real interest rates.
> 
> Deflation sucks. In 10, 15, 20 years we can have hyper inflation and real estate will bounce back. Of course you'll be paying 10 times more for a loaf of bread too. But you'll feel rich seeing all those zeros on your balance sheet. And the sun will be shining more brightly than ever due to global warming. And nirvana will be playing on Classic Hits FM. And Australia will still be the greatest place on God's green earth because....well, you can't afford to go anywhere else anyway. And you'll remember a time, long, long ago, when you really were wealthy.
> 
> ...




Gee, why don't we all just pop out the back and shoot ourselves and get it all over with......

Meanwhile back in the real world, away from gloomy, pessimistic internet forums frequented by conspiracy theorists and other gloomy folk (who in the past with no internet fortunately had no easy way to share and snowball their whacky idea's so easily!), life goes on, and actually, is pretty good! I only need to see my newest little baby son smile and giggle for the first time to be reminded of that!

Cheers,

Beej


----------



## Glen48 (12 November 2008)

Here is a chance to make 50K + . There are 80 houses going up for auction at North Lakes here in QLD with $50 K off the price.
12 Mths ago people were sleeping in their cars so they could buy a block of land as soon as the agent's office opened.
So those who think RE doubles every 7 years buy now, here are houses 3-4 years old not sure how the double every 7 works as it didn't work for these Brainwashed Victims.
And more good news store owners are walking out of their shops in the new Westfield centre also buy a few houses and open a business were the workers have never had it so good.


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## MrBurns (12 November 2008)

Glen48 said:


> Here is a chance to make 50K + . There are 80 houses going up for auction at North Lakes here in QLD with $50 K off the price.
> 12 Mths ago people were sleeping in their cars so they could buy a block of land as soon as the agent's office opened.
> So those who think RE doubles every 7 years buy now, here are houses 3-4 years old not sure how the double every 7 works as it didn't work for these Brainwashed Victims.
> And more good news store owners are walking out of their shops in the new Westfield centre also buy a few houses and open a business were the workers have never had it so good.




That sounds like a story from 1929 ...........


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## numbercruncher (12 November 2008)

Beej said:


> Gee, why don't we all just pop out the back and shoot ourselves and get it all over with......
> 
> Meanwhile back in the real world, away from gloomy, pessimistic internet forums frequented by conspiracy theorists and other gloomy folk (who in the past with no internet fortunately had no easy way to share and snowball their whacky idea's so easily!), life goes on, and actually, is pretty good! I only need to see my newest little baby son smile and giggle for the first time to be reminded of that!
> 
> ...





Congrats on the new son Beej ! awesome time for you and your family !


You do bemuse me though, we are stairing down the barrel of the biggest financial crisis since the great depression yet you dismiss peoples commentary of this as fabricated pessimism ?

Very bizarre, almost like ostrich head in the sand behaviour ...... potentially a dangerous thing !!

Who knows maybe Central banks and Governments of the world will unite and save the day ( cough cough ) ...... but acting like this whole thing is a figment of the bears/realists imagination is frankly really bizarre !!

Cheers and G/luck.


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## Indie (12 November 2008)

MrBurns said:


> Thats profound , can you follow it up with something more specific like where to put say $500k cash ?





YEN.


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## nunthewiser (12 November 2008)

Indie said:


> YEN.




YEP

the future benchmark


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## MrBurns (12 November 2008)

numbercruncher said:


> Congrats on the new son Beej ! awesome time for you and your family !




Congrats Beej, I think you have just realised whats important and that the global financial crises doesnt even rank, well done and welcome to the REAL world, enjoy the ride (I assume this is your first?}
Big cigar from me to you


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## MrBurns (12 November 2008)

Indie said:


> YEN.





Thanks but I dont know enough to even consider it, yeah i know read up on it . I guess I should, thanks again.


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## Indie (12 November 2008)

Beej said:


> Gee, why don't we all just pop out the back and shoot ourselves and get it all over with......
> 
> Meanwhile back in the real world, away from gloomy, pessimistic internet forums frequented by conspiracy theorists and other gloomy folk (who in the past with no internet fortunately had no easy way to share and snowball their whacky idea's so easily!), life goes on, and actually, is pretty good! I only need to see my newest little baby son smile and giggle for the first time to be reminded of that!
> 
> ...





I'm sure the balance sheets of all trouble companies in the world would be fixed overnight if we could just rid the internet of all those evil conspiracy theorists. Then we could just concentrate on getting on with the business of making renters feels like investment morons who are missing the property boat.


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## THE BUZZ (12 November 2008)

Hey all, thought this point may interest, a friend of mine who has a reasonably succesfull retail store in a smaller centre in melbourne is planning to just hand back the keys when lease is up mid next year, he can't see the logic of signing a new lease with 20 % rent increase and a mandatory re-fit out of store [approx - 50k-70k] when economy looks so terrible.

He's glad he is out of debt and comfortable with his own home and a rental property.

Maybe considering the doom and gloom he should approach centre management and barter a better deal? Maybe all store owners should stick it up the centres, I'm sure they would dread losing out on rent incomes altogether if owners can't see a light at the end of the tunnel.


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## Glen48 (13 November 2008)

Whats with the drama over IR coming down 3% mid next year?
Do they know how bad things are i reckon they will hit 3%very early next year starting with another 1% in December.


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## Temjin (13 November 2008)

Beej said:


> Gee, why don't we all just pop out the back and shoot ourselves and get it all over with......
> 
> Meanwhile back in the real world, away from gloomy, pessimistic internet forums frequented by conspiracy theorists and other gloomy folk (who in the past with no internet fortunately had no easy way to share and snowball their whacky idea's so easily!), life goes on, and actually, is pretty good! I only need to see my newest little baby son smile and giggle for the first time to be reminded of that!
> 
> ...




Congrats for your newborn, I'm looking forward to it one day too. 

Now back to the point, there is a difference between a "pessimistist" and a "realist". We are gloomy because we are looking at facts. Facts that lengendary investors and high profile people such as Warren Buffet, Jim Rogers, Alan Greenspan, Marc Faber, Nourine Robinin, and alike are protraying. They all agree the world is facing one in a hundred year event and this is no where near from over. (though they do have a bullish side, but definitely not in real estate in this regards) 

Most of us, at least I am anyway, are basing our opinions BASED ON THEIR WISDOM and their VIEWS. 

So do you think they are wrong in this regards? 

I certainly don't have the experiences/knowledge to judge them wrong since some of them are billionare investors who have been in the business before we were even born. If you believe you know more than they do, and they their "gloomy" predictions are totally unjustified based on your own "limited" observation of the surrounding world, then go ahead and let them know they are wrong and everything is all and well. 

Like I said again, step back and look at the bigger picture. Limit reading the media news because they are either overwhelming gloomy or overwhelming cheerleading. Subscribe to those lengendary investors' newsletter/blog/articles and see if they are totally wrong about the state of the world economy.


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## Mofra (13 November 2008)

Temjin said:


> Now back to the point, there is a difference between a "pessimistist" and a "realist". We are gloomy because we are looking at facts. Facts that lengendary investors and high profile people such as Warren Buffet, Jim Rogers, Alan Greenspan, Marc Faber, Nourine Robinin, and alike are protraying. They all agree the world is facing one in a hundred year event and this is no where near from over. (though they do have a bullish side, but definitely not in real estate in this regards)
> 
> Most of us, at least I am anyway, are basing our opinions BASED ON THEIR WISDOM and their VIEWS.
> 
> So do you think they are wrong in this regards?



Warren Buffet is still investing billions, and still canvasses any attractive deal that he may find. The "get in the bunker" crowd obviously disagree with this legendary investor, I don't. Are things more difficult now? Yes, but in any crisis there are *multiple* opportunities to exploit.


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## chops_a_must (13 November 2008)

Mofra said:


> Warren Buffet is still investing billions, and still canvasses any attractive deal that he may find. The "get in the bunker" crowd obviously disagree with this legendary investor, I don't. Are things more difficult now? Yes, but in any crisis there are *multiple* opportunities to exploit.




So how much exactly would you be down if you bought GS or GE at the same time he did?

He only got into those deals because of the conditions attached.

And plus, I think he is just ramping, because his performance of late has been rather ordinary.


----------



## bigt (13 November 2008)

Not exactly a perfect quantitative argument, though I subscribe to daily Domain.com.au emails, filtered to Inner West Sydney, houses up to $550k.

Not much in there until a few weeks ago, now getting more and more daily. Two bedders which you wouldnt have picked up for under $650k are now appearing either in the email for auction (under $550k filtered) or priced at under $550k, some a lot less.

Definately good news for us FHB, and definately a sign that the inner sity burbs of Sydney are feeling the downturn. Then again, inner west Sydney has probably increased in price more than most other suburbs, so about time they came back to sensible-land. I feel this is just the start too. Thing is, is now the time to put in some silly offers, whilst panic is spreading?


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## nomore4s (13 November 2008)

Mofra said:


> Warren Buffet is still investing billions, and still canvasses any attractive deal that he may find. The "get in the bunker" crowd obviously disagree with this legendary investor, I don't. Are things more difficult now? Yes, but in any crisis there are *multiple* opportunities to exploit.




There are always opportunities, identifying them and then taking advantage of them is the hard part.

IMO you can not compare the normal investor to WB, if I was able to get the sort of deals WB can get I too would be jumping in but I can't, he doesn't invest in these companies at the prices or the terms that we do, his risk is greatly reduced.


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## Pommiegranite (13 November 2008)

Hi all,

As someone who is always comparing financial merits of buying a *PPOR *or renting, I have put together a financial comparison model *(attached)* with varying factors (such as capital gains, costs of purchasing, weekly rent amount, purchase price, renting subsidies, borrowing/saving rates, tax rates etc). 

I plan to use this model on an ongoing basis to tell me when it is cost effective to buy rather than rent.

All of these factors can be adjusted to suit one's individual situation. I would appreciate it if any of you could proof test this and point out any ommissions or things I should consider.

*Please note the following:*

1. Fill in green areas only

2. Duties tables are from Sydney (as I thought this is where most of you live)

3. Model calculates 'Net Savings rate' as 'Borrowing rate less 2% x Marginal Tax rate)

4. For ease of comparison, I have ignored any deposits. The only difference this makes is that the 2% difference between savings and borrowing rates on the deposit i.e minimal

5. Interest rates vary over the term, and so do capital gains. Therefore this should be adjusted on an ongoing basis.

6. It is possible that tax on savings can cross 2 tax bands. Unfortunately I cannot expand this model to include other income due to being restricted by 293KB filesize limit (It has been a chore just to reduce this file size as it is!)

7. Once again, this a PPOR vs Rent comparison. I am aware that there are other potential benefits and risks from be leveraged on an investment property. Maybe I will get to comparing these in the future.

*ANY feedback, faults found and tips would be appreciated. Thanks*


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## Pommiegranite (13 November 2008)

I've got no idea why my attachment keeps disappearing and reappearing.

Oh well, here goes again:


----------



## Pommiegranite (13 November 2008)

Third time lucky?


Oh well, here goes again with the new and improved version:


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## Knobby22 (13 November 2008)

They all work for me.


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## cuttlefish (13 November 2008)

Pommiegranite said:


> I've got no idea why my attachment keeps disappearing and reappearing.




too much information thanks! 


The spreadsheets pretty cool though.


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## cuttlefish (13 November 2008)

cuttlefish said:


> The spreadsheets pretty cool though.




and its telling me that in my suburb houses are expensive and studio apartments are cheap ...

Which I think is pretty much right on those numbers, but its difficult to assess land value which is quite relevant for underdeveloped land in an inner Sydney area constantly increasing in density.


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## Mofra (13 November 2008)

Excellent work Pommiegranite. I actually did a few similar calculations years ago when I was being prompted to buy my own home, and found I was much better off buying an investment property & continuing to rent.


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## Spek (13 November 2008)

http://business.smh.com.au/business/pleasure-at-the-pain-of-others-20081112-5nyi.html

Michael Evans knows where to find the real heart of Sydney.

IT'S tough out there on Main Street. Particularly Main Street, Palm Beach. Not to mention Main Street, Mosman.

Ask those well-known social demographers otherwise known as the trading desk at Goldman Sachs JBWere.

Musing on the impact of the meltdown in, ahem, "the real world", Goldies operative Preston Hamersley called in a few "anecdotes from Main Street".

Such as how prices have been slashed at the Opera House car park, to $12 from $16.

And how private wine sellers are flooding the market at the "higher-end demographic".

Don't forget the well-known car dealer flogging 250 BMWs and Minis by the end of the year.

Our man in the street even had some thoughts on the Main Street property market.

"Some amazing stock available. In Mosman, prices are down 20 per cent and looks like half of Mosman is for sale."

And at Palm Beach? "Seventy properties for sale! How many on the 'Hill' - 300?"

We suspect that's trader talk for the real, real world, aka, Bellevue Hill.


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## gfresh (13 November 2008)

I have something similar, although done slightly differently. 

Couple of things in yours though:

a) In the amortisation sheet, you seem to referencing an empty cell in the "capital value" area? Was that meant to reference anything?

b) you haven't accounted for any rental increases as far as I can see over that 30 years? 

c) IMO I would definitely be indexing the savings from the deposit. A few $10k compounding yearly over 30 years will give you significant extras. If you have the deposit to buy, you have it to set aside to invest as well.  

d) What is the "rental assistance". Is that some NSW thing? Or a partner on lower income receiving Commonwealth rent assistance? Makes no sense to me here in QLD 

e) You should probably index the rates with the capital gain, as councils will always sting you for higher rates until you die, it's probably more a fixed proportion of the value.


----------



## Beej (13 November 2008)

Pommiegranite said:


> Third time lucky?
> 
> 
> Oh well, here goes again with the new and improved version:




Not bad - Thanks for sharing Pommie! I've had a bit of a look. A few comments:

* No more mortgage duty - abolished in all states when the GST came in.
* Legal fees - purchaser conveyancing can be done for $900
* Lenders Fees - you should be paying zilch here
* Inspection fees - should only be paying $400 or so
* Stamp Duty - I'm guessing the spreadsheet uses the QLD rate?
* I also thought the council rates and insurance rates were too high. Council rates in NSW would typically be around $600-$1500/year tops (I currently pay $180/qtr), so I adjusted that. Building insurance would typically be about $400pa in most cases.

Making the above adjustments, and using an interest rate of 7% (which is what I have on my equity manager account currently), and using my current PPOR as the example (based on current appraised value + current rental expectation), plus I guess most controversially a 3.5% capital gain rate (which is inflation essentially only, no doubling in 7 years etc etc - more like 20! SO very conservative long term) - the spreadsheet says that after 3 years, it is more cost effective to rent by $10k after 3 years, but that after 10 years you are $90k in front for buying. Of course this example is a little moot as I currently own my PPOR outright already anyway 

Interestingly, I also used the numbers for a house that I am considering purchasing (which is better and more expensive than my current PPOR), and it comes out after 3 years as being better to BUY than to rent after the first 3 years to the tune of $10k-$50k depending on the rental value I use. After 10 years, I am $180k -> $350k in front for buying that house rather than renting it.

So both cases look like no brainers to me!

PS: I do not wish to divulge the specifics (values, rents etc) of my examples as they reveal to much detail of my personal financial situation!

PPS: I also had the question already asked about whether rents are indexed/increased over time in the calcs?

Cheers,

Beej


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## Junior (13 November 2008)

Jonathon Pain of HFA estimates that AUS house prices will drop by a minimum of 20-25% in the short-medium term.


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## Beej (13 November 2008)

Junior said:


> Jonathon Pain of HFA estimates that AUS house prices will drop by a minimum of 20-25% in the short-medium term.




Fine - if you believe that then rent away!

PS: Don't expect to be buying MY house off me for a 25% discount to it's current value!

Cheers,

Beej


----------



## Temjin (13 November 2008)

Pommiegranite said:


> Third time lucky?
> 
> 
> Oh well, here goes again with the new and improved version:




Intersting Pommiegranite. I'm working on a similar spreadsheet too except it only looks at the "investment return" of owning a house. That return can be compared by the person's opportunity cost (cash rate or equity return over the long term) taking his/her marginal tax rate into account.

I have not worked on the "return comparsion" yet, only on the return of a home investment. Will post when i have made some final adjustments at it.

I can't get around my head with your method at the moment. 

I use a simple net present value (basic financial modelling) in my method, using fairly same assumptions as what you have. Like stamp duty, insurance cost, also included home maintainence cost (I'm sure someone need to fix their home over 10 years period!), fixed interest rate for term, etc, etc. 

Will post when I have more time to fix some minor mistakes. (note i have post a similar spreadsheet in this whole thread before, but I changed my method to be more academic)


----------



## CamKawa (13 November 2008)

Beej said:


> PS: Don't expect to be buying MY house off me for a 25% discount to it's current value!



I will expect to do so.


----------



## Pommiegranite (13 November 2008)

Temjin said:


> Intersting Pommiegranite. I'm working on a similar spreadsheet too except it only looks at the "investment return" of owning a house. That return can be compared by the person's opportunity cost (cash rate or equity return over the long term) taking his/her marginal tax rate into account.
> 
> I have not worked on the "return comparsion" yet, only on the return of a home investment. Will post when i have made some final adjustments at it.
> 
> ...




Thanks for all of the replies guys. It's exactly what I was looking for! G and Beej, you've made some key points which I hadn't considered

I'm going to try and get something together which incorporates your points and other amendments and get it posted next week (although getting it under 293k will be the biggest challenge!). Temjin, it would be good to see what you have also.

One thing that this spreadsheet shows me is that the overriding financial benefit from renting over buying (and vice versa) is capital gains/losses. All of the rest (including payment of principal on a mortgage) is window dressing.

So timing the market (moreso than time in the market) really does go a long way to determining one's financial future.


----------



## Pommiegranite (13 November 2008)

Beej said:


> Not bad - Thanks for sharing Pommie! I've had a bit of a look. A few comments:
> 
> * No more mortgage duty - abolished in all states when the GST came in.
> * Legal fees - purchaser conveyancing can be done for $900
> ...




Beej,

I heard that inspection fees depend on age/size of property. I look at a few figures from the net and took a %

The Stamp duty rates are from NSW

The Council rates are from Baulkham Hills Shire, and are actual rates for the cheapest option ie a 90litre bin (no organics)


----------



## Pommiegranite (13 November 2008)

gfresh said:


> *d) What is the "rental assistance". Is that some NSW thing? Or a partner on lower income receiving Commonwealth rent assistance? Makes no sense to me here in QLD *




G,

In NSW and Victoria if you are entitled to Family Tax Benefit A or dolebludger allowance, the you are entitled to rental assistance (not sure about other state). These figures are for NSW.

This shows that this spreadsheet really needs to have some income parameters in it. I've got a feeling that there is no end to how much I can tweak this!


----------



## Spek (13 November 2008)

Beej said:


> PS: Don't expect to be buying MY house off me for a 25% discount to it's current value!



 **


** Small print: This assertion assumes current value is already 12.7% less than last year. Source http://www.smh.com.au/news/national/...165481817.html


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## robots (13 November 2008)

hello,

wallop, bang, oh another high 5% smashed from the shonky exchange in one day, one day 

about time CBA is getting pulled down with the rest,

what a day, paradise on the streets down Chapel St again, 30+ degrees sipping lattes watching the world go around, awesome

anybody know how's property going? awesome time as a money renter

thankyou
robots


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## cuttlefish (13 November 2008)

I'm by no means a property bull at the moment, but I do have to say that doing some sums on studio apartments currently for sale local to me they are looking like fair value at the moment.  I'm not about to buy another investment property right now, but 'grossly overvalued' doesn't seem like a fair description.  

I also note that I could buy back an equivalent unit to one I sold 5 years ago for the same price today as I sold it for back then (possibly even get it slightly cheaper than I sold it for). Hardly evidence of an irrational speculative bubble in this area at least imo.

Some sums based on net rental yield (agents fees, rates and levees taken out) and based on current rental market rates has it costing an investor $50/week out of pocket to hold (after adding in the negative gearing benefits at top tax rate.). Thus only requires a 1% capital gain to break even.  (this is based on 7.4% 10 year fixed term interest rate).

If interest rates fall another 1%,  a 5% discount was achieved off the asking price, and the rent raised by10%, the property would be neutrally geared at 100% borrowing.

Hardly comparable to tulip bulbs and dot com stocks is it?


----------



## MrBurns (13 November 2008)

cuttlefish said:


> I'm by no means a property bull at the moment, but I do have to say that doing some sums on studio apartments currently for sale local to me they are looking like fair value at the moment.  I'm not about to buy another investment property right now, but 'grossly overvalued' doesn't seem like a fair description.
> 
> I also note that I could buy back an equivalent unit to one I sold 5 years ago for the same price today as I sold it for back then (possibly even get it slightly cheaper than I sold it for). Hardly evidence of an irrational speculative bubble in this area at least imo.
> 
> ...




When property has fallen below replacement value, that's a reasonable time to start thinking about buying again.


----------



## Glen48 (13 November 2008)

Wait a few more minutes before you buy as George Soros has some thing to tell us all:

SHOCKER: George Soros just announced that up to two-thirds of the $1.9 trillion hedge fund industry is about to go belly-up 6,600”” an event that would force one of the greatest stock market fire sales of all time. In his report below, Mike Larson gives you the details and shows you how to use this latest bombshell to go for double-your money gains.


----------



## robots (13 November 2008)

Glen48 said:


> Wait a few more minutes before you buy as George Soros has some thing to tell us all:
> 
> SHOCKER: George Soros just announced that up to two-thirds of the $1.9 trillion hedge fund industry is about to go belly-up 6,600”” an event that would force one of the greatest stock market fire sales of all time. In his report below, Mike Larson gives you the details and shows you how to use this latest bombshell to go for double-your money gains.




hello,

wait before you buy,

they forgot my tomato in my salad roll today and its going to wipeout the world

thankyou
robots


----------



## nunthewiser (13 November 2008)

robots said:


> hello,
> 
> wait before you buy,
> 
> ...




the tomato or the roll ?? would be nice to know which one to worry about


----------



## robots (13 November 2008)

nunthewiser said:


> the tomato or the roll ?? would be nice to know which one to worry about




hello,

the tomato, 

thankyou
robots


----------



## CamKawa (13 November 2008)

Here's a chart from tonight’s ABC news. It looks like the property market is at least 23% overcooked.


----------



## MrBurns (13 November 2008)

CamKawa said:


> Here's a chart from tonight’s ABC news. It looks like the property market is at least 23% overcooked.




Yep 23% plus the down dip thats overdue say another 15% let's round it off at say 40% probably a lot more.


----------



## CamKawa (13 November 2008)

MrBurns said:


> Yep 23% plus the down dip thats overdue say another 15% let's round it off at say 40% probably a lot more.



And if you look at when we last had a credit crisis, 1929-1933, you can see that house prices fell from about 200 to 100. A quiet 50% fall.


----------



## Mofra (13 November 2008)

MrBurns said:


> Yep 23% plus the down dip thats overdue say another 15% let's round it off at say 40% probably a lot more.



Great analysis there... I can make up figures too (or "roudn them off" if you'd prefer . I'd rather live in the real world though.


----------



## nunthewiser (13 November 2008)

im just trying to work out where everyone going to live while all this happens


----------



## MrBurns (13 November 2008)

Mofra said:


> Great analysis there... I can make up figures too (or "roudn them off" if you'd prefer . I'd rather live in the real world though.




Yes I can see that from your avitar


----------



## Mofra (13 November 2008)

MrBurns said:


> Yes I can see that from your avitar



Funny how the bears always try to get personal (with apologies to NC & Pommie).


----------



## MrBurns (13 November 2008)

Mofra said:


> Great analysis there... I can make up figures too (or "roudn them off" if you'd prefer . I'd rather live in the real world though.




I'm sure Alan Greenspan did a lot of analysis as did Wayne Swann (choke) and a lot of others that thought they were smart arses that are now sitting on losses that they will never get back.

I only made a reasonable assumption based on what is happening now and what happened before, been there seen it all before, whats your analysis based on ?


----------



## MrBurns (13 November 2008)

Mofra said:


> Funny how the bears always try to get personal (with apologies to NC & Pommie).




Oh you poor victimised thing, go have a lie down.


----------



## xoa (13 November 2008)

robots said:


> hello,
> 
> wallop, bang, oh another high 5% smashed from the shonky exchange in one day, one day
> 
> about time CBA is getting pulled down with the rest,




Don't break out the champagne yet. The banks are getting smashed, because they're heavily exposed to the slumping housing market. Specuvestors and banks are in the same boat.


----------



## MrBurns (13 November 2008)

Mofra said:


> Funny how the bears always try to get personal (with apologies to NC & Pommie).




Just realised that wasn't personal........unless thats a real photo of you


----------



## Mofra (13 November 2008)

MrBurns said:


> Oh you poor victimised thing, go have a lie down.



I'd respond in kind, but some of us are above that sort of thing


----------



## MrBurns (13 November 2008)

Mofra said:


> I'd respond in kind, but some of us are above that sort of thing




Well I admit I had to lower mysrlf to repond to your first insult but let's just leave it at that.

With respect, if you cant take it dont dish it out.


----------



## aleckara (13 November 2008)

nunthewiser said:


> im just trying to work out where everyone going to live while all this happens




This is the classic argument of most property bulls. Who says that people will get a place to live even if they need it? If the above average worker can't afford the house at the price it has to go down - simple. Then only above average workers will have houses and the rest will rent or whatever alternative.

I see a possibility of house prices going down. But I see this caused by factors that increase homelessness and general poverty. Unemployment, and the bank loan defaults, mortgagee sales, and so on resulting from this. As the money is sucked out of the economy a snowball effect can happen in other sectors. Sad Australia put all its eggs in one basket - housing. People never consider homelessness as an alternative here, but if the country has no money then we will suffer and house prices will fall with an extreme amount of suffering. I don't know if it will happen but it is a slight possibility.


----------



## nunthewiser (13 November 2008)

aleckara said:


> This is the classic argument of most property bulls. Who says that people will get a place to live even if they need it? If the above average worker can't afford the house at the price it has to go down - simple. Then only above average workers will have houses and the rest will rent or whatever alternative.
> 
> I see a possibility of house prices going down. But I see this caused by factors that increase homelessness and general poverty. Unemployment, and the bank loan defaults, mortgagee sales, and so on resulting from this. As the money is sucked out of the economy a snowball effect can happen. Sad Australia put all its eggs in one basket - housing.




i think you assume too much , i am not a property bull at all and expecting a nice retraction of prices actually across the board,before continuing its long term uptrend. it was a question.

im actually wondering if all these property bears here are actually prepared to rent for the next 5- 20 years in the hope of finally picking a bottom and paying dead money in rent in the meantime.

like i said was only a question.


----------



## Mofra (13 November 2008)

nunthewiser said:


> im actually wondering if all these property bears here are actually prepared to rent for the next 5- 20 years in the hope of finally picking a bottom and paying dead money in rent in the meantime.
> 
> like i said was only a question.



There are a few who on record as renters - some going back to the first housing thread from a number of years ago, so there's a bit of credibility there. I'm renting too by the way - rent money is only as dead as non-deductable bank interest


----------



## nunthewiser (13 November 2008)

Mofra said:


> There are a few who on record as renters - some going back to the first housing thread from a number of years ago, so there's a bit of credibility there. I'm renting too by the way - rent money is only as dead as non-deductable bank interest




yes but from my understanding you have property as investment also and it kind of counteracts the whole cycle , i too have rented in the past and let other renters pay for my propertys.

yep understand the amount of longterm renters here but still inquisitive if they prepared to rent till they finally decide they have found the perfect low before entering the property market


----------



## MrBurns (13 November 2008)

Mofra said:


> There are a few who on record as renters - some going back to the first housing thread from a number of years ago, so there's a bit of credibility there. I'm renting too by the way - rent money is only as dead as non-deductable bank interest




I know an agent who sold about 7 years ago because he was positive that the market couldn't go any higher, it doubled after that at least. 
He is very experienced, I think that just goes to show the enormity of the present bubble and I don't think many people see that, partly because they've never seen it before.(property bubble)

In any case argument is all but redundant as this is unfolding as we speak, we will know within 6 months who is right.


----------



## nunthewiser (13 November 2008)

MrBurns said:


> )
> 
> In any case argument is all but redundant as this is unfolding as we speak, we will know within 6 months who is right.




who is disagreeing ?


----------



## Glen48 (13 November 2008)

Germany has made it to the recession group today GM is all but finished.
I had to sell my house after a Divorce tried to get $325 K 10 yrs ago and had to take 260K. It sold a few years ago for 800K just shows how big the bubble is.


----------



## MrBurns (13 November 2008)

nunthewiser said:


> who is disagreeing ?




The bulls and bears are at each other as usual, but very soon all they need do is look up at the scoreboard and they'll see whats unfolding.

I have thought residential property prices have been unrealistic for some time and there are many who feel the same way.


----------



## tasmart (13 November 2008)

CamKawa said:


> Here's a chart from tonight’s ABC news. It looks like the property market is at least 23% overcooked.




The other interesting part of this is that the compound growth line in real terms since 1926 is only 3%. 

I would like a better return for my long term life savings.


----------



## nunthewiser (13 November 2008)

MrBurns said:


> The bulls and bears are at each other as usual, but very soon all they need do is look up at the scoreboard and they'll see whats unfolding.
> 
> I have thought residential property prices have been unrealistic for some time and there are many who feel the same way.




and i repeat , who is disagreeing ? ive said my views, mofra has stated his all along this thread also .

still wondering who you talking about


----------



## Mofra (13 November 2008)

nunthewiser said:


> yes but from my understanding you have property as investment also and it kind of counteracts the whole cycle , i too have rented in the past and let other renters pay for my propertys.
> 
> yep understand the amount of longterm renters here but still inquisitive if they prepared to rent till they finally decide they have found the perfect low before entering the property market



An interesting aspect you've touched upon by your questions is the activity of the most high profile bear, Stevie Keen.

Despite banging on for years about the impending doom, he only _just recently_ listed his property for sale. At least there are plenty of posters here who have been consistent and put their money where their mouth is. 

People wonder why I don't hold much respect for Keen...


----------



## cuttlefish (13 November 2008)

How much have houses on George Street, Sydney city fallen so far this year?


----------



## nunthewiser (13 November 2008)

Mofra said:


> An interesting aspect you've touched upon by your questions is the activity of the most high profile bear, Stevie Keen.
> 
> Despite banging on for years about the impending doom, he only _just recently_ listed his property for sale. At least there are plenty of posters here who have been consistent and put their money where their mouth is.
> 
> People wonder why I don't hold much respect for Keen...




keens just like the rest of the majority of overpaid mouthpieces , great typist and he bound to call it right sooner or later if he sticks to the same story


----------



## Mofra (13 November 2008)

tasmart said:


> The other interesting part of this is that the compound growth line in real terms since 1926 is only 3%.
> 
> I would like a better return for my long term life savings.



Fair comment - traditionally equities have outperformed residential property over the long term, although recent events may scare a few for years to come. 
I assume the 3% above CPI is capital return only (excluding rental & upkeep)?


----------



## cuttlefish (13 November 2008)

Does anyone think the prices of farmland at Parramatta will fall as well?   I heard it fell a lot during the great depression so was wondering if it will fall again this time.


----------



## Mofra (13 November 2008)

nunthewiser said:


> keens just like the rest of the majority of overpaid mouthpieces , great typist and he bound to call it right sooner or later if he sticks to the same story



My point exactly. Even a broken clock is right twice a day


----------



## tech/a (13 November 2008)

Well I have properties in Moana and Seaford Rise here in Adelaide.
Last year to September Seaford Rise Rose +13.5% and Moana +15.5%
Rents also rose.
Having bought all mine in 1996-2001 and having had years with growth of 40% I find the argument muted.
As I drive around here (Where I live) there arent many for sale signs.

Its not the interest rate thats going to kill people its being un employed!


----------



## chops_a_must (13 November 2008)

tech/a said:


> As I drive around here (Where I live) there arent many for sale signs.



I'd say about 20% of the houses around me have for sale signs on them, or have changed hands in the last year tech. But it is a high rental and thus high specuvestor area I would imagine.



tech/a said:


> Its not the interest rate thats going to kill people its being un employed!



Correct. And no matter how highly paid you are, or how educated, it is going to bite a lot of people on the **** who would never have thought it possible at one stage.


----------



## MrBurns (13 November 2008)

nunthewiser said:


> and i repeat , who is disagreeing ? ive said my views, mofra has stated his all along this thread also .
> 
> still wondering who you talking about




I was talking generally to the bulls that dont see a problem, who specifically ? well I could go back through all the posts and make notes .........naa I won't.

Mofra seemed to waste no time denegrating one of my posts so I assume the cat is a bull, anyway I'm not interrsted in arguing with anyone the facts will speak for themselves.


----------



## cuttlefish (13 November 2008)

The problem imo with the ABC news chart that CamKawa posted is that it doesn't take into account land values.   If you take a portion of land anywhere in Sydney and look at what it was worth in 1929 vs what the same piece of land in the same location and of the same size is worth now you will have significantly more than 3% growth.  The same will apply to more or lesser extent in all growing cities.


----------



## cuttlefish (13 November 2008)

MrBurns said:


> I was talking generally to the bulls that dont see a problem, who specifically ? well I could go back through all the posts and make notes .........naa I won't.
> 
> Mofra seemed to waste no time denegrating one of my posts so I assume the cat is a bull, anyway I'm not interrsted in arguing with anyone the facts will speak for themselves.




Some people will take their analysis a little further and won't have a black and white opinion.  

There will be a negative impact on property prices, but its depth and duration will vary enormously depending on the location and type of property involved.  Similarly the affect of an economic slump on rentals will vary in different locations.  This will depend on a multitude of factors including the types of industry that make up the local economy, the drivers for local population growth and the rate of population growth, the current and historic vacancy rates, rental yields and supply situation etc. etc.

It is far too simplistic to make a blanket statement that property prices will fall 40%.

I've yet to see much detailed analysis beyond these blanket statements and very little historic price analysis that takes land values into account.   Back in the 60's a 'house' was on a quarter acre block.   In 2008 a 'house' in McMansion ville is on blocks as small as 200sqm or 400sqm.  Thus the 1960's house is actually now 3 or 4 blocks of land ... or if its in a high density area it might even be a block of 8 or more flats ... or have been consolidated into a larger block of 50 flats ... or may even have been consolidated into a highrise office or apartment block .... or turned into 5 ultra trendy restaurants, or a luxury beach front hotel etc. etc.

Property investment is about location and land.


----------



## Pommiegranite (13 November 2008)

Mofra said:


> An interesting aspect you've touched upon by your questions is the activity of the most high profile bear, Stevie Keen.
> 
> Despite banging on for years about the impending doom, he only _just recently_ listed his property for sale. At least there are plenty of posters here who have been consistent and put their money where their mouth is.
> 
> People wonder why I don't hold much respect for Keen...




Unless you know the full value of his portfolio across all asset classes, then passing judgement of when he sells is pointless eg keen could have had 50mill in stocks and had no need to sell a 500k home.


----------



## tech/a (13 November 2008)

cuttlefish said:


> Some people will take their analysis a little further and won't have a black and white opinion.
> 
> There will be a negative impact on property prices, but its depth and duration will vary enormously depending on the location and type of property involved.  Similarly the affect of an economic slump on rentals will vary in different locations.  This will depend on a multitude of factors including the types of industry that make up the local economy, the drivers for local population growth and the rate of population growth, the current and historic vacancy rates, rental yields and supply situation etc. etc.
> 
> ...






Good God an intelligent post on the topic.


----------



## MrBurns (13 November 2008)

cuttlefish said:


> It is far too simplistic to make a blanket statement that property prices will fall 40%.




Frankly I just assume people will understand that some areas will fall less than others, some areas will retain most of their value, I don't feel the need to point that out when i make a statement like that.

The market will fall dramatically, thats my opinion people will do their analysis after the fact as usual, those who try beforehand will fail because we have never been in this position before.

I'm fairly conservative but I'm  almost certain this is the "big one"


----------



## tech/a (13 November 2008)

MrBurns said:


> I'm fairly conservative but I'm  almost certain this is the "big one"




Compared to what?
The fall of the Roman Empire?
The Great Depression which will be renamed "The not so Great Depression?"

Do you EVER get out of your Comfort zone?
As you perceive it of course.


----------



## MrBurns (13 November 2008)

tech/a said:


> Compared to what?
> The fall of the Roman Empire?
> The Great Depression which will be renamed "The not so Great Depression?"
> 
> ...




What is that supposed to mean ?

Well compared to anything that's gone before, there hasn't been a property bubble (residential) like this before.

I guess I keep assuming people can fill in the gaps but perhaps I need to spell eveyrhing out in capitals.


----------



## cuttlefish (13 November 2008)

tech/a]Good God an intelligent post on the topic. [/QUOTE]

cheers!

[QUOTE=chops_a_must said:


> And no matter how highly paid you are, or how educated, it is going to bite a lot of people on the **** who would never have thought it possible at one stage.




I agree its no time for complacency and the ideal is no gearing or minimal gearing.


----------



## MrBurns (13 November 2008)

cuttlefish said:


> I agree its no time for complacency and the ideal is no gearing or minimal gearing.




The signs couldn't be clearer.


----------



## chops_a_must (13 November 2008)

cuttlefish said:


> I agree its no time for complacency and the ideal is no gearing or minimal gearing.



Beats me that at a time any company with any debt at all, and especially leverage against property, is being absolutely walloped globally, that people with significant borrowings against property are not worried and are actually advocating that as a good thing that others should look at. 

Surely that should be a warning?


----------



## cuttlefish (13 November 2008)

chops_a_must said:


> Beats me that at a time any company with any debt at all, and especially leverage against property, is being absolutely walloped globally, that people with significant borrowings against property are not worried and are actually advocating that as a good thing that others should look at.
> 
> Surely that should be a warning?





I agree and I hope I'm not being construed as someone that is advocating buying property right now because I'm not. I'm not intending to offer an opinion one way or another - just trying to provide some balanced viewpoints.  

Property is suprisingly resilient over the medium to long term from my own personal experience.  It certainly has its slumps though and it looks like one is coming right now based on the overseas experience and the local economic outlook, combined with the recent runup driving yields down to quite low levels in most areas.  

But its a complex topic with a lot of variables and different locations need to be considered on their individual circumstances/parameters.


----------



## MR. (13 November 2008)

cuttlefish said:


> I agree and I hope I'm not being construed as someone that is advocating buying property right now because I'm not.




Not I either and many more.  So who is buying / going to buy the properties on the market now?  

Does the seller hold tight for the buyers return? Or should the seller keep on lowering until a deal is met.  Providing the bank agrees with the loan. But in many cases now they are not loaning the money unless their risk is well covered.  So when a figure is accepted by seller and buyer the bank says no and so start over again.


----------



## robots (14 November 2008)

tasmart said:


> The other interesting part of this is that the *compound growth line in real terms since 1926 is only 3%.*
> 
> I would like a better return for my long term life savings.




hello,

this is the real interesting one, 

all the guns here reckon 3% return (it only ever tracks inflation?) is so poor yet they spend so much time discussing a very ordinary asset class by their standards,

why is that? 

have a great day, australia is still pumping along well brothers, spend up big  and do the right thing by your fellow man

thankyou
robots


----------



## tech/a (14 November 2008)

MrBurns said:


> The signs couldn't be clearer.




*Sorry dont agree with you.*

This isnt the US.

We dont have a massive surplus in property inventory.
We dont have an over supply of rentals.

I havent the time to answer this fully now,but will sometime today.
Go buy the latest Property Investor mag.
Go to the back and have a GOOD look at the actual statistics for AUST.


----------



## CamKawa (14 November 2008)

I hope shows like ACA don't start carpet bombing us with specuvestor sob stories. Like what were these people thinking? All they had to do to get rich was buy a house? LOL It wasn't my greed the banks made me do it... LOL

Homes seizures rocket


----------



## MrBurns (14 November 2008)

tech/a said:


> *Sorry dont agree with you.*
> 
> This isnt the US.
> 
> ...




*I never said this was anything like the US,* those in the property industry would call this a no brainer, it's coming down how far time will tell.

So *I dont agree with you* lets just let the market speak or itself over the next 12 months.


----------



## Temjin (14 November 2008)

MrBurns said:


> *I never said this was anything like the US,* those in the property industry would call this a no brainer, it's coming down how far time will tell.
> 
> So *I dont agree with you* lets just let the market speak or itself over the next 12 months.




Yep, what needs to be covered has already been done here at least a hundred times. Let's the market speak for itself and see what happens. 

However, as much as I do not want to see a massive property slump because it will affect almost EVERYONE OF US, no one can deny this is an impossibility. Remember Nassim with his probability thinking? Anything is possible. 

Why would anyone want to get into huge debt when there is an increasing risk of massive unemployment?


----------



## Mofra (14 November 2008)

MrBurns said:


> Mofra seemed to waste no time denegrating one of my posts so I assume the cat is a bull, anyway I'm not interrsted in arguing with anyone the facts will speak for themselves.



Actually, all I did was point out the following was not analysis:



MrBurns said:


> Yep 23% plus the down dip thats overdue say another 15% let's round it off at say 40% probably a lot more.



Given you still haven't provided a single piece of evidence or reason for your opinions (perhaps there was a link to article somewhere which was a typical mainstream media piece in any case), then I can't possibly agree with what you post.


----------



## MrBurns (14 November 2008)

Mofra said:


> Actually, all I did was point out the following was not analysis:
> 
> Given you still haven't provided a single piece of evidence or reason for your opinions (perhaps there was a link to article somewhere which was a typical mainstream media piece in any case), then I can't possibly agree with what you post.




For goodness sake this is a forum not a Senate enquiry.

I have given reasons for my opinions but if you're looking for cold hard eveidence there will be plenty when this unfolds further as there is no precedent for this we are all guessing including world leaders.

Some guess from experience, others who have non guess anyway but some dont listen.

I was heartened to see vision of our leader waving from the top of an aircraft entry platform as he jets off for another talkfest, too bad he has to return.


----------



## cuttlefish (14 November 2008)

MR. said:


> Not I either and many more.  So who is buying / going to buy the properties on the market now?




People looking to buy a home in tightly held areas that have been waiting for a while for an opportunity.   They'll be more selective but there will be buyers. People can't put their lives on hold forever waiting for the perfectly timed entry.


----------



## CamKawa (14 November 2008)

MrBurns said:


> For goodness sake this is a forum not a Senate enquiry.



I known, the permabulls are hocked to their eyeballs in debt and are looking for anything to support their view no matter how strong evidence is to the contrary. They are completely deluded IMHO, just let them fall into negative equity and relax.


----------



## lioness (14 November 2008)

Mr Burns,

I must say I know many Mr Burns as friends. These types of people have been telling me for >10 years property will crash and it has gone up 800% where they wanted to buy.

So yes a 20% fall is possible but they still can never make up the 780% lost.


----------



## CamKawa (14 November 2008)

cuttlefish said:


> People can't put their lives on hold forever waiting for the perfectly timed entry.



My fear is the perfectly timed entry maybe 15 years away.


----------



## gfresh (14 November 2008)

I hope the ANZ has put aside loan provisions for the 3000 employees they are about to show the door: http://www.theage.com.au/national/anz-tipped-to-make-heavy-job-cuts-20081113-66a2.html

After the Christmas sales, the retail layoffs will then start in force... Late Jan..  

Property has boom and slow periods, but recessions don't happen that often and do hurt the property market. Odds are still 70% for a recession if you ask me, but I am sure the optimists will disagree. Sometimes it is wise to be cautious, which is what most are right now.


----------



## CamKawa (14 November 2008)

gfresh said:


> I hope the ANZ has put aside loan provisions for the 3000 employees they are about to show the door:



I'm surprised to see ANZ do that. Like when you have a look at their house price prediction chart I would have thought they would be hiring an extra 3000 staff to handle the massive influx of home loan applications. How does that work?


----------



## MrBurns (14 November 2008)

lioness said:


> Mr Burns,
> 
> I must say I know many Mr Burns as friends. These types of people have been telling me for >10 years property will crash and it has gone up 800% where they wanted to buy.
> 
> So yes a 20% fall is possible but they still can never make up the 780% lost.




These types of people ??? You mean rational thinking people who have some experience in a market where things go elsewhere but UP ?

800% ??? geee that must have been the guy that found his boundary re aligned to take up the 3 houses adjoining.

Property will recover and go up again but it hasn't even gone down/crashed yet so don't rush in just yet.

I might as well talk to the cat.


----------



## tech/a (14 November 2008)

MrBurns said:


> *I never said this was anything like the US,* those in the property industry would call this a no brainer, it's coming down how far time will tell.
> 
> So *I dont agree with you* lets just let the market speak or itself over the next 12 months.




I am in the industry.
Civil Construction.
Project Developement.

And your in?


----------



## lioness (14 November 2008)

MrBurns said:


> These types of people ??? You mean rational thinking people who have some experience in a market where things go elsewhere but UP ?
> 
> 800% ??? geee that must have been the guy that found his boundary re aligned to take up the 3 houses adjoining.
> 
> ...




You should be banned for arrogance.

Anyway, what are you expecting Melbourne inner city to fall Mr Burns?


----------



## MrBurns (14 November 2008)

tech/a said:


> I am in the industry.
> Civil Construction.
> Project Developement.
> 
> And your in?




More the real world, commercial agency for 25 years.

They tell me now the commercial market is stuffed with widespread redundancies underway in agencies and across all sections of the industry. 

You would be ok with Govt contracts and more to come with infrastructure spending about to increase.


----------



## MrBurns (14 November 2008)

lioness said:


> You should be banned for arrogance.
> 
> Anyway, what are you expecting Melbourne inner city to fall Mr Burns?




If that were the criteria Rudd should go too. 
In fact I'll resign if he does.

Inner Melbourne, I cant really speculate on specific areas just from my experience overall from the last crash.

Not sure what happened last time Inner city but on the Eastern fringe Hawthorn etc dropped around 30% from what I remember, now I haven't got any hard evidence of that, it's just my recollection from then.


----------



## nunthewiser (14 November 2008)

lioness said:


> You should be banned for arrogance.
> 
> QUOTE]
> 
> ...


----------



## arco (14 November 2008)

Coast builder closes doors

12:00a.m. 14th November 2008

Troubled builder Marshall Thompson Homes (Queensland) Pty Ltd yesterday said it had closed its business in Queensland and appointed an administrator.

Director Graham Thompson said the company, which was headquartered in Adelaide but operated a subsidiary business from premises on Brisbane Road, Mooloolaba, had initiated a meeting with the Building Services Authority to advise of its intention.

“Management is proceeding to deal with its affairs in Queensland in an orderly manner in the best interests of all concerned,” Mr Thompson said yesterday. “We are not in a position to make any further comment at this stage.”

While final figures are not yet available, it is believed Marshall Thompson Homes (Queensland) owes up to $500,000 to suppliers and $400,000 to sub-contractors.

And staff who had been promised they would be paid what they were owed by last Thursday still had not received their money yesterday.

The company has 11 homes under construction from Brisbane’s northern outskirts to the Sunshine Coast.

http://www.thedaily.com.au/news/2008/nov/14/builder-closes-door/


----------



## Mofra (14 November 2008)

CamKawa said:


> I known, the permabulls are hocked to their eyeballs in debt and are looking for anything to support their view no matter how strong evidence is to the contrary. They are completely deluded IMHO, just let them fall into negative equity and relax.



Cam, not everyone who owns property is geared up to the eyeballs and negatively geared.


----------



## Mofra (14 November 2008)

MrBurns said:


> Property will recover and go up again but it *hasn't even gone down*/crashed yet so don't rush in just yet.



In some areas it has; you wouldn't want to incur the wrath of the other bears surely?


----------



## Sunder (14 November 2008)

Mofra said:


> Cam, not everyone who owns property is geared up to the eyeballs and negatively geared.




No, but permabulls are more likely to be than anyone else.

If you truly believed that shares rose 10% per year every year, and never went backwards more than 2-3%, how much would you borrow @ 7.5% or so to invest? Let me guess, as much as the bank would let you, minus about 2-3% to prevent margin calls?

Permabulls really believe their own tripe. They think houses double every 7-10 years and at worse "Ease" a couple percent between cycles. I remember someone on another house price crash forum calculated that if this 7-10 year rule was true, you could have bought a house on about 4 hours median wages back in 1900. (Their wages, not ours).


----------



## MrBurns (14 November 2008)

Mofra said:


> In some areas it has; you wouldn't want to incur the wrath of the other bears surely?




I meant "crashed" it's certainly gone down, but it's still early days yet.


----------



## numbercruncher (14 November 2008)

Sunder said:


> No, but permabulls are more likely to be than anyone else.
> 
> If you truly believed that shares rose 10% per year every year, and never went backwards more than 2-3%, how much would you borrow @ 7.5% or so to invest? Let me guess, as much as the bank would let you, minus about 2-3% to prevent margin calls?
> 
> Permabulls really believe their own tripe. They think houses double every 7-10 years and at worse "Ease" a couple percent between cycles. I remember someone on another house price crash forum calculated that if this 7-10 year rule was true, you could have bought a house on about 4 hours median wages back in 1900. (Their wages, not ours).





They worked out that the average Sydney house would be circa $180 million this year if that permabull lie was true ! - I think they worked on prices from about 1900 to now ....


----------



## Glen48 (14 November 2008)

One big problem with RE is the owners think their precious house is some thing and therefore refuse to believe the data.
George Soros is now saying a very deep recession and possible depression.
2/3 of the Hedge Funds to fold very soon.
Given OZ home owners are living in the most expensive houses per incoem and we are more in debt that the Yanks but not as bad at Uk thinks just have to start going down soon.
Some woman on ABC today was saying the Domino's are starting to fall and yet to reach small to medium business.


----------



## MR. (14 November 2008)

Glen48 said:


> One big problem with RE is the owners think their precious house is some thing and therefore refuse to believe the data.
> George Soros is now saying a very deep recession and possible depression.
> 2/3 of the Hedge Funds to fold very soon.
> Given OZ home owners are living in the most expensive houses per incoem and we are more in debt that the Yanks but not as bad at Uk thinks just have to start going down soon.
> Some woman on ABC today was saying the Domino's are starting to fall and yet to reach small to medium business.




I know my soro but here's your soro link:

http://www.news.com.au/business/story/0,27753,24650136-14334,00.html

But this is Australia mate!


----------



## CamKawa (14 November 2008)

MR. said:


> I know my soro but here's your soro link:
> 
> http://www.news.com.au/business/story/0,27753,24650136-14334,00.html
> 
> But this is Australia mate!



"Mr Soros, who reportedly earns more than $100,000 an hour as a hedge fund manager"

That maybe even more than one of our big 4 bank CEO makes - amazing.


----------



## MrBurns (14 November 2008)

Meanwhile back at Rudd's Travel Agency -


----------



## gfresh (14 November 2008)

Is he waving goodbye to Australia's economy?


----------



## MrBurns (14 November 2008)

gfresh said:


> Is he waving goodbye to Australia's economy?




Setting up a Swiss bank account in Yen for he and the missus so they can jump ship just before we go under, but dont worry he'll leave Swany in charge it'll be right mate.


----------



## CamKawa (14 November 2008)

gfresh said:


> Is he waving goodbye to Australia's economy?



Thats a good one. LOL


----------



## cuttlefish (14 November 2008)

Haha - good to see a bit of levity on a Friday arvo.


----------



## robots (14 November 2008)

hello,

gee, the poverty pack are going Bezerk

all this over a 3% return over the long term, what a day and great to see some solid contributions,

over and out, off to tennis 

thankyou
robots


----------



## tech/a (14 November 2008)

There isnt much if any informed comments on this thread.
Mostly "Blind Freddy" can see this or that.

So lets bring some perspective into the thread,its currently boring as hell with the un informed forming un informed opinions which they up hold with vengence.
those who have any counter opinion are labelled permabulls.

Labels are good I have one for my own property investments--Business--its what I do.

So looking at the *Department of Treasury and Economics 3rd November release* on House pricing throughout Australia and in particular SA (which is where Business for me is!).
*Statistics from 30/09/07 to 30/09/08*

House prices across Australia rose 2.8%
Leaders were Adelaide 9.7% Melbourne 8.1%
Losers were Perth - 4.1%
Sydeny - .4%
These were the only states with a negative price growth.

The Share Market had fallen 40% in the same period.

The Report from the Reserve Bank Ric Battellino on the 30Th of October raises the following.

*(1) Household Income.*
Over the past 5 yrs household disposable income has increased 30%.
Factors contributing to the surge.
Salary grew at around 7.5% P/A
Investments grew an average of 17% P/A.
Tax payable grew less than income because of tax cuts resulting in an increase in disposable income of around 8.3%.
Inflation grew at 2.2% P/A leaving 6.1% P/A growth in disposable income.

*(2) Household Balance Sheets.*
As At 30/09 The average household assets were $245,000 and Average Liabilities $150,000.

*(3) The Housing Market.*
The Australian housing market is leading most world markets by upto 3 yrs.(According to the Reserve Bank) as an example we peaked in 2003 and the US in 2006. The boom in Housing started in Australia well before other western countries.
Most Western countries have over supply.
Australia now has a shortage of supply.
Australian housing's boom ended due to affordability NOT over supply as in most western countries and in particular the US.
As a result buyers are now waiting for lower interest rates and or increased wages to satisfy the underying demand.

I only have this in hard copy so if anyone can take a copy and up load it to here or a link I am happy to fax it. Just private mail me.

*People dont get it that its about SUPPLY.*

Massive supply = falling prices.
There ARE areas like this but only pockets. The problem is that these pockets are focused on as the NORM for Australia as a whole.
Fact is its NOT the NORM.

We have a supply problem there is very little.
As prices drop marginally.
Incomes rise marginally.
Incentives are given (Grants)
Interest Rates drop (Now heavily). The buyers will be looking at Property once again.

So before making Knee Jerk comments without informed information, do a little research and *stop treating people like they know bugger all*---you might just learn something!!!


----------



## Glen48 (14 November 2008)

Ch 9 news tonight people a turning up at Auctions and going home again ..nothing is selling all are waiting for the prices to go down...down


----------



## nunthewiser (14 November 2008)

well done tech/a

top post


----------



## CamKawa (14 November 2008)

Glen48 said:


> Ch 9 news tonight people a turning up at Auctions and going home again ..nothing is selling all are waiting for the prices to go down...down



Found it here. Buyers turn back on housing... Why would you buy this month when it's going to get cheaper next month?


----------



## numbercruncher (14 November 2008)

Glen48 said:


> Ch 9 news tonight people a turning up at Auctions and going home again ..nothing is selling all are waiting for the prices to go down...down





Yes seems the supply side has been a myth/fabrication/lie, absolutely no shortage anymore (except a few suburbs) ... some suburbs here on the GC have 2 years inventory I read ....


----------



## tech/a (14 November 2008)

numbercruncher said:


> Yes seems the supply side has been a myth/fabrication/lie, absolutely no shortage anymore (except a few suburbs) ... some suburbs here on the GC have 2 years inventory I read ....




Which suburbs I have the stats for every suburb in Australia.
So fire away and we will see whats fabrication and whats fact.


----------



## chops_a_must (14 November 2008)

tech/a said:


> Which suburbs I have the stats for every suburb in Australia.
> So fire away and we will see whats fabrication and whats fact.



Could you have a quick look at the southern suburbs of Perth tech?

Just want to see if my observation lines up with the figures.


----------



## nunthewiser (14 November 2008)

tech/a said:


> Which suburbs I have the stats for every suburb in Australia.
> So fire away and we will see whats fabrication and whats fact.




can you punch up huonville tasmania please , very intrested as houses getting snapped up in this region from what i can see visually ( sold signs)

thankyou in advance


----------



## numbercruncher (14 November 2008)

tech/a said:


> Which suburbs I have the stats for every suburb in Australia.
> So fire away and we will see whats fabrication and whats fact.





Surfers Paradise, Southport, Upper Coomera and Labrador have the largest poperty glut in the state , over 1500 forsale signs and growing by a staggering amount every day .....

Just use re.com.au or domain and see inventory going mental nation wide ...... massive projects being cancelled everywhere .... should see the highrise developments just being scraped up here ..... carnage baby ....

I hear your going awesome though Tech and goodonya buddy !


----------



## lioness (14 November 2008)

tech/a said:


> Which suburbs I have the stats for every suburb in Australia.
> So fire away and we will see whats fabrication and whats fact.




Tech/a

Can you provide stats for Fitzroy North please in houses and units.

Thnx.


----------



## tech/a (14 November 2008)

chops_a_must said:


> Could you have a quick look at the southern suburbs of Perth tech?
> 
> Just want to see if my observation lines up with the figures.




Name them I'm a South Aussi dont know your area.
Know Brentwood.---34.3% growth last year!----16.4% growth each year for last 10 yrs.



> Surfers Paradise, Southport, Upper Coomera and Labrador




Surfers Growth 12 mths---2.1% Annual over 10 yrs/yr ---15.6
Southport 10.1----13.4
Upper Coomera 13.5----10.1
labrador -5.6---10.8

Labrador looks the worst Surfers could be next.Plenty of supply so you wouldnt be buying there.

Huonville.---2.2% and Annual over 10 yrs 10.1%
Id say there was plenty of supply here.

Fitzroy north 20.5% and 11.9%

And Real Estate prices have been falling for YEARS evidently!
Only see one out of this lot! Labrador.


----------



## nunthewiser (14 November 2008)

thankyou


----------



## chops_a_must (14 November 2008)

tech/a said:


> Name them I'm a South Aussi dont know your area.
> Know Brentwood.---34.3% growth last year!----16.4% growth each year for last 10 yrs.



The dad lives in Mt. Pleasant which is right next door.

So Mt. Pleasant would be interesting to know.

I live in Kardinya, so that, plus the neighbouring suburbs in:
Murdoch
Winthrop
North Lake
Samson
O'Connor
Willagee
Coolbellup

Would be interesting to know. Quite a big rental and specuvestor area. The house I'm in in Kardinya has doubled in 4 years.


----------



## singlefished (14 November 2008)

tech/a said:


> So lets bring some perspective into the thread.......
> 
> ........ *stop treating people like they know bugger all*




Hi tech, I don't mean to get off on the wrong foot here but to be honest I'd rather read the tripe posted by robots than suffer vain comments like these on a regular basis.

_thankyou_

Now, onto the main essence of the post ~ Fair enough, I understand how supply can affect house prices during *stable* economic conditions, I don't think that is a point even worth debating...

but...

if we are to enter a period of much slower economic growth with increasing unemployment (look out for Feb '09 figures) which could drag on for many quaters influencing many sectors, what will there be to underpin house prices in the short term - 6 months to a year from now?

You cannot argue supply is everything and remain blind to what the economy is doing based on the information extract provided. There was nothing in there telling us how the RBA see how a possible recession/slowdown/unemployment will effect the situation as a whole.

The RBA data is stating fact I believe, but that fact is now history ~ and past performance is no indication of future performance, as I'm sure we all agree. What's going to happen to wages / househoild disposable income when businesses really start tightening their belts?

I believe that all the fundamentals are there (tight supply, the great Aussie Dream, etc, etc...) to push prices up over the long term with a fairly quick initial rise to get the ball rolling probably. Before the ball starts rolling though and people return to the market in droves, the slowdown is inevitable and the Anglo countries that have caused all the problems in the first instance need to get through their recessions and start showing sustained signs of recovery before things start turning positive for ourselves here.

Sentiment and uncertainty in the future are what's holding property investors back in the current financial climate I believe

As stated by the RBA, the past year has only seen 2.8% increase across Australia. Why is this the case when supply is still as tight as it ever was and unemployment was for the majority still sitting at historic lows? Possibly the smart money shied away from investing altogether (both shares and property) and is sitting in lengthy term deposits with rates returning >8%? Or is it that wage growth and disposable income have been unable to keep up the same rate as property price growth so property prices are having to wait for everything else to catch up? I don't know.....

What I also don't know is what's going to continue to drive prices up in the short/medium term when all the national economic indicators are pointing in the wrong direction...

Cheers.

NB - for the record ~ I AM bullish on property in the long term, but bearish on property in the short term ~ need to give it another 2 quaters before I will reassess the situation


----------



## robots (14 November 2008)

hello,

another 2mths singlefished? mr burns says 6mths, glen48 says 12mths,

we will just add that to the 3yrs and 2mths from the previous number 1 thread "house prices to stagnate for years", the king of all Property threads here at ASF

which was actually closed because it's just so embarrassing for the poverty pack,

investors will not return to the property market en masse like previous, construction is down and the ride is going to be fantastic

thankyou
robots


----------



## singlefished (14 November 2008)

robots said:


> hello,
> 
> another 2mths singlefished? mr burns says 6mths, glen48 says 12mths,
> 
> ...




2months??? I'm missing something here....

I will be waiting 2 "quaters" or 6 months before reassessing my outlook on property if that's what you're interpreting????


----------



## robots (15 November 2008)

hello,

no worries, thanks very much for the correction

before you know it 5yrs, 10yrs 15yrs

utopia

thankyou
robots


----------



## singlefished (15 November 2008)

robots said:


> before you know it 5yrs, 10yrs 15yrs




You'll need to explain it to me like I'm 6 years old.... I haven't got a clue what you're talking about!


----------



## Temjin (15 November 2008)

tech/a said:


> There isnt much if any informed comments on this thread.
> Mostly "Blind Freddy" can see this or that.
> 
> ..................................
> ...............................




Could I please point you to this latest paper just released by someone?

http://www.geocities.com/homes4aussies/h4a081104.pdf

It's an excellent read and have a look at the appendices too. 

On the issue of being "informed", this is largely based on HOW you were informed and by whom. Do I prefer to get informed by vested interest parties or do I prefer to be informed by independent analysts using official ABS data? 

Again, I already mentioned property discussion can be extremely sensitive because a lot of us have "EMOTIONALLY" invested in our own "beliefs" and that it is extremely difficult to believe anything else. Surely you can see it in your own trading style and others too?


----------



## Glen48 (15 November 2008)

Opps i must have put in a typo about 12 Mths, The fall is only just starting and has years to go maybe 5 + and then a gradual increase.
It will be exciting times for the next few years. I can see the G20 coming up with something drastic in no time because they have no time, this is growing on its self by the hour.


----------



## kotim (15 November 2008)

There is no shortage of rental supply generally, IN our booming environment there has been quite a floating population moving around for the jobs that they can get relatively easy.  So when for eg a mine opens up people move there and voila there is a shortage.  Sure there are super good areas where everybody wants to live if they could and those areas will suffer less.

In the biggest property boom for a long time, people were buying investment properties left right and centre and only a few of them (relatively speaking) were for immigrants.  The rest are for the normal numbers of kids growing up and moving out in the world.

There were not too many people buying two and three houses for themselves to live in all at once.

Absolute common sense tells us that drastic rental undersupply across many sections of the community was and is absolute crap.

However good luck to all those who make profits.


----------



## numbercruncher (15 November 2008)

Temjin said:


> Could I please point you to this latest paper just released by someone?
> 
> http://www.geocities.com/homes4aussies/h4a081104.pdf
> 
> ...






Pretty good reading that people with the finger on the pulse should already be aware quite of .....




> In the aforementioned paper I showed that renting is a far more economically sensible decision for
> all Australians who do not currently own their home. Currently the median priced house in most
> Australian capitals is $400,000 or more, and the median rent is around $350 per week. At a
> mortgage rate of 9%, and with very conservative estimates on the cost of ownership, you would
> ...


----------



## Warren Buffet II (15 November 2008)

tech/a said:


> Name them I'm a South Aussi dont know your area.
> Know Brentwood.---34.3% growth last year!----16.4% growth each year for last 10 yrs.
> 
> 
> ...




As people say when those numbers are quoted and show a fall, those are averages and do not reflect the real thing.

So basically, prices are going down big time period.

WBII


----------



## lioness (15 November 2008)

robots said:


> hello,
> 
> another 2mths singlefished? mr burns says 6mths, glen48 says 12mths,
> 
> ...





Sorry to be a smartie robots, but Fitzroy North has had more growth than St kilda, but I won't argue with Mr Burns. He tells me I will lose money staying where I am.

Hehehe


----------



## CamKawa (15 November 2008)

tech/a said:


> Name them I'm a South Aussi dont know your area.
> Know Brentwood.---34.3% growth last year!----16.4% growth each year for last 10 yrs.
> 
> 
> ...




I think page 3 from http://www.geocities.com/homes4aussies/h4a081104.pdf sums up the dodgy real estate data that you spout here tech/a.

*When Statistics are Used to Confuse*​ 
Have you noticed that, unlike 12 months ago, stories of house price increases are not splashed everywhere? Well, that’s the first point to make. The data is not conducive to promoting residential housing as an investment, so the media are relying on other tactics – stories of huge
rental increases, fears of the increase to the FHOG causing a surge in house prices – to get home buyers and naÃ¯ve investors interested in housing again. You may have noticed that you actually have to read well into articles, often well into the newspaper, to get some actual figures on house prices. And when you do, they probably show house prices increased – right?​ 
How are they doing that when the data clearly show that house prices are falling? Well they have stopped quoting short term data and are reporting primarily – often only – the annual data. And the annual data will be the last to show the price falls because it “smooths” out “lumpy” data and
disguises turning points in the markets.​ 
So, vested interests – the media included – will use short term data (even auction clearance rates) to emphasise a take off in the market, and will use long term data when the market has turned down. These comparisons involve comparing prices from one point in time to another (perhaps a year
earlier), but they do not necessarily give the full picture of what has happened between those points. ​


----------



## tech/a (15 November 2008)

It is possible to present arguements for whatever side of *"A"* fence in any commodity you wish to present.

If people believe there is no opportunity in that commodity and in this case housing,they wont look for it,in fact if it stands in front of them they wont see it,they will agrue it out of existance.

Others will see opportunity and do something positive with it.

If renting is your thing,then go and rent.

If being entrepenurial in Housing,Stock,Business,Art,Coins,Futures---whatever--then you'll find those opportunities.

Those who dont adopt crowd mentality often stand out from the crowd and are pretty well always told they are fools,in fact some people even get abusive!.Adopting crowd mentality is percieved as safer. If being safer is your thing then run with the crowd.

*There are 3 keys.*
(1) Recognise opportunity.
(2) Evaluate it.
(3) DO IT.

Some get to 1---few go beyond.
Bogged down by fear and endless discussion.

*Its pretty simple really.*
If the Numbers add up then do it.
If they dont then step aside.

We are not all doomed,only those who wish to believe they are!


----------



## numbercruncher (15 November 2008)

Exactly camkawa .....

Fortunately the average mug on the street is no longer falling for this manipulation of the data which is made evident by skyrocketing inventory and nosediving clearance rates and prices.

And its all gaining momentum !


----------



## wavepicker (15 November 2008)

Stumbled accross this site a few days ago. Some interesting charts and statistics there:-

http://www.housingbubble.com.au/


----------



## Temjin (15 November 2008)

tech/a said:


> It is possible to present arguements for whatever side of *"A"* fence in any commodity you wish to present.
> 
> If people believe there is no opportunity in that commodity and in this case housing,they wont look for it,in fact if it stands in front of them they wont see it,they will agrue it out of existance.
> 
> ...




Just wondering Tech/A, are you implying that those who are "bearish" in property are merely following the "crowd mentality" and are not recognising the "opportunity" that you see in your own eyes? This is the impression you are giving me so far, so am curious on your opinion. 

How would you determine crowd mentality? In here, I would agree that the majority of the crowd are against properties for reasons I wouldn't go further here. And it is true that the minority (contrarians from the perspective of ASF's population) are bulls and thus, not part of the "crowd".

However, at least outside this internet forum and into the real world, I still see a crowd mentality in most people still believe property prices have not fallen yet and will ALWAYS rise regardless of what happens to the local/world economy. This is, of course, based on my limited informal survey and observation of my personal networks so far. 

So I would consider myself to be not part of this "herd" because I am against almost everyone I know who are still bullish on properties. They feel it is safer to be in properties because everybody are doing so and are either buying or looking into it. In fact, I am told being a "fool" for not getting into properties right now because of the same arguments used in the appendices as attached in my previous reports. So I guess this is our differences on how we perceive the mentality of the crowd so far. 

Regardless, I do understand what you are trying to say. You are seeing opportunities in the property market, and based on your experiences, you will be exploiting it. I don't and I see far better opportunities elsewhere.

And yes, it is definitely possible to present arguments for which ever side you are with. It goes the same for almost any situations that has not yet been observed or happened yet. (i.e. religion! )


----------



## tech/a (15 November 2008)

Temjin said:


> Just wondering Tech/A, are you implying that those who are "bearish" in property are merely following the "crowd mentality" and are not recognising the "opportunity" that you see in your own eyes? This is the impression you are giving me so far, so am curious on your opinion.




Those who are in a position to take advantage of opportunity---Yes.
Those who are 20 with Hex debts and nothing more than an opinion--No. 



> How would you determine crowd mentality? In here, I would agree that the majority of the crowd are against properties for reasons I wouldn't go further here. And it is true that the minority (contrarians from the perspective of ASF's population) are bulls and thus, not part of the "crowd".




Those who in capable of determining how anything other than the "crowd" exists.



> However, at least outside this internet forum and into the real world, I still see a crowd mentality in most people still believe property prices have not fallen yet and will ALWAYS rise regardless of what happens to the local/world economy. This is, of course, based on my limited informal survey and observation of my personal networks so far.




All commodities Rise and Fall. But not all at the same speed and not all with the same conseqences to investors. Ive not seen more than a halting of price advancment in my area of property investment (Southern beaches).
If it falls 30% will I care. Not really After a 300% rise in the time of owning them a 30% retracement from their highs isnt going to bother me.(Ive sold enough property to be geared 38%)



> So I would consider myself to be not part of this "herd" because I am against almost everyone I know who are still bullish on properties. They feel it is safer to be in properties because everybody are doing so and are either buying or looking into it. In fact, I am told being a "fool" for not getting into properties right now because of the same arguments used in the appendices as attached in my previous reports. So I guess this is our differences on how we perceive the mentality of the crowd so far.




The herd you speak of is a minority group.I'm part of it and I agree with them to the extent that there is opportunity mounting,there is enough evidence to support my research into the opportunity and the Numbers for my next developement are adding up. Mind you most of the "Crowd" --yours--wouldnt be in the position to take advantage of the oppotunity I and others in my group do see---after all it is either all or part of our business.



> Regardless, I do understand what you are trying to say. You are seeing opportunities in the property market, and based on your experiences, you will be exploiting it. I don't and I see far better opportunities elsewhere.




Thats fine T,I also see opportunity in most areas trouble is time and resourses,but what a wonderfully challenging time we live in!!!



> And yes, it is definitely possible to present arguments for which ever side you are with. It goes the same for almost any situations that has not yet been observed or happened yet. (i.e. religion! )




True.
Its an individual thing.
You will see,believe and live by your perceptions.
Unfortunately the majority cannot think for themselves---hence crowds.
Its good to be able at times to step out of our "crowd" and see what others are doing.


----------



## tech/a (15 November 2008)

numbercruncher said:


> Exactly camkawa .....
> 
> Fortunately the average mug on the street is no longer falling for this manipulation of the data which is made evident by skyrocketing inventory and nosediving clearance rates and prices.
> 
> And its all gaining momentum !





Again hearsay.

Can you show me data refering to Skyrocketing inventory and nose diving clearence rates (not auctions--most know settlements occur in these times in after auction negotiations).
Ive not seen anything (A few pockets) but certainly not across the board.
I thought I had just about every stat available.

This is a case of "crowd mentality"
Head nodding --back slapping---no hard evidence other than----You can see it EVERWHERE---you'd have to be blind!!

Everywhere???---


----------



## numbercruncher (15 November 2008)

Sorry tech but I cant help you ....


You see the market how you interpret it from behind your rose coloured glasses and thats cool !!

I hope you continue to get super rich from your top secret information that supercedes that of which the herd has access to ....

I guess the price falls of virtually every Australian city this last quarter is herd propaganda as well ? and if so, why is this " false " information fed to the market ? whom does it benefit ?


The coming months will shows who is more right, property doesnt tank across every market overnight - its a drawn out affair. hindsight will be our judge !

cheers.


----------



## Mofra (15 November 2008)

singlefished said:


> NB - for the record ~ I AM bullish on property in the long term, but bearish on property in the short term ~ need to give it another 2 quaters before I will reassess the situation



On a side note, David Potts (he's an economist/journo so take this with a grain of salt) has pegged March 09 as the economic low point in the current crisis/cycle. As you'd be re-assessing shortly after this, will be interesting to see if you agree with him as circumstances unfold.


----------



## gfresh (15 November 2008)

That paper referred to is quite interesting. It's a little rough, but many of the points in there are quite valid. Interestingly it dismisses the very RBA argument talked about. I don't trust the RBA to be fully on the pulse of things either, having to slash interest rates the fastest ever from record highs only 6 months ago. 

Doesn't show too much foresight in predicting a slow-down, if anything, the extent of the cuts seem to be indicating an intense fear of things getting much worse. 

As stated in there, the belief that house prices peaked in 2003 is silly. It is possible in Sydney this is the case, but in every other state, which has seen 5-10-15%+ growth for the last 5 years, whereas inflation is tracking at 3-4%.

You want supply shown? well if you'd like I can drive around the Gold Coast to many of the likely problem areas and take photos of an overwhelming number of sale signs, and rows and rows of newish cookie cutter homes that all are priced at $400k+. Street after street of them. Living on the ground here (and dealing with local small businesses here - suffering) shows quite a different perspective. 

I can also point out the demographics if you'd like, maybe take some photos of the empty beer bottles strewn across the back-streets, take some pictures of the 'high class' citizens living in some of these areas, maybe capture somebody doing in a skid in a VN commodore if you'd like - they're not hard to find 

To be honest, I don't know how far prices will fall, but the conditions are definitely there *short term* for things to fall markedly. 

Here is a quick example, Broadbeach, just across the road. Now this is not a large area, I could probably take a photo capturing one end to the other, it's probably a few km across. But look at the number of properties for sale in this small area: 

http://www.realestate.com.au/cgi-bi...000&px=350000&pme=25000&pxe=350000&cat=&o=def  (133 under $350k)

http://www.realestate.com.au/cgi-bi...00&px=500000&pme=350000&pxe=500000&cat=&o=def (178 - $350-500k)

http://www.realestate.com.au/cgi-bi...00&px=800000&pme=500000&pxe=800000&cat=&o=def (174 - $500-$800k)

http://www.realestate.com.au/cgi-bi...&px=1250000&pme=800000&pxe=1250000&cat=&o=def (141 - $800-$1.25M)

http://www.realestate.com.au/cgi-bi...CH&pm=1250000&px=&pme=1250000&pxe=&cat=&o=def (104 - $1.25M+)

So all in all 730 properties in a small stretch. Yes, it's a lovely beach.

Now having watched this market for a few years, I can tell you these sort of numbers are not normal, and I find it extremely difficult to believe all this supply is going to disappear that quickly. If not, at least without large price falls, especially in the upper end. Why would anybody accept the asking price on any one of those individual properties when they have so many similar available at every price point to bargain against?


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## sinner (15 November 2008)

tech/a for those of us who "are 20 with hex and just an opinion" could you please explain how auction clearance rates are no longer a valid metric for you now that they are at say 60% for Sydney where they used to be 80%? 

I am not trying to be contrary or condescending, I really would like to understand...

Having done some of my own research I found this nice article "What auction clearance rates don't tell you"

http://www.smartcompany.com.au/Free...t-auction-clearance-rates-dont-tell-you-.html

From Sep 2007, found this particularly interesting

An excerpt



> Across an entire year – unless there has been some major impact on the property market – we would expect to see a clearance rate of 60–70% and this range indicates a balanced market. Clearance rates consistently above 80% indicate a very high level of buyer demand and a reduced supply. For instance, across Melbourne’s inner-urban areas, clearance rates so far this year have ranged between 81.8% and 91.6%. For the same period last year, the range was from 68.3% to 85.1%. Less buoyant geographical areas, where the demand/supply ratio is more balanced, return much lower clearance rates.
> 
> Once the busier spring market begins – generally from the first week of October to the second week of December and more stock comes on to the market, clearance rates anywhere between 60% and 80% would be considered normal. But, the temptation is to interpret any drop in clearance rates as indicative of falling prices and a slowing market. Not so!
> 
> ...




So according to the above, if we take the Sydney clearance rates of 60% as valid (even assuming RE agents reporting their best data), we are at "balance" right now, possibly slipping into "market change" either oversupply, lower buyer volume, high vendor expectations, vendor selling pressure, or a combination of the lot!

If tech/a agrees with the above link analysis that a consistent 70+% rate heading into Jan is needed to sustain buyer confidence and buying in general...

Here are the auction clearance rates for Australian capital cities, for the weekend ending Nov 09, 2008.



Again, not trying to put forth a particular viewpoint, just wanting others input so I can learn


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## gfresh (15 November 2008)

If I also read one more "first home buyers look here" in the listings I'm going to scream.. It's ridiculous if they think this will really help the market. 

In fact I was just thinking how much of a joke this really is to believe this is going going to fix the market in the short term. Announced last month I think it was, and expiring June 09, lets see a typical scenario:

*Miss X and Mr Y (November 08):* "Awesome, the government is offering us $14/21k to buy a home, we've got $5k in the bank, lets go. "

(Off to the bank, $400k property in their eyes in Upper Coomera.. $300k is minimum here for a small unit, use that example if you like but it doesn't come off much better)

*Mr Loans Officer:* "Well yes, you can get the grant great... BUT we're tightening lending standards significantly, and we're not really writing anything under 90% LVR. 6 months ago sure. We're more sensible these days, and our risk department, and our Insurers have told us we have look at all these others things in closer detail. 

Basically, we're not just going to offer you a loan just because the Government has given you 14/21k which you thought you could use as a deposit - we need to make sure you can actually pay it back and can save over time. So you need a 6 month savings history, close to (10%) $40k deposit. "

(in Loans Officers mind: Then we'll use that 14/21k to reduce the total loan amount in case your property value falls 10%, and you lose your job and have to sell in a distressed sale to an over-supplied market)

*Mr Y (Late November 08):* "shoot, damn, looks like we need to save $40k before we can go ahead and do this. Lets get together and really save for the next 6 months so we can afford it"

(Mr Y and Miss X work out on their quite good combined $100k salary, or approx $1500 clear, they can save: $700/wk, as they are VERY disciplined savers, and have very little toys (yeah, sure))

*Miss X:* "But er, honey, 26 x 700 only equals $18,200, and doesn't the extra super dooper grant end in June?"

Some common sense needs to be thought of here when it comes to these magic FHOB saviors, even the Government must know it still doesn't really add up as easily as planned to make any short-term difference. 

Very much doubt the Government will be stopping the extra grant in June 09 as a result, but we will see.


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## sinner (15 November 2008)

I thought the extra grant expired "June 09 or the next 150,000 buyers"


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## nunthewiser (15 November 2008)

gfresh said:


> If I also read one more "first home buyers look here" in the listings I'm going to scream.. It's ridiculous if they think this will really help the market.
> 
> In fact I was just thinking how much of a joke this really is to believe this is going going to fix the market in the short term. Announced last month I think it was, and expiring June 09, lets see a typical scenario:
> 
> ...




ok fair enough BUT what happens if MRand MRS X already have been saving towards there first home and view this dip in prices(in various locations) combined with the govvy carrot gift of the FHOB,combined with falling intrest rates an excellent time to buy ?


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## numbercruncher (15 November 2008)

Spot on gfresh - shows how desperate they are throwing all there hopes on the FHB to save their sorry sorry situation ....

I read recently that only 5pc of gen Y have entered into home ownership ...... and I really really dont see this changing because of a extra 7k - I infact see it getting worse because of tighter lending standards !!


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## nunthewiser (15 November 2008)

Anyone here know where or has a rough chart/statistics/info on the japanese property market ?

be mighty grateful

thankyou in advance


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## Indie (15 November 2008)

tech/a said:


> All commodities Rise and Fall. But not all at the same speed and not all with the same conseqences to investors. Ive not seen more than a halting of price advancment in my area of property investment (Southern beaches).
> If it falls 30% will I care. Not really After a 300% rise in the time of owning them a 30% retracement from their highs isnt going to bother me.(Ive sold enough property to be geared 38%)





So, your saying that if a property you hold falls in value by 30%, from say $500k down to $350k, it doesn't bother you because of previous profits earned. So losing $150k doesn't bother you because you are still "in front" overall. Interesting way of looking at things. 

How about this: sell at $500k, then buy back in after the 30% fall at $350k. Use the $150k (give or take) on thousand dollar hookers and rack, or whatever else takes your fancy?


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## explod (15 November 2008)

Happen to be out of the property market at present but watch this thread with avid interest.

Well done for the thoughtful input.


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## tech/a (15 November 2008)

> Some common sense needs to be thought of here




*Sure does.*

So do you think it wise to buy in Surfers at the moment?

With interest rates plummeting what other options do you think some home owners will take in these areas of High Supply?

What opportunities does it (Plummeting interest rates) lead to for those who are too highly geared?

My Sister lives in Robina--she enjoyed 13.2% increase last year and has a compounded return of around 10% over the last 8 yrs.
I note Carrara 19.8% last year and 12.5% over the last 10 yrs.

*There are options here* and "common sence' would dictate to those who are equiped to use it.

As there are pockets which will plummet there will also be pockets which continue to out perform the Property market in general as there will be areas which stay stagnent.



> tech/a for those of us who "are 20 with hex and just an opinion" could you please explain how auction clearance rates are no longer a valid metric for you now that they are at say 60% for Sydney where they used to be 80%?




Whatever gave you the idea that this is how I measure market strength.

Frankly I dont give a damned wether the Property market/Stock market or Economy is strong or weak.
I'm interested in one thing only.

*DO THE NUMBERS STACK UP.*
Yes-----I do it
No------I dont.

I'm not going to Stop a developement because Auction Clearence Rates are zero,if my number stack up. EG I have 70% of the developement pre sold and I'm either at profit or B/E.
I'm really not interested in the overall-----other than giving me the opportunity to alter my NUMBERS.
In trading for instance I'm hardly taking a trade---numbers dont add up.

In business I'm constantly working on efficiencies and productivity,our pricing leads our industry in aggression, My NUMBERS here are that I wish to be pre booked 4 mths in advance and be profitable.
Thats the way its been since the introduction of GST.Thats the way it will remain.

"Ill use common sence".


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## tech/a (15 November 2008)

Indie said:


> So, your saying that if a property you hold falls in value by 30%, from say $500k down to $350k, it doesn't bother you because of previous profits earned. So losing $150k doesn't bother you because you are still "in front" overall. Interesting way of looking at things.




I have Esplanade Property which I paid $180,000 for Now worth $580,000
a 30% drop brings it to $406K. They are Holiday rentals which return me $45000/year on each. So do you think Id sell these? There is more than the obvious to consider. Tax and my Own Super are paramount in my property investment.

So I'm more complex than most here---sure---but at one time I too rented.
I also came very close to bankruptcy in 1984!---Doing incidentally what the crowd was doing!



> How about this: sell at $500k, then buy back in after the 30% fall at $350k. Use the $150k (give or take) on thousand dollar hookers and rack, or whatever else takes your fancy?




See above there is much more for me than the obvious.
Eg Capital gains tax---why would I want to Crystallize that!

Would you also be kind enough to point out those areas of low supply--- (Common sense) ---which are going to fall 20-30%


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## Glen48 (15 November 2008)

20 -30 % fall would be a soft landing. Any one still in property is a modern day Gambler with more money that sense.
Property should only be looked at as a way of producing income eg a workshop, ware house but even then you would be better of leasing it and using your money on more productive things like Drinks with business mates.
Property will go down for years and sadly we have just started.
Why do people cash in an item once is increases in value such as shares but not property? Like I did.


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## robots (15 November 2008)

lioness said:


> Sorry to be a smartie robots, but Fitzroy North has had more growth than St kilda, but I won't argue with Mr Burns. He tells me I will lose money staying where I am.
> 
> Hehehe




hello,

wack the rise in your signature brother so we all know where its at

alot of other suburbs also had good rises

you doing well man for your hard work, probably just for rocking up to home and sticking the key in the front door, top effort and have a great day 

thankyou
robots


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## singlefished (15 November 2008)

Mofra said:


> On a side note, David Potts (he's an economist/journo so take this with a grain of salt) has pegged March 09 as the economic low point in the current crisis/cycle. As you'd be re-assessing shortly after this, will be interesting to see if you agree with him as circumstances unfold.




Thanks Mofra, you have reaffirmed my confidence in the English language as a method of communication. After Robots responses last night I was really wondering, well, where the problem of adequate articulation lies....

Yup, I think we'll need to see how the economy travels and how unemployment unfolds over the next 6 months. Plenty of dire predictions by government, economists and the like out there so no need for me to quote on anything. I'm certainly no economic guru so have to try and maintain a balanced view of the more bullish and bearish news we receive and assume the truth will be somewhere in the middle....

Confidence in the future and having a better than average chance of staying in employment and thus enabling you the opportunity to pay off a mortgage are paramount to the stabilisation and future growth of property in the short to medium term. Debt is the preferred method p: where's the tongue in cheek smiley?) of paying off a mortgage and if you are unsure about your employment prospects 6 months down the line you'd be less than likely to take on the burden of a 25~30 year debt at this point in time (I assume).

The finance sector and big banks in particular are facing the prospect of huge job losses and I read this morning the mining industry could also possibly be laying off a few staff too http://au.biz.yahoo.com/081114/31/21o9m.html... retail could be the next biggie after the January sales but I don't know, we'll have to wait until Feb / March to see....

Until confidence returns, property is going nowhere but slowly down I fear. 6 month time we'll have a better understanding on our economic direction and hence a further understanding on what the future holds.

Cheers


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## tech/a (15 November 2008)

> Why do people cash in an item once is increases in value such as shares but not property?




They do and like you I did.

Hence gearing at around 38%.Some owned,nothing negatively geared.
Income is passive,but capital gains have been excellent.

You dont have to sell everything particularly if its producing passive income.
Unfortunately the discussion here revolves around 1 dwelling. 

The real benifit of property comes with multiple holdings.
Yes Commercial and Industrial is also excellent.
My own company office and warehouse is in my SMSF,the benifits enormous and the way my CPA uses it and profit at the end of year is amazing.


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## chops_a_must (15 November 2008)

tech/a said:


> You dont have to sell everything particularly if its producing passive income.



In terms of property, I think you have to look at it as an income generating mechanism. Personally, I don't see the rationale behind looking at property for capital gains, unless you are actually a developer. It is a difficult mechanism for producing that.

And if property is producing income, and you have no debt, why on earth would you sell?

I have free carried shares that pay dividends. Why would I care if the SP tanks? So long as it pays divvies. Unless it goes to 0 of course.


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## lioness (15 November 2008)

robots said:


> hello,
> 
> wack the rise in your signature brother so we all know where its at
> 
> ...




Yes, you are right. All I did was have the balls to put my money where my mouth is and have made 500K in 2.5 years, but Mr Burns and Glen will tell me I will lose everything soon. What a joke.:


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## lioness (15 November 2008)

Glen48 said:


> 20 -30 % fall would be a soft landing. Any one still in property is a modern day Gambler with more money that sense.
> Property should only be looked at as a way of producing income eg a workshop, ware house but even then you would be better of leasing it and using your money on more productive things like Drinks with business mates.
> Property will go down for years and sadly we have just started.
> Why do people cash in an item once is increases in value such as shares but not property? Like I did.




30% will be a soft landing you reckon. Well if it falls 30% Glen48, I will be ober the moon with joy. That only means I am up 35% in 2 years on my investment. Gee, I am feeling broke already. 

No-one on here is discussing % rates as a key topic either.


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## lioness (15 November 2008)

Fin review today had a good article on rent increases and what may happen if % rates dramatically fall.

Basically, it states they expect rents to increase 50% in the next few years.

Also if % rates fall to say 3-4% for the variable rate, expect another minor boom to hit us, as unemployment rising to 5-6% won't be enough to stop the next property wave which will take up rising again.

That is the key - job losses. Yes we will have some, but nothing  like USA at 11%. Expect another boom when rates come down as the government will pull out all stops to keep the bubble going.

My key statement is this: this country is built upon property ownership and the old money won't let it collapse the way so called blue chips have.


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## YChromozome (15 November 2008)

nunthewiser said:


> Anyone here know where or has a rough chart/statistics/info on the japanese property market ?







The graph's a bit old - it was published in 2005 and naturally the housing bubble has got much bigger since then.


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## cutz (15 November 2008)

lioness said:


> Fin review today had a good article on rent increases and what may happen if % rates dramatically fall.
> 
> Basically, it states they expect rents to increase 50% in the next few years.
> 
> ...




Yeah, I don’t know about that.

I think the intent of the article is to show that property yields are increasing due to the reduction of investment property values, just as yields are increasing on stocks due to the market getting smashed, the article also states that the current yields offered by property are not enough to entice investors out of cash and into property.    Yet.


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## lioness (15 November 2008)

cutz said:


> Yeah, I don’t know about that.
> 
> I think the intent of the article is to show that property yields are increasing due to the reduction of investment property values, just as yields are increasing on stocks due to the market getting smashed, the article also states that the current yields offered by property are not enough to entice investors out of cash and into property.    Yet.




Cutz,

Spot on here. Plus doesnt Mr Burns and Glen48 types realise that cash will go into a perceived stable investment after joe blow has been burnt with shares.

There will be a fundamental shift away from shares and into property due to blue chips making the average retiree work another 7 years.


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## Sunder (15 November 2008)

lioness said:


> Cutz,
> 
> Spot on here. Plus doesnt Mr Burns and Glen48 types realise that cash will go into a perceived stable investment after joe blow has been burnt with shares.
> 
> There will be a fundamental shift away from shares and into property due to blue chips making the average retiree work another 7 years.




Will property be seen as stable though? Interest rates have been cut monstrously, and new grants have been given, yet clearance rates kept falling, and unsold inventory is still rising.

I don't see a mass exodus into property until the yield is so high that it out performs cash by a substantial enough amount to take the risk. Yields of 4% and risk of 0-30% capital loss, or yields of 6% govt gaurantee? I know which I'd be taking. Fast forward 12 months, and say IR has dropped, and so have house prices, causing yields to go to 6% and cash to go to 4%, would you take the risk of bad tenants, damage, insurance, rates, headaches, and possible further capital losses, against 4% guaranteed?

No Lioness, I see a big and long shakeout here. I don't think property will be seen as a "Stable" investment for some years to come yet.


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## cutz (15 November 2008)

Hi,

Just for the record I do consider that stocks are and always will be the best long term investment, but saying that I do own my own home which I don’t consider an investment but a lifestyle choice.


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## Indie (15 November 2008)

tech/a said:


> See above there is much more for me than the obvious.
> Eg Capital gains tax---why would I want to Crystallize that!
> 
> Would you also be kind enough to point out those areas of low supply--- (Common sense) ---which are going to fall 20-30%




Fair enough, my only point is that if your capital base is shrinking, it's well....shrinking. There's no doubt you bought at the right time. Your numbers look very impressive. 

Buffet is down 30% for the year, I read somewhere. The only people who have made money this year have either been short or in cash.

I think the importance of the supply issue is overblown. The major factor is always availability of credit. Potential buyers can only pay with available funds no matter how much they would like to borrow. If I see banks moving back to zero deposit/equity loans then I'll believe the property market is going to move up again. Only because that is where we've just been, so it stands to reason that for property to even stay at par level, credit availability has to stay at or above that peak. P/e's ratios may be good for you given your buy-in point, but for new investors they don't look very attractive. I live in one of the most tightly held areas in Melbourne (Middle Park) and I've never seen so many properties passed in. This time last year everything that went up was sold, everything.

For those who think Australia won't have double digit unemployment and huge government deficits, followed by rising taxes, you're kidding yourselves. Last time I checked over 2/3 of our economy was in the services sector. This will be hit very hard by a reduction in consumer spending. Just wait for the dark news that's going to follow this coming xmas period, even with the one-off Rudd hand outs to pensioners etc, which is the only thing that will stop a quarter of negative growth anyway. Add to that a depressed commodities sector, problems in the agri sector and it's not looking like a soft landing. I mean, why on earth would anyone think Australia is well placed to survive this global downturn? The government reviews it's outlook every month. Massive rate cuts, stimulus packages? These are emergency measures, not something an economy that is "well placed" needs to do. Being as we are, a satellite to China's economy, I'm even more concerned. They're doing so well they have just unveiled a $500bn+ stimulus package. Tell me that isn't the writing on the wall. 

The problem for housing is that peak credit for the baby boomers has been reached. The next driver for credit growth is where? The subsequent smaller generations of Australians who are going to have to pay higher taxes to support retiring baby boomers?


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## robots (15 November 2008)

Indie said:


> Fair enough, my only point is that if your capital base is shrinking, it's well....shrinking. There's no doubt you bought at the right time. Your numbers look very impressive.
> 
> Buffet is down 30% for the year, I read somewhere. *The only people who have made money this year have either been short or in cash.*
> 
> ...




hello,

you forgetting st Kilda +14.75% for 3 months, nth fitzroy killing it, melton up

ah yes here we go, peak debt

has gphc closed down or something cause they all here spreading the word

i welcome them all, everyone gets a fair go at ASF

thankyou
robots


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## Sunder (15 November 2008)

robots said:


> you forgetting st Kilda +14.75% for 3 months, nth fitzroy killing it, melton up
> 
> ah yes here we go, peak debt
> 
> has gphc closed down or something cause they all here spreading the word




And I'm sure there are people who are up on the long side of shares as well, but by and large property investors will be down, and cherry picking particularly good suburbs on 3 month old data before the slow down, probably doesn't do your credibility any good.

As for the GHPC comment, it indicates you think of it as a marginalised view, who are coming to proseletyze here. Perhaps the reality is, that they simply could see what was happening earlier than anyone else, and the views are becoming mainstream, as people stop denying reality.

For the disclosure laws, I am a member of GHPC as well (as well as some very bullish property investment forums).


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## Glen48 (15 November 2008)

I had brought and sold 7 houses over 30 and made money on two. The last one I double my money in 6 yrs and then decided to sell as it has reach the top and that will be it for real Estate for a long time, cash in the Bank is the only way until there is some direction.
G20 has to come up with a new system with in weeks or its all over.


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## robots (15 November 2008)

Sunder said:


> And I'm sure there are people who are up on the long side of shares as well, but by and large property investors will be down, and cherry picking particularly good suburbs on 3 month old data before the slow down, probably doesn't do your credibility any good.
> 
> As for the GHPC comment, it indicates you think of it as a marginalised view, who are coming to proseletyze here. Perhaps the reality is, that they simply could see what was happening earlier than anyone else, and the views are becoming mainstream, as people stop denying reality.
> 
> For the disclosure laws, I am a member of GHPC as well (as well as some very bullish property investment forums).




hello,

what they could see st kilda was going up 14.7%, melton 7%, nth fitzoy 20+%

how long we been in slow down for sunder? stick with gphc, oh thats right they have all disappeared havent they (hiredgoon still around?)

keep it coming 

thankyou
robots


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## nunthewiser (15 November 2008)

YChromozome said:


> The graph's a bit old - it was published in 2005 and naturally the housing bubble has got much bigger since then.




Thankyou kindly for your time

anyone else got anything more up to date as in chart/statistics/info? or can point me the way

re japan property markets

cheers


----------



## robots (15 November 2008)

hello,

you think a newer graph would be out nun, doesnt do much for credibility

thankyou
robots


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## tech/a (15 November 2008)

Good post!!



Indie said:


> Fair enough, my only point is that if your capital base is shrinking, it's well....shrinking. There's no doubt you bought at the right time. Your numbers look very impressive.
> 
> Buffet is down 30% for the year, I read somewhere. The only people who have made money this year have either been short or in cash.




In general terms your right,however there are exceptions,one other of course are those who have worked for a living or have businesses which have turned a profit.



> I think the importance of the supply issue is overblown. The major factor is always availability of credit. Potential buyers can only pay with available funds no matter how much they would like to borrow. If I see banks moving back to zero deposit/equity loans then I'll believe the property market is going to move up again. Only because that is where we've just been, so it stands to reason that for property to even stay at par level, credit availability has to stay at or above that peak. P/e's ratios may be good for you given your buy-in point, but for new investors they don't look very attractive. I live in one of the most tightly held areas in Melbourne (Middle Park) and I've never seen so many properties passed in. This time last year everything that went up was sold, everything.[/quote
> 
> Valid points albeit some are extreme. Everything has an intrinsic replacement value,Land + developement+ improvements. There are areas where excellent value can be found. As for your properties being handed in --- many who are seeing interest rates plummet and pressure coming off are now and in the future in the position NOT to sell if they don't wish to. Put that into your future equations.
> 
> ...


----------



## YChromozome (15 November 2008)

robots said:


> hello,
> you think a newer graph would be out nun, doesnt do much for credibility




Japan was the biggest housing asset bubble on record. As we exceeded it in 2005, I don't think there is any value in a newer graph. What will it show?  Currently we are in uncharted territory. No body has ever had a housing bubble as big as current.


----------



## nunthewiser (15 November 2008)

robots said:


> hello,
> 
> you think a newer graph would be out nun, doesnt do much for credibility
> 
> ...




 opportunity is in the hand of the beerholder they say 

trust you are having a spectacular day

cheers


----------



## nunthewiser (15 November 2008)

YChromozome said:


> Japan was the biggest housing asset bubble on record. As we exceeded it in 2005, I don't think there is any value in a newer graph. What will it show?  Currently we are in uncharted territory. No body has ever had a housing bubble as big as current.




yes i know what the graphs for the u.s , oz and uk look like , im mainly after a jap one as intrested in a few things

cheers


----------



## jeflin (15 November 2008)

cutz said:


> Hi,
> 
> Just for the record I do consider that stocks are and always will be the best long term investment, but saying that I do own my own home which I don’t consider an investment but a lifestyle choice.




In terms of long term investment, I will say that housing is as good as stocks in throwing up solid returns. 

It is harder to liquidate housing assets though but that is the beauty as it prevents us from making hasty decisions in the short term.


----------



## johenmo (15 November 2008)

We know they up and down and increase looooooong term (long being a relative term).

My experience and from talking to others who have moved a lot thru work is that people who have bought and stayed in one place or kept it have done best.  So reading back about housing vs shares.  Provided you have get it right, shares outdo property in general terms.  We've doubled our money in 4 years, and lost 10% over 7 years.  Depends when you buy in the cycle in the particular market.  Our first house would have been up 10x in 20 years if we'd kept it.  And the mortgage was small.

As for the thread theme, I think we've got a year or so for them to fall and bottom.  The masses look at their home as their big asset, and traditionally love bricks n mortar.  But the boom never lasts forever, whatever the commodity/item.


----------



## tech/a (15 November 2008)

Some tables of interest.


----------



## nunthewiser (15 November 2008)

tech/a said:


> Some tables of interest.




Thankyou very much

might actually start a separate thread on all things japan instead of clogging this one with my questions

cheers


----------



## SBH (15 November 2008)

From a different forum.....

The crash is here!

http://forum.globalhousepricecrash.com/index.php?act=attach&type=post&id=5312

The adjusted clearance rate for Brisbane last week was 17%. That is unbelievably low, no wonder the press hasnt mentioned real estate all week. Sydney today had a clearance rate of 41%, with 100 'unreporteds' so expect that to be adjusted to high 30% later. Great stuff

Which property bull wants to be the first to admit they are beaten?


----------



## robots (15 November 2008)

SBH said:


> From a different forum.....
> 
> The crash is here!
> 
> ...




hello,

i have been smacked down, beaten to a pulp, i admit it, i am a mess, confused, embarrassed and in total shock

cant believe it, struggling for words, gobsmacked, anyone know if a salvation army in St Kilda for assistance?

thankyou
robots


----------



## SBH (15 November 2008)

robots said:


> hello,
> 
> i have been smacked down, beaten to a pulp, i admit it, i am a mess, confused, embarrassed and in total shock
> 
> ...





Ha ha good post robots. Well done on St Kilda, looks like it will perform well compared to most other places.

But whats your opinion on Australia as a whole? Going down or up?


----------



## robots (15 November 2008)

hello,

thanks sbh, 

as mentioned previously i wouldn't have a clue and am in for the long haul

5, 10, 15, 25yrs will be gone soon and hopefully i and others doing the rent&invest technique all have a stash to enjoy

Australia is the best joint in the world hands down and I am just on the ride of life

thankyou
robots


----------



## YChromozome (15 November 2008)

robots said:


> anyone know if a salvation army in St Kilda for assistance?




There was last week . . 

. . However administrators were appointed on Thursday.


----------



## robots (15 November 2008)

YChromozome said:


> There was last week . .
> 
> . . However administrators were appointed on Thursday.




hello,

too much debt ychromo?

thankyou
robots


----------



## MrBurns (15 November 2008)

robots said:


> hello,
> 
> thanks sbh,
> 
> ...




I agree Robots, no matter what you've always got a door and a key to put in it,  unlike some shares that just disappear.

We are in the best country in the world, if you want to know how lucky we are just look at the world news sometimes.

Enjoy..........and be grateful.


----------



## nunthewiser (15 November 2008)

MrBurns said:


> I agree Robots, no matter what you've always got a door and a key to put in it,  unlike some shares that just disappear.
> 
> We are in the best country in the world, if you want to know how lucky we are just look at the world news sometimes.
> 
> Enjoy..........and be grateful.




WTF!!!!! u got a fever mr burns ? you just agreed with robots!!, quick someone take the mans tempreture!


----------



## MrBurns (15 November 2008)

nunthewiser said:


> WTF!!!!! u got a fever mr burns ? you just agreed with robots!!, quick someone take the mans tempreture!




Not nice language for a bride of God, extra time at confession in the morning for you ! 

No fever I'm really a nice guy when I'm not defending myself !


----------



## Passive (15 November 2008)

Financial Review had some interesting articles on property - yields in some states making this an attractive proposition and with rates on a downward spiral it may become the investment vehicle of choice when things stabilise.


----------



## Glen48 (15 November 2008)

"when things stabilise."
Answer that and you can own 100000 homes debt free.


----------



## Passive (15 November 2008)

That essentially is the difference between being proactive and reactive. Seen this all too often.Similar circumstances and different details. In the 90's the sky was going to fall down and on many occasions b4 that - lo and behold those with vision will be able to buy before the pack - buy intelligently and do well out of it. Therein lies the difference - those who have succeeded don't need to be proven right or wrong - just enjoy the many benefits over time.


----------



## chops_a_must (15 November 2008)

Passive said:


> That essentially is the difference between being proactive and reactive. Seen this all too often.Similar circumstances and different details. In the 90's the sky was going to fall down and on many occasions b4 that - lo and behold those with vision will be able to buy before the pack - buy intelligently and do well out of it. Therein lies the difference - those who have succeeded don't need to be proven right or wrong - just enjoy the many benefits over time.




I think the secret is going to be, and across all asset classes, buying with cash.

Almost impossible for most with property, but those that can, will and do will probably be miles ahead.

The question is more likely to be when.


----------



## Sunder (16 November 2008)

robots said:


> hello,
> 
> what they could see st kilda was going up 14.7%, melton 7%, nth fitzoy 20+%
> 
> ...




You remind me of someone offensively defensive on the Somersoft forums. She signed on with "Hello", off with "Thank you", used grammatically incorrect short sentences, and offensive self answering "gtfo" kind of statements when things weren't going her way as well. Funny, she lives in Melbourne too. I guess when people get panicky, they get get pretty prickly. 

How long have we been in slow down? Australia as a whole, only very recently, Q3. Some places still aren't in slow down. Others in Sydney have been flat or slowing down since 2003. Is it relevant? What matters is not what's happened, but what's coming. If Sydney slowed down during one of the greatest booms in living memory, what happens when we hit recession? We experience one of the biggest RE booms? I have my doubts. 

And no, GHPC is now much more active than before, and gaining more and varied posters, and yes, Hired Goon is back. 

In short, if you are so sure that RE is going to be a good investment, why get so prickly - enjoy your good buy as you have lots more bargaining against sellers, cheaper interest rates, and a much larger client base as people keep renting and put off home purchase. There's no need to get nasty about things.


----------



## robots (16 November 2008)

hello,

not being nasty or prickly i am just having a discussion with you, 

no big deal really, different views, happens everyday around the water cooler

thankyou
robots


----------



## Mofra (16 November 2008)

chops_a_must said:


> I think the secret is going to be, and across all asset classes, buying with cash.
> 
> Almost impossible for most with property, but those that can, will and do will probably be miles ahead.
> 
> The question is more likely to be when.



Not quite so difficult to pay cash for with "alternate" forms of commercial property with low entry costs; car spaces, storage units, ATMs, etc. Not my first choice personally.

Yields & lease terms aren't as good as normal commercial property either. True set & forget holds.


----------



## MrBurns (16 November 2008)

Friend of mine has his house on the market, Kew. good suburb, at the open yesterday 2 people turned up and according to the agent that was better than the previous 3 houses they had open yesterday.


----------



## gav (16 November 2008)

Maybe because Kew is generally a pretty expensive area?


----------



## tech/a (16 November 2008)

Kew.

340 sold in the year Sept to Sept.
Median Price $1,100,000.
12 mths rise 29.6% !!!
10 Yrs average 11.7%.

So is he slashing the price to sell?
Id be sacking the agent.
If he has had a poor response at auctions whats he doing running it at auction?


----------



## sinner (16 November 2008)

Can you give us a month by month breakdown of the rises and sales t/a? Thanks


----------



## numbercruncher (16 November 2008)

tech/a said:


> Kew.
> 
> 340 sold in the year Sept to Sept.
> Median Price $1,100,000.
> ...





All your data is out of date, Kew has fallen about 15pc last quarter ....

Permabulls last bastion of hope is to quote prices over a 12 month period, that little rort is falling apart everyday that ticks by as well .....

no one is doubting the past as thats happened so why keep on regurgitating the figures ? facts are its toppling rapidly on average now .... prices are falling, clearance rates nosediving to rates not seen for decades .....

stop fighting the truth ...... who are you trying to fool ? scared about something ? your only 38pc geared, why the need to bend the truth ?


----------



## Mofra (16 November 2008)

http://www.news.com.au/business/money/story/0,25479,24653251-5013951,00.html

Interesting - the 40%+ falls the megabears have been sprouting runs counter to almost every economist except "I don't put my money where my mouth is" Keen.

AMP looking at 10-15% _annual_ fall, whilst Hazza Triguboff thinks we're close to the bottom (I have a feeling he knows a bit about property).
The market is not a forgone conclusion at all...


----------



## MrBurns (16 November 2008)

Not Auction, private sale, there are pockets of brightness, some houses in Kew are special and when they come up a premium will be paid for them BUT the rest is like everywhere else I guess, when he told me that today it was frightening, his place would have sold in a week before all this. 
Now it seems there's very little if any market.

It's only the second day it's been open but doesn't look good at all.


----------



## sinner (16 November 2008)

Mofra said:


> Hazza Triguboff thinks we're close to the bottom (I have a feeling he knows a bit about property).
> The market is not a forgone conclusion at all...




In all honesty, I hope the "megabears" are wrong, even though I feel uneasily feel they are probably right. Being wrong spells roses and rainbows compared to what being right spells...

But for Mr Triguboff, easy to be complacent when your the direct target of >3bn govt bailout in the form of 150,000*$21,000 + infinite FHOG at 14k



> "I don't think we have to worry, we have such help from the Government"




Good on ya mate, what a battler,


----------



## MrBurns (16 November 2008)

It's happening before their eyes yet the property bulls remain convinced property is safe from further collapse.
An amazing study in human nature to be in self denial in the face of the facts.


----------



## nunthewiser (16 November 2008)

LOL and the roundabout continues............... your all wrong and im right ........ok... phew glad thats sorted

avaniceday


----------



## numbercruncher (16 November 2008)

Mofra said:


> http://www.news.com.au/business/money/story/0,25479,24653251-5013951,00.html
> 
> Interesting - the 40%+ falls the megabears have been sprouting runs counter to almost every economist except "I don't put my money where my mouth is" Keen.
> 
> ...





Professor Keen sold his apartment to some sucker for the record 

Wouldnt be surprised if the sale collapses due to finance like half the contracts do these days thou eh ?


----------



## chops_a_must (16 November 2008)

Mofra said:


> AMP looking at 10-15% _annual_ fall, whilst Hazza Triguboff thinks we're close to the bottom (I have a feeling he knows a bit about property).
> The market is not a forgone conclusion at all...



The guy from Mirvac right?

Well... Mirvac properties in the next suburb along have been on the market for nearly 2 years now. Can't drop the price because half have already sold, the rest can't.

Hilarious. Bottom of the market indeed. Why they needed to raise capital right?


----------



## robots (16 November 2008)

hello,

i think they should be banned nun, they cant go on writing such rubbish it doesnt contribute to the discussion at all,

your a legend Number, still havent heard from Keen (sent a couple of emails) was just letting him know how st kilda is going

what a day, sun shining again, this is paradise even if i have been battered and beaten down to a pulp

thankyou
robots


----------



## sinner (16 November 2008)

nunthewiser said:


> LOL and the roundabout continues............... your all wrong and im right ........ok... phew glad thats sorted
> 
> avaniceday




I think this roundabout is probably the most constructive thing anyone can really do right now, aside from running hard numbers into pretty charts..certainly prefer it to an information silence, or worse, an information consensus (which probably means the opposite is true)!

Don't think (or at least hope not) anyone here is trying to prove themselves right and everyone wrong, we are all just dumping information, which by definition gains some bias during conversion from data to info.

It's like reading the paper, you'd be an idiot to believe everything anyone writes down, you gotta read both sides of the bull**** and draw your line somewhere down the middle.


----------



## nunthewiser (16 November 2008)

robots said:


> hello,
> 
> i think they should be banned nun, they cant go on writing such rubbish it doesnt contribute to the discussion at all,
> 
> robots




LOLOLOL OH NO!!!.. dont tell me the gestapo thought police have finally stolen your freewheelin attitude to other peoples right to voice there opinion !

oh man im gunna go light a candle


----------



## nunthewiser (16 November 2008)

sinner said:


> I think this roundabout is probably the most constructive thing anyone can really do right now, aside from running hard numbers into pretty charts..certainly prefer it to an information silence, or worse, an information consensus (which probably means the opposite is true)!
> 
> Don't think (or at least hope not) anyone here is trying to prove themselves right and everyone wrong, we are all just dumping information, which by definition gains some bias during conversion from data to info.
> 
> It's like reading the paper, you'd be an idiot to believe everything anyone writes down, you gotta read both sides of the bull**** and draw your line somewhere down the middle.




 all cool sinner , i reckon this thread is a bewty actually and its great that all sides of the story is heard , EVEN the made up ones that sound really great too

cheers


----------



## tech/a (16 November 2008)

numbercruncher said:


> All your data is out of date, Kew has fallen about 15pc last quarter ....
> 
> Permabulls last bastion of hope is to quote prices over a 12 month period, that little rort is falling apart everyday that ticks by as well .....
> 
> ...




What the???

Leave all you to it.
Just quoted the figurs because I thought they would be of interest.

Nothing to prove,and nothing to gain being involved in this thread.


----------



## numbercruncher (16 November 2008)

So you deny the charge ?

I think you intentionally quote past gains when you are aware that prices are falling in most areas of the country !

But if your not doing that, fine, ill take your good word for it


----------



## sinner (16 November 2008)

tech/a said:


> What the???
> 
> Leave all you to it.
> Just quoted the figurs because I thought they would be of interest.
> ...




You have nothing to gain but the dilution of ignorance through whatever knowledge you may provide to us who appreciate the on-hand opine of one who is deeply involved in the topic at hand both on a business and personal level.

Please do not take lines drawn in the sand too seriously, a bit of wind always blows it away anyway. If you stop posting in this thread, I will be upset and might !


----------



## MrBurns (16 November 2008)

You can forget your charts and "research" on property it's all old news, go out and talk to a real estate agent and get the real story, if you're interested that is.

Robots seems to be getting rattled for once, times must be tough in St Kilda.


----------



## Mofra (16 November 2008)

chops_a_must said:


> The guy from Mirvac right?
> 
> Well... Mirvac properties in the next suburb along have been on the market for nearly 2 years now. Can't drop the price because half have already sold, the rest can't.
> 
> Hilarious. Bottom of the market indeed. Why they needed to raise capital right?



Nah, Triguboff knows his stuff, he's Meriton not Mirvac.
Ignored the Mirvac comments as typical listed company spin (a wise man once said he had never read pessimism in a company report 

Not sure how the 40%+ crowd feel about the 10-15% comments though.


----------



## nunthewiser (16 November 2008)

MrBurns said:


> You can forget your charts and "research" on property it's all old news, go out and talk to a real estate agent and get the real story, if you're interested that is.
> 
> Robots seems to be getting rattled for once, times must be tough in St Kilda.




LOL ! "real story from a real estate agent" ??? WTF ...... m8 they have 2 storys .
1. when u are in the market to list a property they will tell you how much extra u can get for your property if u list with them
2. tell you how bad the market has become after you sign on dotted line


----------



## Mofra (16 November 2008)

numbercruncher said:


> Professor Keen sold his apartment to some sucker for the record
> 
> Wouldnt be surprised if the sale collapses due to finance like half the contracts do these days thou eh ?



He didn't even put the apartment on the market until this year; not really putting his money where his mouth is though is it?

Perhaps he's worried about the rise in unemployment, knowing that useless, sensationalised public commentary doesn't pay as well as it used to.


----------



## numbercruncher (16 November 2008)

Maybe the money means little to him Mofra ? perhaps he couldnt care less if his apartment crashed by 40pc, perhaps he was "attached" to it ...... maybe he had other reasons,  There are stacks of property bears that arnt rushing out to sell .......

Im bearish on RE and the ASX but have some money in both, go figure !!


----------



## robots (16 November 2008)

hello,

i am neutral on RE and ASX and just going with the flow brothers out there,

best wishes to Luke on Idol tonite

thankyou
robots


----------



## robots (16 November 2008)

hello,

harry trig the man himself:

http://media.theaustralian.com.au/multimedia/2008/11/15-triguboff/index.html

what entertainment, 

thankyou
robots


----------



## So_Cynical (16 November 2008)

chops_a_must said:


> The guy from Mirvac right?




Harry Triguboff http://en.wikipedia.org/wiki/Harry_Triguboff

So your not from Sydney chops?

I suppose Meriton could be confused with Mirvac.


----------



## tayser (16 November 2008)

http://www.news.com.au/story/0,27574,24648042-5007133,00.html

snippet:

THE Rudd Government is planning a Budget assault on middle class welfare which could see health benefits and family payments wound back.

With the global crisis blowing a $40 billion hole in revenues, economic departments have begun targeting expensive government programs.

Among a list of likely casualties is the 2004 decision to expand the Medicare Safety Net scheme for visits by pregnant women to obstetricians. 

__________

Where's the talk about stopping negative gearing and the savings the government would reap from it?

now: all new properties bought, say, after Jan 1 2009 cannot be negatively geared.
future: all negative gearing ceases on Jan 1 2014.  Current property owners which take advantage of negative gearing have 5 years to either pay off debt so the property they own is not negatively geared or sell it.

etc.


----------



## Mofra (16 November 2008)

numbercruncher said:


> Maybe the money means little to him Mofra ? perhaps he couldnt care less if his apartment crashed by 40pc, perhaps he was "attached" to it ...... maybe he had other reasons,  There are stacks of property bears that arnt rushing out to sell .......
> 
> Im bearish on RE and the ASX but have some money in both, go figure !!



As yes, the cost/benefit analysis bugbear.
Assuming for example that Shane Oliver's expectations are right, we'll take his worse case 15% drop as a starting point. For an investor, is it worth selling, locking in cap gains tax, then having to pay ~5% to rebuy when/if the property drops? Often, the case is no, it makes more sense to hold.
If the property is positively geared, it would make even less sense to sell.

Of course I don't profess to know the direction of the market in the short term, however I don't know any property owners who view it as a short term investment either.


----------



## Spek (17 November 2008)

"Saturday's clearances highlight the market's rapid fall over the past 12 months.

For the same Saturday last year, Brisbane clearances were 55.4 per cent compared with 32.1per cent, Adelaide 61.6 per cent compared with 42.1 per cent, Melbourne 76.7 per cent compared with 52.9 per cent, and Sydney 58.1 per cent compared with 41.6 per cent.

But low clearances and falling prices are not the only worries for Melbourne agents. Mid-November is supposed to be the busiest time of the year in Australia's auction capital, but on Saturday only 776 properties were listed for auction, compared with 1041 last year.

"That should be enough to tell everybody the market is sick," said the owner of one of Melbourne's largest inner-suburban agencies, who did not want to be named. Melbourne, according to Australian Property Monitors figures, recorded a 7.5 per cent increase in house prices in the 12 months to September.

But house prices were flat during the September quarter, while apartment and unit prices fell 2.3 per cent.

Across the nation, Australian Property Monitors have predicted a 10 per cent price fall in the current financial year. "

http://www.theaustralian.news.com.au/story/0,25197,24661207-5013404,00.html


----------



## robots (17 November 2008)

hello,

good afternoon brothers. great day

http://www.theaustralian.news.com.au/business/story/0,28124,24663943-643,00.html

wow, shonk exchange down to 4 yr low, walloped  yet the humble RE market in most capital cities is doing just fine, nirvana

well done to all those in doing it tough, keep your chin up and walk tall

thankyou
robots


----------



## ROE (17 November 2008)

“If you own your own home free and clear, people will often refer to you as a fool.  All that money sitting there, doing nothing.”
- Anthony Hsieh, CEO Lending Tree

The year is now 2008 who is the fool  obviously Lending Tree cos they file for bankruptcy not long ago.


"The retreat in housing-market activity that's now under way amounts to a simmering-down process...
rather than a classic cyclical contraction that could spiral down for some time."

- David Seiders, Chief Economist, National Association of Home Builders, Jan 2006

The year is now 2008 and American market has crashed 
Damn that Mirvac quote could fit in with this one  housing is now bottum


and now for a more sensible quote from a great man

Sir John Templeton: Keep a cautious watch
"Prices of houses in all nations for centuries have fluctuated above and below cost of reproduction. In the United States now, in most major cities, homes can be sold for far higher prices than reproduction costs. Several times in my lifetime, house prices have been far below reproduction costs, and such cycles are likely to continue."


----------



## tech/a (17 November 2008)

> Sir John Templeton: Keep a cautious watch
> "Prices of houses in all nations for centuries have fluctuated above and below cost of reproduction. In the United States now, in most major cities, homes can be sold for far higher prices than reproduction costs. *Several times in my lifetime*, house prices have been* far below reproduction costs*, and such cycles are likely to continue."




As they were in the late 90's early 2000's interest rates at all time lows.
Practically *impossible* to buy a home and negatively gear it!

And yes the cycles will continue.
So next time make sure you recognise it and do something about it!!!


----------



## chops_a_must (17 November 2008)

tech/a said:


> As they were in the late 90's early 2000's interest rates at all time lows.
> Practically *impossible* to buy a home and negatively gear it!
> 
> And yes the cycles will continue.
> So next time make sure you recognise it and do something about it!!!




The problem is though Tech, there are often a confluence of factors that lead to such circumstances, that make it not amenable to most people.

I remember the Mum was wanting to buy a new house in this period, and rent the old one out. The rent would far and away have covered all costs comfortably. Despite having personal contacts, good and secure income, no-one was interested in financing it.

Move on 3-4 years and she can borrow as much as she wants.  When in actual fact, the returns are far lower and the risks far greater for the lenders down the track. 

Things are not always as simple as they seem.


----------



## lioness (17 November 2008)

Those with high paying jobs will be kings in this deflationary episode.

They will have huge cashflow and be able to borrow from banks and buy cheap assets. Others wont be able to even if they have large assets.


----------



## tech/a (17 November 2008)

chops_a_must said:


> The problem is though Tech, there are often a confluence of factors that lead to such circumstances, that make it not amenable to most people.
> 
> I remember the Mum was wanting to buy a new house in this period, and rent the old one out. The rent would far and away have covered all costs comfortably. Despite having personal contacts, good and secure income, no-one was interested in financing it.
> 
> ...




Chops.
My EX rang me in 1999 the house she was renting came up for sale.
She wanted to know what I thought.
I told her to simply buy it.
She was a high risk case and had only returned to the work force for 14 mths.
Being a lovely guy I made up the difference between yes and no by the bank.
(5k at the time).
Happy EX's are worth more than a house in my view!!

I cant understand why your case was refused.
Its either collateral or serviceability seems on face value she had both.

lioness is right serviceability will be king.


----------



## chops_a_must (17 November 2008)

tech/a said:


> I cant understand why your case was refused.
> Its either collateral or serviceability seems on face value she had both.



It came down to being on contract. Even though her employability was not a problem. Was the head of a prestigious private school at the time.

Now it doesn't seem to matter, so long as you have a job, as basically everyone is on contract. And now she has 4 properties, but has acquired them when her circumstances haven't really changed much.  I guess the point being, a lot of it comes down to the circumstances of the time, not necessarily people's intentions, plans, or potential solvency.


----------



## Mofra (18 November 2008)

chops_a_must said:


> Now it doesn't seem to matter, so long as you have a job, as basically everyone is on contract. And now she has 4 properties, but has acquired them when her circumstances haven't really changed much.  I guess the point being, a lot of it comes down to the circumstances of the time, not necessarily people's intentions, plans, or potential solvency.



Absolutely true, LMIs had tightened lending provisions last year in terms of max amounts insurable at high LVRs, after having relaxed provisions previously (including employment conditions). It is surprising how much economic circumstances reflect themselves in lending practices; nowhere near as much as the US though, where there were two main requirements to obtain a loan:
a.  A Pulse
b.  Ability to sign a contract


----------



## Passive (18 November 2008)

What does not seem to come up for discussion much was the Governments Consumer Credit Code in Australia which does not allow homeowners to be lent beyond what they can afford. Whilst bulky and cumbersome admittedly has served the homeowner well in that banks etc could not lend willy nilly.

Does not protect the commercial or property investor though.

In hindsight our regulators have learnt a thing or two more than the USA.


----------



## gfresh (18 November 2008)

ANZ has come out with their official loan changes:

- 80% max LVR on loans $1M-2.5M
- 90% max LVR on loans under $1M

So: $240k deposit required for say $1.2M loan  and well, and back to the ol' real 10% deposit for the cheaper stuff. 

LVR for lo-doc is now 60% and 70% respectively. No liar loans for the self-employed - minimum of 2 years paperwork required. 

The credit restrictions are beginning folks.. enjoy!


----------



## CamKawa (18 November 2008)

gfresh said:


> ANZ has today come out with their official loan changes:
> 
> - 80% max LVR on properties $1M-2.5M
> - 90% max LVR on properties under $1M
> ...



Have you got a link for that?


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## gfresh (18 November 2008)

CamKawa said:


> Have you got a link for that?




Actually think it was announced Friday, but here are the details:

http://ratesonline.propertyfinda.com.au/australian-homeloan/product/equity-manager/anz or 

http://www.infochoice.com.au/loans/...ArticleTypeId=2&MajorCategoryIds=1,22,24,3,37

A few of the other mortgage aggregate sites have the updated info as well.


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## MrBurns (18 November 2008)

gfresh said:


> ANZ has today come out with their official loan changes:
> 
> - 80% max LVR on properties $1M-2.5M
> - 90% max LVR on properties under $1M
> ...




Yes they'll put lower valuations on the properties than what was paid for them plus the income test will be brutal, they dont want to be caught in whats to come.

Whats this kiddies ??? Thats right its a *credit squeeze !*


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## Passive (18 November 2008)

MrBurns said:


> Yes they'll put lower valuations on the properties than what was paid for them plus the income test will be brutal, they dont want to be caught in whats to come.
> 
> Whats this kiddies ??? Thats right its a *credit squeeze !*




Hardly a credit squeeze! 20% for a loan was common sensible practice for decades- many schemes out there to help homebuyers in and rates and prices down somewhat - just watch the money that will be thrown at potential buyers. 10% dep is generous.
Where is all the cash going - where are all the super redemptions and payments going? More like a glut of cash that needs to be lent to sensible buyers and generally homes don't all go to first homeowner. Second tier buyers have huge deposits as do many property investors have huge equity even allowing for the decline. More and more of these people will start positioning themselves soon to invest in a more reliable asset class.


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## Beej (18 November 2008)

gfresh said:


> ANZ has come out with their official loan changes:
> 
> - 80% max LVR on loans $1M-2.5M
> - 90% max LVR on loans under $1M
> ...




All looks quite sensible to me. Even if valuations used by the banks are overly conservative, it's no bad thing. FHBs who want to borrow 95-100% (ie no savings) are the most effected by these so-called changes (or rather a return to normality as I see it). That actually should put a floor under potential increases in default rates over the next year or two, as those already up-to-the-hilt have relief due to lower interest rates, and those entering the market fresh won't be able to borrow to-the-hilt.

Eg a FHB buying a $400k house will need a deposit of $40k. In NSW they pay $0 stamp duty, plus get $14k from the FHB grant, so need to have saved $26k - let's call it $30k to cover legal and moving costs etc. Anyone who can't save a $30k deposit for a first house has no business buying one anyway, unless we really DO want to follow the US into a sub-prime style crisis over here. Repayments on the $360k loan would be ~$500/week, which would be not much more (maybe 25% higher) than the cost of renting the type of house or unit that money would buy, and about 30% of average household income of $80k/year. All quite doable and sensible really! Hardly a credit crunch.....Plus of course if $400k is too much, there are plenty of houses to be had in Sydney for $300k-ish, even better!

And of course the 80-90% of people buying property who are not FHBs shouldn't have any issue with these lending guidelines at all either?

Cheers, 

Beej


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## MrBurns (18 November 2008)

Beej said:


> All looks quite sensible to me. Even if valuations used by the banks are overly conservative, it's no bad thing. FHBs who want to borrow 95-100% (ie no savings) are the most effected by these so-called changes (or rather a return to normality as I see it). That actually should put a floor under potential increases in default rates over the next year or two, as those already up-to-the-hilt have relief due to lower interest rates, and those entering the market fresh won't be able to borrow to-the-hilt.
> 
> Eg a FHB buying a $400k house will need a deposit of $40k. In NSW they pay $0 stamp duty, plus get $14k from the FHB grant, so need to have saved $26k - let's call it $30k to cover legal and moving costs etc. Anyone who can't save a $30k deposit for a first house has no business buying one anyway, unless we really DO want to follow the US into a sub-prime style crisis over here. Repayments on the $360k loan would be ~$500/week, which would be not much more (maybe 25% higher) than the cost of renting the type of house or unit that money would buy, and about 30% of average household income of $80k/year. All quite doable and sensible really! Hardly a credit crunch.....Plus of course if $400k is too much, there are plenty of houses to be had in Sydney for $300k-ish, even better!
> 
> ...




Yes this is more like it, hope it sticks, think it will for a while as the market softens the banks dont want to be caught.


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## robots (18 November 2008)

hello,

you have always had to supply 2 yrs financials for self-employed, probably 10% reduction of lvr only,

but look at this:

http://www.theaustralian.news.com.au/business/story/0,28124,24670201-5018001,00.html

paradise for the money renters coming up brothers, petrol down (not that the pushie uses any) and IR's down this is it,

yet many here keep carrying on as though you fool if you have debt, man every month it is costing me less and less, nirvana

hope everyone having a great day out there,

thankyou
robots


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## awg (18 November 2008)

I dunno, if I was a new buyer, I would still be holding out.

prices falling right across Sydney, Brisbane, Perth, and Newcastle (my HT)

except some very isolated pockets

I agree there will be some good rental yields, very soon

but i reckon prices still to drop in most locations

I would be really surprised if St Kilda showed a rise NEXT quarter

no offence, robots!...hope Im wrong!


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## Beej (18 November 2008)

awg said:


> I dunno, if I was a new buyer, I would still be holding out.
> 
> prices falling right across Sydney, Brisbane, Perth, and Newcastle (my HT)
> 
> ...




Rents also rising across Sydney STILL, (on the news tonight Ch9) - up an average of 3.2% in the last quarter! Strangely, the biggest rent rises are occuring in the cheapest suburbs (eg Bankstown), and rents have even fallen in some more expensive suburbs?? (Eg, Randwick). Regardless, the stars seem to be aligning for FHBs who have been waiting on the sidelines - in Sydney at least...... low/lowering interest rates, softened house prices (lower prices ranges ie < $500k are stable to rising in Sydney actually right now after years of falls/stagnation - wait for this quarters numbers), $0 stamp duty and $14k - $21k FHB grant, + increasing rents and low vacancy rates..... I remain unconvinced it will get too much better than this in that lower price segment IN SYDNEY = opportunity of the decade. SEQ/Perth, another story, I would definetly be holding off if I was a FHB in those area's, (unless the numbers stacked up and I wanted to get into my home for mainly lifestyle rather than purely financial reasons).

Beej


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## juddy (18 November 2008)

awg said:


> I agree there will be some good rental yields




I see people refer to this often as a form of protection during market downturns, low capital growth etc. I'd like to know from people here who owned rentals during the last recession, what their experiences were in collecting rent from people who were unemployed. Unless you own high quality property chances are you may face this situation in years to come. How do you plan to deal with it?  Landlord's insurance was difficult to get just 10 years ago, now any and all companies offer it. When the risk starts to get greater, it is likely we'll see companies cut back or raise premiums heavily.

I must say, I see significant risks in purchasing investment properties at this time. If you purchased ten years ago, fine, but not now ( as a new investor).

Awaiting to be enlightened.


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## Pommiegranite (19 November 2008)

Spek said:


> It seems clear from this thread that buyers think its the best buyers market this decade. On the flip side, has anyone been selling at the moment that has had a good "fast sale at a good price" selling experience?????




Excellent point Spek. It highlights the fact that property bulls will always convince themselves that things are in their favour until......"I don't understand...what went wrong?" Then they will try to comfort themselves that 7 years after buying, their property will have double in value.

I met some clown yesterday who bought in Willoughby last year (North Shore NSW I believe), who told me that his property had increased 15% in value and that ALL properties on the North Shore have always had a 15% average annual increase. He also went on to tell me that you could take ANY 2 years, 7 years apart and property prices would show a doubling.

This is what we are dealing with. Pure stupidness.


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## Beej (19 November 2008)

Pommiegranite said:


> Excellent point Spek. It highlights the fact that property bulls will always convince themselves that things are in their favour until......"I don't understand...what went wrong?" Then they will try to comfort themselves that 7 years after buying, their property will have double in value.
> 
> I met some clown yesterday who bought in Willoughby last year (North Shore NSW I believe), who told me that his property had increased 15% in value and that ALL properties on the North Shore have always had a 15% average annual increase. He also went on to tell me that you could take ANY 2 years, 7 years apart and property prices would show a doubling.
> 
> This is what we are dealing with. Pure stupidness.




I don't where that guy got his figures from - but you are right that is BS. Willoughby (NSW) has probably doubled over the past 8 years or so, but that is not the norm as we all know. FYI Willoughby has one of the 3 Sydney Porsche dealerships located within it, plus it is where the TCN 9 studios are based (although they are moving and have sold the land to developers I believe). My brother-in-law actually bought into Willoughby a few years back and just sold a few months ago for a nice profit. Your "clown", however naive, in the long term will still end up doing very well from his Willoughby purchase I would expect - especially if he renovates cleverly, as it is a bit of an up and coming area on the north side of Sydney right now.

Having said that, any Sydney North Shore property will always be solid over the long term (and will AT LEAST beat the inflation rate for sure), as that area is full of some of the most desirable suburbs and homes that high income earning professionals (doctors, lawyers/judges, executives, business owners etc) will always want to live in. It is also well established and there is little/no new supply, and all the best schools, infrastructure (train line, parks, bushland, middle harbour and so on) etc are around there. The north shore types like to leave the Eastern Suburbs to the "nouvea riche" - drug dealers, media types, advertising executives etc etc 

Cheers,

Beej


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## gfresh (19 November 2008)

I'm in tears.. 

http://au.youtube.com/watch?v=bNmcf4Y3lGM

Funniest thing I've seen all month.. some may not find it so funny, but I thought it was brilliant


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## djsherly (19 November 2008)

I agree, the problem with quoting median prices is context. Houses aren't like shares in a company as they're not directly interchangable. The period of measurement is important as well. If for some strange reason only two bedroom duplexes sold for a suburb that is predominantly 4bed 2bath then the median will necessary fall for that period.

Not trying to be an apologist for property investors (although I do have a couple myself - bought long ago) but I think detecting the trend for property is necessarily more difficult that for shares. I think it's pretty clear though the property prices are softening.


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## saiter (19 November 2008)

Pommiegranite said:


> This is what we are dealing with. *Pure stupidness.*




Isn't it stupidity?


----------



## MrBurns (19 November 2008)

saiter said:


> Isn't it stupidity?




Don't be stupid !


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## Mofra (19 November 2008)

Another gift for Christmas from the RBA:

http://www.news.com.au/business/money/story/0,25479,24674059-14327,00.html


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## MrBurns (19 November 2008)

Mofra said:


> Another gift for Christmas from the RBA:
> 
> http://www.news.com.au/business/money/story/0,25479,24674059-14327,00.html




If we didn't have an interest rate buffer the RBA would have nothing to do, shut it down and save a few bucks.

I'll do it, I'll ring in once a month and drop the rates by a percent or so and charge much less than they do.


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## MrBurns (19 November 2008)

I just thought of a job far worse than night cart driver (those blokes who used to carry the cans from the houses in unsewered areas, they carried them on their shoulders and it always leaked and ran down their shirts front and back)

Finance journalist, what a job, the markets up the markets down, and that's their life.

At least the night cart man had a bit of variation in the various houses he picked up from Aaaarrrgghhh!.....................


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## Glen48 (19 November 2008)

Doing their BIT:

t may seem like ancient history now, but not long ago the mortgage industry was turning ordinary people into millionaires. One of them was Sharmen Lane, a high school dropout who, like many other young women during the boom, found her way into an obscure banking job with the clunky title "mortgage wholesaler." Her experience””and the experiences of other wholesalers like her””offers a glimpse into the recklessness and indulgence that drove the industry to ruin.

The rise of mortgage wholesalers from grunts to rainmakers is one of the more curious developments of the housing bubble. Wholesalers work for banks and other lenders. The wholesaler's job is to buy loan applications from independent mortgage brokers so that lenders can turn them into loans. Wholesalers are paid on commission: the more loans they generate, the more money they make. During the housing boom, lenders typically approved the loans and then packaged them into securities. That path””from mortgage brokers to wholesalers to lenders to securities””turned out to be a road to disaster.

But as the housing bubble inflated, wholesalers””though hidden from public view””became high-earning superstars. Lane, a manicurist before joining now-defunct subprime lender New Century Mortgage in 1997, says she brought home $1 million in 2002 and $1.2 million in 2003.

Eventually the deal-making turned frenetic. Multiple wholesalers began inundating mortgage brokers with offers for the same applications. Some brokers chose to exercise their power by asking for something extra in exchange for their business: sex.

Dozens of former brokers and wholesalers say the trading of sexual favors was so common that it came to be expected. Lane recalls one visit to a mortgage brokerage near San Jose (Calif.) in which the manager lewdly propositioned her in his office. She says she declined the advance, and he didn't sell her any applications. But other female wholesalers didn't have the same qualms about crossing the line. "Women who had sex for loans were known very quickly," says Lane, who left New Century before it failed in 2007 and now works as a $200-an-hour life coach and motivational speaker in New York. "I didn't want to be a mortgage slut."
WHOLESALE CORRUPTION

Investment bubbles always spawn excesses, and housing was no exception. The abuses went far beyond sexual dalliances. Court documents and interviews with scores of industry players suggest that wholesalers also offered bribes to fellow employees, fabricated documents, and coached brokers on how to break the rules. And they weren't alone. Brokers, who work directly with borrowers, altered and shredded documents. Underwriters, the bank employees who actually approve mortgage loans, also skirted boundaries, demanding secret payments from wholesalers to green-light loans they knew to be fraudulent. Some employees who reported misdeeds were harassed or fired. Federal and state prosecutors are picking through the industry's wreckage in search of criminal activity.

Now wholesalers, who for a brief moment rose to prominence, are an endangered species. The failures of large subprime lenders like New Century, BNC (a unit of Lehman Brothers), and GreenPoint Mortgage, owned by Capital One, threw thousands out of work. Some lenders still in business have curtailed or shuttered their wholesale operations.

In the end, the wholesalers were undone by the same people who allowed for their rise: their Wall Street overlords. During the boom investment banks bought as many loans as they could to pool together and turn into securities. In 2006 the top 10 investment banks, which included Merrill Lynch (MER), Bear Stearns (BSC), and Lehman Brothers, sold mortgage-backed securities worth $1.5 trillion, up from $245 billion in 2000. To keep the supply of loans coming, the investment banks increasingly took control of the industry's frontline players as well.
First they started buying small, independent wholesaling firms. Next they extended billions in credit to subprime lenders. Then they took stakes in some, and bought others outright. At the height of the frenzy in 2006, six top investment banks shelled out a total of $2.2 billion to buy subprime shops.

That gave Wall Street the power to demand more subprime loans, which carried the highest interest rates and were the most profitable. As a national account director for Deutsche Bank (DB), Mark D. Toomey bought loans from mortgage lenders to turn into securities. Sometimes, he says, he "twisted arms" to get more loans. "Nobody had the [guts] to say no," says Toomey, who left the bank in 2007. Deutsche Bank declined to comment.

But mostly, brokers and wholesalers were happy to comply. The more loans they made, after all, the more they got paid. One former wholesaler in Northern California who requested anonymity joined subprime lender GreenPoint Mortgage in 1997, right out of college. By 2004, she says, she was pulling in several hundred thousand dollars a year. She kept a chauffeur on call to shuttle her and her friends to "exclusive clubs, restaurants, and parties," and treated friends to shopping sprees at Neiman Marcus, Gucci, and Louis Vuitton. "It was the time of our lives," says the woman, who now works as an account executive for another lender in the area.

Brokers say some female wholesalers weren't up on the finer points of finance””but exploited other assets in their quest for more loans. "You had boiler rooms of younger, predominantly male brokerage operations and in would walk a gorgeous, fit [wholesaler] who would go desk to desk," says Rick Arvielo, president of New American Funding, a mortgage brokerage in Irvine, Calif. "Most of them didn't know the product."

Of course, it's accepted practice in many industries for companies to hire attractive saleswomen. What's more, on Wall Street, lurid tales of erotic dancers livening up after-hours events are common.


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## Glen48 (19 November 2008)

INDECENT PROPOSALS"

But in the mortgage business, it went further: The women allegedly offering sexual favors were bank employees. Evan Stone, president of Walnut Creek (Calif.) mortgage brokerage Pacific Union Financial, says "minimally trained and minimally dressed" wholesalers often wooed brokers. He says he regularly got visits in his suburban office from representatives wearing unusually short skirts to entice him and his team of brokers to party at the local Ruth's Chris Steak House. Stone says one New Century wholesaler offered to fly him to Chicago to "have a good time." He says he declined all offers of sexual favors. "There were some indecent proposals made," he says. "That was part of building the relationship."

Wholesalers also offered sexual favors to co-workers. To drive up their commissions, some enticed loan underwriters at their companies to approve questionable applications. A vice-president at Washington Mutual who once wielded $500 million to make loans recalls an incident in which a female wholesaler wanted him to approve a loan that didn't fit guidelines. The manager, who requested anonymity, says the co-worker, wearing a low-cut shirt, knelt down at his desk and said: "I really need this. What do I have to do?"

Some wholesalers turned a blind eye to broker fraud, too. "I'd walk into mortgage shops and see brokers openly cutting and pasting income documents and pay stubs, getting out the Wite-Out and changing Social Security numbers," says Melissa Hernandez, a former wholesaler for Argent Mortgage, a unit of now-defunct Ameriquest Mortgage, who says she never knowingly bought bogus applications. "There was no ambiguity."

Other wholesalers took matters into their own hands, doctoring documents to qualify borrowers for loans. A former Wells Fargo (WFC) wholesaler says he regularly used the copiers at a nearby Kinko's to alter borrowers' pay stubs and bank account statements. 
He would embellish job titles””turning a gardener, for instance, into the owner of a landscaping company””and inflate salaries. "I knew how to work the system," the former wholesaler says. Wells Fargo spokesman Kevin M. Waetke says the bank "does not condone any misrepresentations in the loan-underwriting process. We thoroughly investigate any incident that comes to our attention. Where necessary, we will take the appropriate disciplinary action."

Employees who resisted making bad loans ran the risk of being penalized. Shortly after Rachel Steinmetz joined GreenPoint's Manhattan branch as a senior underwriter in September 2005, wholesalers at the bank started asking her to approve loans "under terms that the borrower did not qualify for," according to a wrongful termination suit filed in June by Steinmetz in New York federal court. She says she told her superiors that the applications contained suspect details and that the loan files didn't have enough paperwork to back up borrowers' claims. "Notwithstanding [her] concerns, management overrode her decisions" and approved the loans anyway, the complaint says.

In April 2006, Steinmetz claims, she rejected a loan application that inflated the borrower's income and the home's appraisal value. While Steinmetz was out of the office celebrating Passover, she says in the complaint, her superiors signed off on the loan. A month later, Steinmetz says, her boss asked her to compile the paperwork on the same loan in preparation for closing. "Although she protested," the complaint notes, "the loan was funded in her name."

Steinmetz says through her attorney that there was retribution for her reluctance to make bad loans. Even though her bosses knew she was devoutly religious, the complaint says, they often would inundate her with "additional work and unnecessary meetings" on the eve of the Sabbath and religious holidays. In May 2006, she says, her superiors nixed her bonus even though she made her loan quota. Steinmetz is now suing Capital One (COF), which bought GreenPoint Mortgage in 2006 and shut it down less than a year later, for $10 million in damages. "We believe these claims are without merit, and we are confident that we will prevail in this litigation," says Capital One spokeswoman Diana Don.
DEMANDING "SPIFFS"

Whistleblowers at other firms complain of similar treatment. Coleen Colombo joined the Concord (Calif.) branch of BNC in 2003. The small office, next to a Mercedes-Benz dealership and a run-down Kmart (SHLD), was part of a regional group that funded some $1.2 billion of loans a month. Colombo initially thrived in her job as a senior underwriter. In a performance review, she received a top rating of "exceeds expectations," according to a wrongful termination and harassment suit filed in California Superior Court on behalf of Colombo and five other female employees.

The environment turned hostile in 2005, the suit says. One fellow employee, a male wholesaler, began bringing Colombo questionable loans with incorrect salaries, occupations, and home values, she says. In one instance, she claims in the suit, the wholesaler "tried to bribe [Colombo] to allow a loan with fraudulent information to go through."

The bribes, known as spiffs, were common at the BNC branch, says Sylvia Vega-Sutfin, a former wholesaler who left the firm in 2005. The mother of four, who says she made $16,000 a month during the boom, says that some underwriters demanded spiffs of $1,000 for the first 10 loans and $2,500 for the next 20 loans, whether they approved the mortgages or not. When she refused to pay them, Vega-Sutfin says, her loan files started to go missing and the size of her commission checks plummeted. Her bosses "said they would make an example of me to others: 'If you complain, this is what will happen,' " she says.

Colombo says in the suit that she e-mailed the regional vice-president for operations to report the wholesaler who tried to bribe her. She claims the vice-president brushed off her complaints in a meeting. Colombo "left the office in tears," the suit says. After she returned from a short leave of absence, the branch manager told her a co-worker "wanted her terminated for making the complaints," Colombo claims.

Meanwhile, the wholesaler who tried to bribe Colombo started sexually harassing her, according to the suit. The male colleague made her feel "uncomfortable and fearful" by "intentionally rubbing his body against hers." Colombo resigned from BNC in 2005. "You would have thought he was the pimp and we were his prostitutes," says Linda Weekes, another underwriter who is part of the suit. "It felt like a dirty, sleazy place to work." The case has been on hold since its owner, Lehman Brothers, filed for bankruptcy on Sept. 15. "We dispute the allegations made by these former employees and will be contesting them on the merits in the pending litigation," says a Lehman spokesman.

The world came crashing down for wholesalers in late 2006, when subprime loans started going bad. Wall Street quickly reined in its mortgage factories, tightening lending standards, pulling credit lines, and forcing lenders to buy back the same risky loans it once voraciously consumed. For the thousands of wholesalers swept up in the excitement and excess of a manic market, it was time to find a new job.

Der Hovanesian is Banking editor for BusinessWeek in New


----------



## sinner (20 November 2008)

Interesting to see the only index in the green today is the REIT, Stockland, Abacus and the likes holding their own against some serious slaughter.


----------



## arco (20 November 2008)

Get your name down now before these run out.................

Run-down suburbs on the rise 
Tony John is willing to bet $1 billion that the run-down suburb of Buranda, in Brisbane's south, is the next New Farm.  The Brisbane architect-developer has a scheme for a massive residential, retail and commercial project that can only be called immensely ambitious. He is willing to bet that Brisbane people will be willing to pay about $500,000 for an entry-level one-bedroom apartment measuring less than 50sqm. Property analyst Michael Matusik agrees, saying Brisbane's evolution means people will pay half a million dollars to live in tiny units in once-forgotten parts of town. He says Buranda is the ideal place for the small units to work because they will appeal to investors and first home buyers who will see it as the start of an urban renewal precinct and an opportunity to get in on the ground floor.


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## chops_a_must (20 November 2008)

Haahahaha...

Classic.


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## Coxy (20 November 2008)

Hello all, this is my first post in this thread, I have however been reading it over the weeks and found it to be very interesting. There have been some great posts, allot of arguing and a few morons (i wont list them) but all in all a good read. 

I thought I would post a link to another property outlook forum named "What is your outlook for property prices in 2009 and beyond". Out of all the forums I have come across regarding this topic it is by far the most intelligent and informative, with both Michael Yardley (CEO of Metropole Property Investment Strategies) and Steve Keen (UWS) getting in on the debate.

My personal view is that the property bubble has reached its peak and is in the process of popping, there is overwealming evidence to this fact as allot of you are well aware, there are however those that are adimant property will continue on its tread or somehow maintain the current level. There are such varying views on this that only time will tell, however the linked forum I have provided is a must read for all contributors to this thread and any interested in a very strong informative debate.

http://ourfinanceblogs.com/forums/index.php?topic=18.0

Cheers
Coxy


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## Temjin (20 November 2008)

There are simply too much emotions in this whole thread. I read an interesting article from a personal development side and the author noted that when someone has emotionally invested considerably into a particular believe, it would be extremely difficult if not impossible to change it. 

And he gave an example with religion and then obviously, all hell break loose with the readers' comments.  

Regardless, no one can deny that everyone of us have invested a lot of our emotions into a particular belief. This is true for those who are bearish and have a negative view of the local/global economy (and without IPs), and those who remain optimistic probably with several IPs or their own home. 

It would take more than just strangers' opinions on internet forums and charts/pictures to change our opinions. A reality check is needed and that doesn't happen to everyone at the same time and may not even happen to the same person even if his/her belief turned out to be false with the rest of his/her interest group.


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## robots (20 November 2008)

hello,

good stuff today brothers, what a fantastic day

rainfall in Melbourne and had to sit inside today for the usual cafe latte's on chapel st,

looking forward to next RBA meeting,

anything else going on in the world? 

thankyou

robots


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## numbercruncher (20 November 2008)

Average homebuyer from this day forth needs an extra 25k to get in on the poxy/pyramid scheme.

Good to see the banks lifting the game back to some historical norms .....

Cant get over the amount of forsale signs going up on the gold coast ....


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## robots (20 November 2008)

hello,

great news NC, 

here in Melbourne no signs at all, all disappeared not sure what that means

everyone is coming my way Number with St Kilda up 14.7% for the Sept08 Quarter, they all want to get down here with Robots and crew

fantastic

thankyou
robots


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## robots (20 November 2008)

Spek said:


> Same observation here too.  With the odd input from dhukka I think, tech, numbercruncher.  Others but I cant remember them all from a quick read.  Some good INFORMATION on the thread if you have the patience to read past the waste of text posts - gotta wonder why some of these clown think people want to read their drivel.




hello,

yeah word out to all the ASF members, the discussion is getting better ever day and those involved should be proud of their efforts

thankyou
robots


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## explod (20 November 2008)

robots said:


> robotshello,
> 
> great news NC,
> 
> ...




Yep, everyone has given up and decided its time to party and St Kilda is one of the best places to do that.  Get into it before she all blows away.


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## chops_a_must (20 November 2008)

explod said:


> Yep, everyone has given up and decided its time to party and St Kilda is one of the best places to do that.  Get into it before she all blows away.



Wont be long before all the prostitutes and crack *****s flood the area again. 

Still had that feeling I was going to catch a disease just by walking down the street the last time I was there.


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## Glen48 (20 November 2008)

92% chance the RBA will drop rates another 1% in December, which I agree they will do and we may see the same for a few months until it hits .0001%
You have to ask you self why are the RBA dropping the rate so much if there is no problem.
Wonder were the house boomers get their info from to predict prices to keep going?
 One day we can look back and say I lived through that depression.


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## MrBurns (20 November 2008)

chops_a_must said:


> Wont be long before all the prostitutes and crack *****s flood the area again.
> 
> Still had that feeling I was going to catch a disease just by walking down the street the last time I was there.




St Kilda's great for employment though, I saw an ad for a post graduate in hosing vomit from the front of pizza shops.

A guy with a doctorate in removing condoms from childrens playgrounds and hosing the vomit got the job though, I'd like to describe him but there were no visible facial features it was all face piercings, rusty too errrrk !

St Kilda the land of opportunity !


----------



## nunthewiser (20 November 2008)

personally dont mind STkilda .its got a vibe and buzz unlike many other places


----------



## MrBurns (20 November 2008)

nunthewiser said:


> personally dont mind STkilda .its got a vibe and buzz unlike many other places




Cockroaches


----------



## chops_a_must (20 November 2008)

nunthewiser said:


> personally dont mind STkilda .its got a vibe and buzz unlike many other places




That's true.

Although the buzz you feel there is likely to be someone trying to slip a vibrator into somewhere it isn't meant to go.

I do really like catching a good gig at the POW though. But geez... when the wind gets up there, it's so so much colder than the wharfs in Freo in winter.


----------



## nunthewiser (20 November 2008)

chops_a_must said:


> That's true.
> 
> Although the buzz you feel there is likely to be someone trying to slip a vibrator into somewhere it isn't meant to go.
> 
> I do really like catching a good gig at the POW though. But geez... when the wind gets up there, it's so so much colder than the wharfs in Freo in winter.




yep , give the baterry toys a miss as always onya guard out there at night .

BUT i got to see the pogues out there many years back when i lived out that way and always brings a twinkle to my eye thinking about the place


----------



## YChromozome (20 November 2008)

robots said:


> good stuff today brothers, what a fantastic day




Was it ever. The All Ords closed down to 3332.6. The significance of this is we have just plunged through the 50%. From the peak of the market on the 1st November 2007, the Australian Stock Market has now fallen 51.4%.

Boomers must be licking their wounds. All those retirement savings just evaporating. Hey, good thing Robots, that they all have four investment properties each on 100% LVR. They have something to cling onto before they start to tank too.


----------



## robots (20 November 2008)

hello,

thanks for reporting those fine numbers, gee the shonk exchange not travelling to well chromo,

but what do you expect, really? its all made up stuff, fairlyland and the data from the ABS regarding wealth of home-owners in comparison to specuvestor renters will be very very interesting,

thankyou
robots


----------



## Mofra (20 November 2008)

YChromozome said:


> Boomers must be licking their wounds. All those retirement savings just evaporating. Hey, good thing Robots, that they all have four investment properties each on 100% LVR. They have something to cling onto before they start to tank too.



Gotta love the assumptions... yep everyone is geared to 100%


----------



## cuttlefish (20 November 2008)

You can't live in dollars and you can't eat them.


----------



## cuttlefish (20 November 2008)

Thats not to say house prices won't fall - I think significant price falls are pretty likely unless inflation comes out of the can - but unencumbered property in the right location is always in demand for accomodation - and thus probably always tradeable for food, labour or equivalent goods.

Credit issues aside as a shorter term issue, longer term the only real risk to property is the rule of law being eroded or law being changed ... like when the communists decided to seize property, or you lived in a country that got invaded by another one and suddenly your laws weren't really that important.


----------



## Julia (20 November 2008)

Mofra said:


> Gotta love the assumptions... yep everyone is geared to 100%



Yep, and likewise  all the Boomers were silly enough not to move to cash when the market started to fall.  Another baseless assumption.
Generalisations like that are just so silly.


----------



## chops_a_must (21 November 2008)

Julia said:


> Yep, and likewise  all the Boomers were silly enough not to move to cash when the market started to fall.  Another baseless assumption.
> Generalisations like that are just so silly.




And that Gen Y ers with their astonishing mortgage take up percentage of 5% have caused this credit mess.  I've actually seen that written on another forum.

Mofra... do you happen to be a fan of Maynard G. Krebs?


----------



## Naked shorts (21 November 2008)

arco said:


> Run-down suburbs on the rise
> Tony John is willing to bet $1 billion that the run-down suburb of Buranda, in Brisbane's south, is the next New Farm.  The Brisbane architect-developer has a scheme for a massive residential, retail and commercial project that can only be called immensely ambitious. He is willing to bet that Brisbane people will be willing to pay about $500,000 for an entry-level one-bedroom apartment measuring less than 50sqm. Property analyst Michael Matusik agrees, saying Brisbane's evolution means people will pay half a million dollars to live in tiny units in once-forgotten parts of town. He says Buranda is the ideal place for the small units to work because they will appeal to investors and first home buyers who will see it as the start of an urban renewal precinct and an opportunity to get in on the ground floor.




I live at the neighboring suburb (Dutton Park), and I can confirm that Buranda is a hole. things are cleaning up a bit, I remember last year every second time i would go their for lunch I would see a cop car. Now not so much (Im thinking the cracking down has worked). I wouldnt live there, but it doest have some things going for it,

They have a hospital (which is under going expansion)
Its right next to the M1 (very easy to make your way down the coast, or get into the city).
Its within walking distance to UQ
Its on a main road that goes direct to South Bank, or west end.
It has 2 shopping centres, (coco's and coles(or maybe its woolworths)).
Roads near by are under going expansion
Its going to be on the entrance to one of the tunnels.
It has a train stations on either side.
It has a busway station
McDonalds, Subway etc


Considering all this, I would never pay $500,000 for a unit there. 10years? maybe


----------



## singlefished (21 November 2008)

Here's an extract from Michael Pascoes column on yahoo finance....

I checked his numbers - Sydders@30493 and Brissy(incl GC & SC)@33294 so not too different this week. This will include thousands of under contracts and the perpetual *"Another one SOLD by Iman Rse!"* listings that've been there for the last 6 months ~ but still, quite a large number on the market.

Where would the Author have located the quantity of listed properties from previous years ~ their own research or is there somewhere this can be found on the net?

The article in full is actually a discussion on real estate v's shares, also makes for interesting reading if you are so inclined....

http://au.pfinance.yahoo.com/b/michael-pascoe/111/real-estate-vs-bank-shares




			
				Michael Pascoe said:
			
		

> On the residential real estate investment side, the clearest thing I've read in ages about the market outlook was in last weekend's Sun Herald, a column by Louis Christopher, the head of property research at Adviser Edge.
> 
> It's so good I won't try to paraphrase it, I'll just reprint what Louis submitted to the paper (but please read it carefully - he's not predicting there's going to be a recession and he sometimes writes with his tongue in his cheek):
> 
> ...


----------



## sinner (21 November 2008)

Housing Industry Association (HIA) figures show a big jump in new home enquiries since the Federal Government tripled the First Home Owner Grant.

The HIA says $21,000 grant for new homes has led to a doubling in the number of inquiries.

The association expects around 15,000 new homes will be built as a result of the increased grant.

http://www.abc.net.au/news/stories/2008/11/21/2426333.htm


----------



## robots (21 November 2008)

hello,

hey hey man, the weekend coming on

http://business.theage.com.au/business/retail-king-slams-nohoper-charity-20081120-6cwj.html

bang this in here as plenty here supporting the handout crew(s), go Gerry you spot on brother and with aussie unemployment figures been so low its amazing people have the gall to ask "got any spare change"

yeah right, i get up and go to work so I can give it to you to bludge around all day being a professional no-hoper, 

thankyou
robots


----------



## Scuba (21 November 2008)

explod said:


> ***edited***...stacked in US $100 bills would be 9 million miles high and end to end out of the universe.
> ***edited***



Sorry Explod,
Nine million miles < %10 of distance to (our) sun.... Next closest sun is (Andromeda) 4.3 Years @ C (from the famous equation) where our sun is approximately 8 minutes distance at that speed......
 Other than that I've really enjoyed your posts 
Regards,
Dave
(Trolling on a Friday....)
\:


----------



## sinner (21 November 2008)

robots said:


> hello,
> 
> hey hey man, the weekend coming on
> 
> ...




What a bleeding rediculous article! Harvey Norman who based their entire business model and growth on cheap credit for the masses! 

Where does this guy get off! I hope they get their ****ing comeuppance!


----------



## Scuba (21 November 2008)

robots said:


> ***edited*** its amazing people have the gall to ask "got any spare change"
> 
> yeah right, i get up and go to work so I can give it to you to bludge around all day being a professional no-hoper,
> 
> ...




When I was living and working in London it was reported that one of the "beggars" around Kings Cross/ Euston was observed (Monday to Friday) "at the end of the day" catching the tube to a south London station where he then boarded a "home counties" line train, where he alighted in Surrey, entered the toilets at the station there, exited wearing a suit and tie, walked to the car park and keyed into his 5 series Beemer and drove home to his wife and family.....

_Some really do struggle though..._


----------



## ROE (21 November 2008)

sinner said:


> What a bleeding rediculous article! Harvey Norman who based their entire business model and growth on cheap credit for the masses!
> 
> Where does this guy get off! I hope they get their ****ing comeuppance!





Yeah WTF man some people have problems, some people born in the wrong family at the wrong time and some people got sh*t throw at them through life

for someone like Gerry to disregard this short of people are not human..Animal do that human has compassion and that separate us from the animal...

ah well I only buy my toys from JB hi-fi then or may he lost the plot now that cheap credit is gone and his poor customers he profiteer from are now homeless so he turn on them hahaha


----------



## robots (21 November 2008)

ROE said:


> Yeah WTF man some people have problems, some people born in the wrong family at the wrong time and some people got sh*t throw at them through life
> 
> for someone like Gerry to disregard this short of people are not human..Animal do that human has compassion and that separate us from the animal...
> 
> *ah well I only buy my toys from JB hi-fi *then or may he lost the plot now that cheap credit is gone and his poor customers he profiteer from are now homeless so he turn on them hahaha




hello,

and i will grace the floor of Harvey's joint to get some household gear, what a legend

thankyou
robots


----------



## Indie (21 November 2008)

robots said:


> hello,
> 
> hey hey man, the weekend coming on
> 
> ...





What a royal coc*smoker Harvey is. People like him would feel twice as much sympathy for a homeless dog than they would a homeless human being. When times get tough beat up on the unemployed and homeless. Whose next? The disabled? Very poor form Gerry.


----------



## robots (21 November 2008)

hello,

look at this!

http://business.theage.com.au/business/anz-drops-fixed-mortgage-rates-20081121-6dk1.html

what a day, the money renters are killing it out there, down and down the rates are going fantastic,

this is remarkable, another "rent" reduction on way

thankyou
robots


----------



## chops_a_must (21 November 2008)

I wouldn't piss on Gerry or his supporters if they were on fire.


----------



## robots (21 November 2008)

hello,

tall poppy syndrome, 

thankyou
robots


----------



## chops_a_must (21 November 2008)

robots said:


> hello,
> 
> tall poppy syndrome,
> 
> ...




Nope.

Just coming from someone that has been homeless themselves at one stage.

A lesser person would wish you to be struck down with a crippling mental illness, or someone close to you likewise, to know what it's like to deal in those circumstances.

NO-ONE is ever above living like that.

Seriously.


----------



## robots (21 November 2008)

hello,

i suffer from all of them:

bipolar, manic depression, schizophrenia

thankyou
robots


----------



## chops_a_must (21 November 2008)

I and others here could probably describe you, and I doubt any of those words above would be mentioned.


----------



## professor_frink (21 November 2008)

robots said:


> hello,
> 
> hey hey man, the weekend coming on
> 
> ...




I'd delete this and the exchange that has followed, but you have made yourself look pretty silly so it's probably better that it stays.


----------



## Beej (21 November 2008)

robots said:


> hello,
> 
> look at this!
> 
> ...




Well there you go - barely a few pages ago on this thread there was speculation about whether we would ever see interest/mortgage rates drop below 7% for any significant period of time. Here is the chance to lock in 5.99% for 1 year if you are game. Personally, I think they are going even lower than this, but this offer certainly shows you that there is no "credit rationing" going on over here in oz - the banks are cashed up are competing to lend money, but clearly not to very high risk borrowers - which is a good thing.

Cheers,

Beej


----------



## robots (21 November 2008)

hello,

its really no different to having asthma or a crook leg or knee

you just get on with living life man and enjoying the planet

thankyou
robots


----------



## chops_a_must (21 November 2008)

robots said:


> hello,
> 
> its really no different to having asthma or a crook leg or knee
> 
> ...




It is a lot different.

You aren't subjected to violent tirades by a person with a broken leg, because of their broken leg for instance.

I don't think you could be demonstrating your wide spread ignorance in a more thorough fashion even if you tried.


----------



## cuttlefish (21 November 2008)

Stumbled across this - has a report of sale prices for 3rd quarter 2008 in Manhattan - seems you can pick up a second hand 2 bedroom apartment for around $US1.25 million - I wonder how much prices have fallen to bring them down to those giveaway levels 


http://www.citi-habitats.com/media/pdf/sales3quarter2008.pdf


----------



## numbercruncher (21 November 2008)

Beej said:


> Well there you go - barely a few pages ago on this thread there was speculation about whether we would ever see interest/mortgage rates drop below 7% for any significant period of time. Here is the chance to lock in 5.99% for 1 year if you are game. Personally, I think they are going even lower than this, but this offer certainly shows you that there is no "credit rationing" going on over here in oz - the banks are cashed up are competing to lend money, but clearly not to very high risk borrowers - which is a good thing.
> 
> Cheers,
> 
> Beej





Oh thats nothing .....

Firstmac is doing 3.99pc fixed intro rates ! Prices to boom for years ? You can pretty much thank the government's $500m RMBS investment for that - so your all paying for this crackup boom now ..... our AUD banana bucks are wonderful things too .... propping up your houseprice ...

Nothing like our own ARMageddon hey ? Just a shame people need circa a 50k deposit to get on the pyramid and the stats show that only 20pc of Australians have savings in excess of 20k and only 5pc of Gen-Y have fallen for this debt slavery trickery ....

Wonder if they lend people their max LVR using the 3.99pc ?


----------



## Glen48 (21 November 2008)

Gerry and Canon have another problem, Canon have been giving a rebate for every printer sold once you filling in all the paper work etc now the company who looked after sending out the rebate cheques has filed for bankruptcy, I guess Canon though they would hang on to the loot and invest it in Lehman's or Bear Sterns and collect big time.


----------



## Julia (21 November 2008)

professor_frink said:


> I'd delete this and the exchange that has followed, but you have made yourself look pretty silly so it's probably better that it stays.



Good decision, Professor Frink.  Thank you.  A pretty appalling display of ignorance by Robots here.


----------



## So_Cynical (22 November 2008)

I'm sure i heard something on the news today about real estate "for sale" listings
going up significantly?...anyway all i could find was this....from the courier mail.

http://www.news.com.au/couriermail/story/0,23739,24685775-952,00.html

_Brisbane's housing sales slump the worst in Australia - November 21, 2008 11:00pm

THE number of properties sold in Brisbane has slumped by 18.6 per cent in the past 12 
months - *the worst property market decline recorded in Australia.*

Property analyst Michael Matusik said vendors with homes on the market for more than 
six weeks usually lost up to 15 per cent on the sale._


----------



## singlefished (22 November 2008)

numbercruncher said:


> Oh thats nothing .....
> 
> Firstmac is doing 3.99pc fixed intro rates ! Prices to boom for years ? You can pretty much thank the government's $500m RMBS investment for that - so your all paying for this crackup boom now ..... our AUD banana bucks are wonderful things too .... propping up your houseprice ...
> 
> ...




You've got to wonder why the banks are getting desperate ehh?

I'm guessing that not much business being done these days and if people aren't putting themselves into debt then the banks aren't making any money.

Maybe they're trying to entice new buyers into the game by stimulating sales growth to maintain current price levels? Wouldn't be good for the banks bottom line if prices dropped and future homebuyers didn't have to borrow so much money....

Not sure how falling prices would affect the Aussie banks though ~ I read in the US people just sent their house keys back to the bank and the property became the banks problem, here in Aus doesn't the debt follow you to the grave and beyond? Can anyone elaborate please or is this discussed in another thread somewhere...?

_On a side note ~ why is there so much irrelevant drivell being posted that is nowhere near being on topic? I'd suggest the offenders take their rant to another thread or even better, a blog somewhere off site! Either that or the moderators start getting serious and start culling a lot of the cr@p and prosecuting the offenders ~ it's not going to improve otherwise._


----------



## kitehigh (22 November 2008)

In the US they have nonrecourse loans for homes, which allows them to send the keys back to the banks and walk away.  We don't have the same luxury here in Oz.  The banks will come after everything you own and them some in order to get their money back.  Thats a big incentive to keep up your repayments. 

Yes agreed there is a lot of drivell on this thread.


----------



## robots (22 November 2008)

hello,

yes not wrong about the drivel tonnes of it in this thread, 

didnt realise a thread existed named "bludgers", should of posted there

great point *Beej*, 12-18mths ago we were all doomed on 10+ interest rates, now the money renters are looking at hopefully 5-6% in the near future, awesome

just going with the flow man

thankyou
robots


----------



## MR. (22 November 2008)

So_Cynical said:


> I'm sure i heard something on the news today about real estate "for sale" listings
> going up significantly?...anyway all i could find was this....from the courier mail.
> 
> http://www.news.com.au/couriermail/story/0,23739,24685775-952,00.html




"He said the total number listed in Queensland and Brisbane had increased this week, highlighting renewed vendor confidence."

Either that or vendors just want out!

While prices have fallen, some analysts claim a dearth of upmarket properties changing hands has skewed statistics.

True, but there is *no* lack of supply in up market properties, just a lack of "SALES".  It just means buyer and seller here can't even meet. 
So what are they worth?   

"Median house prices are likely to continue to fall during much of 2008-09, due mainly to the compositional change of the sales made rather than actual losses made by vendors on resale," Mr Matusik said.

Lucky, so my grandfather will make a profit on his home he bought in 1948!


----------



## CamKawa (22 November 2008)

I can't believe that the press are publishing stories like this. They are obviously out of touch with the fundamentals. Where are all the immigrants?
:

Mansions go begging as wealthy dump luxury homes

:bananasmi:bananasmi:bananasmi:bananasmi


----------



## Aussiejeff (22 November 2008)

sinner said:


> What a bleeding rediculous article! Harvey Norman who based their entire business model and growth on cheap credit for the masses!
> 
> Where does this guy get off! I hope they get their ****ing comeuppance!




Gerry says:

_"*Society might have been better off without them but we are supposed to look after the disadvantaged and so we do it. But it doesn't help the society.*"

Mr Harvey, the founder of the Harvey Norman retail chain, said the group had given money to charities, adding: "*At the end of the day, the more quality individuals you develop in the community, the better off the community should be.*"_

I'm pretty sure Herr Hitler had similar affection for the disadvantaged of the Third Reich. He, too, felt the Wunderkind would be "better off without them". 

I'm surprised Herr Norman didn't offer the traditional salute after spruiking this Fascist drivel.

Isn't the Nazi Party banned in Australia?

Off topic I know, but it deserves a response.

I hope HVN go bust....

For Herr Norman's sake.


----------



## numbercruncher (22 November 2008)

If the media run with this Herr Norman could do endless damage to his little cartel hey !?


----------



## numbercruncher (22 November 2008)

Yes seems Herr Norman is atracting himslf some condemnation ...

subject is probably worthy of a thread hey !



> HIGH-profile Melbourne youth worker Les Twentyman has attacked retail billionaire Gerry Harvey for saying donating to charity is "just wasted".
> 
> Mr Harvey has been quoted in a new book as saying there's "no good reason" to give to charity and, for the community to be better off, it needed more "quality individuals".
> 
> ...




http://www.news.com.au/couriermail/story/0,23739,24688165-5003402,00.html


----------



## Mofra (22 November 2008)

robots said:


> its really no different to having asthma or a crook leg or knee
> 
> you just get on with living life man and enjoying the planet



You've obviously been trolling for replies most of this thread, but the above post is plain embarrassing for any thinking human being.

Apologies for off topic post


----------



## Mofra (22 November 2008)

numbercruncher said:


> If the media run with this Herr Norman could do endless damage to his little cartel hey !?



Given his use of buy now, pay later credit (unsecured credit which is far worse than a standard credit card), I don't think Harvey's lack of moral fortitude should come as a surprise to too many. I'd go as far to describe his finance terms as about as "rigorously tested" as some of the US NINJA loans that started the sub prime mess in the first place.

His business model isn't far removed from a payday lender opening a shop next to housing commission flats.


----------



## MrBurns (22 November 2008)

Mofra said:


> Given his use of buy now, pay later credit (unsecured credit which is far worse than a standard credit card), I don't think Harvey's lack of moral fortitude should come as a surprise to too many. I'd go as far to describe his finance terms as about as "rigorously tested" as some of the US NINJA loans that started the sub prime mess in the first place.
> 
> His business model isn't far removed from a payday lender opening a shop next to housing commission flats.




Gerry Harvey also said that giving to charity was just encouraging people who contribute nothing to society. 
Some people have the ability to make money but they really haven't got a normal human brain, he's one of them.


----------



## ROE (22 November 2008)

professor_frink said:


> I'd delete this and the exchange that has followed, but you have made yourself look pretty silly so it's probably better that it stays.




"Never argue with a fool. People might not know the difference."


----------



## ROE (22 November 2008)

Aussiejeff said:


> Gerry says:
> 
> _"*Society might have been better off without them but we are supposed to look after the disadvantaged and so we do it. But it doesn't help the society.*"
> 
> ...




the first step for that is buy stuff from beloved WOW power house, JB and Fantastic Furniture holding.


----------



## Beej (22 November 2008)

Todays auction results for Sydney here: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Not too bad ~50% clearance rate on a large number of properties being auctioned (139 sold out of 253 + 36 withdrawn). Certainly no indictaions of a great price crash still. if anything prices seem quite stable, and in fact at 2 auctions I attended today some very good prices relative to the market expectation were achieved.

My feeling is the lower interest rates are improving buyer sentiment, and may well put a floor under the current market in Sydney at least - (again I think SEQ/Perth etc are about 1-2 years behind the current Sydney cycle).

Certainly not anything close to boom time conditions, which I don't expect to come back until we get out the other side of the current global economic malaise. However, I still reckon that in Sydney, price falls are about done, and buyers who have been on the sidelines are coming back into the market. We shall see if I am right when the official stats are all released for this quarter. In terms of sales, this quarter is just about done anyway - only 1-2 weeks left really to sell places before the xmas holiday period starts to set in.

PS: A note to all - remember if you REALLY want to understand what is happening in your local R/E market at any time you need to get out there ON THE GROUND and see what exactly is selling, for how much, who is buying, and what is not selling and why.

Cheers,

Beej


----------



## numbercruncher (22 November 2008)

> PS: A note to all - remember if you REALLY want to understand what is happening in your local R/E market at any time you need to get out there ON THE GROUND and see what exactly is selling, for how much, who is buying, and what is not selling and why.





Thats kinda like if you REALLY want to know what the weather is like you need to go feel it on your skin instead of listen to the weather report ?


----------



## Beej (22 November 2008)

numbercruncher said:


> Thats kinda like if you REALLY want to know what the weather is like you need to go feel it on your skin instead of listen to the weather report ?




Ummmm - no. If you don't understand my point then perhaps you have never bought or sold real estate, and don't really understand how the R/E market works, or how to guage it. It's more complex than just the median stats, and stock market type analysis doesn't give you the whole/correct picture is all I am saying. Every area, market, individual property is different and often this generates surprising results.

PS: I say this because you may miss out on that bargain unless you are ready and find it when it comes up! Opportunity abounds right now 

Beej


----------



## numbercruncher (22 November 2008)

Yes opportunity abounds ! cease the moment ......


----------



## CamKawa (23 November 2008)

A quite day for property in the media today, maybe it's not that exiting for punters to read they are getting poorer by the day?


----------



## YChromozome (23 November 2008)

CamKawa said:


> A quite day for property in the media today, maybe it's not that exiting for punters to read they are getting poorer by the day?




Yesterday was another bumper day here. The local newsagent had :


----------



## Beej (23 November 2008)

CamKawa said:


> A quite day for property in the media today, maybe it's not that exiting for punters to read they are getting poorer by the day?




Umm well not on commecial TV in Sydney. CH 7 news ran a promoted headline 6pm news story about how the Sydney auction results this weekend showed a reasonably robust market, and featured an auction of a run down inner city terrace that had 20 registered bidders and sold for $150k above it's reserve! Hardly a quiet media day. The owner of that sold property hardly got poorer today now did they? Keep dreaming.......

Beej


----------



## numbercruncher (23 November 2008)

Link to that article Beej ? How much did this run down unit sell for ?

Do you work in the RE industry Bej ?


----------



## Beej (23 November 2008)

PS - I want address one of the "great property price crash" arguments that keeps coming up related to tracking national median prices, and predicting that house prices must fall as the median is too far above the "long term average", should be N x average wages, and the median cannot possibly grow into the future at a rate greater than wage growth etc etc etc. This came up a lot on the "ourfinanceblogs" thread references a couple of pages back as well.

The part of this argument that seems to hold the greatest credibility is the point that MEDIAN prices cannot possibly continue to accelerate at a rate greater than average wage growth. Many of the bearish posters here see this as a "fundamental" that validates beyond argument their view that there is a major correction due.

There are two flaws with this particular statistic/view:

1) The use of average full time WAGES as the "multiple" by which house price norms are predicted. This is incorrect and leads to flawed analysis. Housing is important (culturally) to many/most Australians, and as such a significant proportion of our incomes (at all levels) will be devoted to housing - either through FHB purchase, sevicing mortgages, or funding renovations/improvements to our homes. As such, what matters to most people, and what defines AFFORDABILITY is AVERAGE HOUSEHOLD DISPOSABLE INCOME, NOT INCLUDING HOUSING COSTS. If you look at this stat, you will find a much closer correlation to historic price growth - eg it accounts for the change from 1 to 2 income households, and the shift from a high to a low inflation/low interest rate environment. It also accounts for the ability as average people become wealthier in real terms to devote a greater proportion of TOTAL income to housing while still having plenty of money for other lifestyle needs/wants, compared to past times in history. Ie it accounts for improved real wages and higher economic productivity, and the flow on effect of this into house price growth (and housing stock improvement - which is one of the major sources of improved living standards over time).

2) There are many ways that the MEDIAN price might fall - only one is an across the board fall in prices. The MAIN may that the median growth will slow going forward however is more likely to be through INCREASED SUPPLY OF LOW COST HOUSING. We may well have the situation in the future where the median price to wage multiple is significantly lower than it is now, yet the prices of all CURRENTLY EXISITING houses have contiued to increase at a rate well above average wage growth. This will continue to confound all the housing market bears. But this could happen because a large amount of well located low cost new property has been built and sold, thus shifting the median price down.

Cheers,

Beej


----------



## Beej (23 November 2008)

numbercruncher said:


> Link to that article Beej ? How much did this run down unit sell for ?
> 
> Do you work in the RE industry Bej ?




As I said it was on Sydney CHANNEL 7 6PM NEWS on sat night - not an article I can link to. I am sure that the 1 million people or so in Sydney who watch the CH7 news will have seen it though and can verify the story for you if you like.....

They didn't say how much the terrace sold for, however they said it was $150k over reserve. They filmed the auction and did quite a story on it.

PS - it's funny how anyone with a less negative view on property is questioned as to whether they work in the R/E industry!! For the record, MY WORK/BUSINESS HAS NOTHING WHATSOEVER TO DO WITH THE REAL ESTATE INDUSTRY. My interest is as a private owner and limited investor, with a keen interest in the market from observing and participating in it over 20 years. No 10+ 100% LVR massively negatively geared property portfolio here 

Cheers,

Beej


----------



## shaunQ (23 November 2008)

> As I said it was on Sydney CHANNEL 7 6PM NEWS on sat night




Ok. A channel 7 exclusive eh? Do they often send a TV crew out to cover auctions? Did they just pick a property out of the hat? Who owned the property? Who bought the property? Was channel 7 paid to show it? Was the real estate institute involved? If so, which is HIGHLY likely, what influence do they have on Channel 7, and the media in general.. (Lots).

Personally, stories like this only confirm the down turn and are desperate tactics from a very influencial sector.


----------



## ROE (23 November 2008)

man why bother arguing about house price ..the market will decide

in the short term it's a voting machine, long term it's a weighting machine.

if it's over price it will drop, if it's under price it will goes up 

those think it will go up forever good for them, those are more conservative sit and wait
and if you want the action now join in with the herd .


----------



## Beej (23 November 2008)

shaunQ said:


> Ok. A channel 7 exclusive eh? Do they often send a TV crew out to cover auctions? Did they just pick a property out of the hat? Who owned the property? Who bought the property? Was channel 7 paid to show it? Was the real estate institute involved? If so, which is HIGHLY likely, what influence do they have on Channel 7, and the media in general.. (Lots).
> 
> Personally, stories like this only confirm the down turn and are desperate tactics from a very influencial sector.




Sheez - I give up! You can't win with you guys! You'll quote the mainstream media ad nauseum if it suits you...... Wasn't an exclusive, just a news story. I presume they picked an auction at random but who knows? The buyer was briefly interviewed and was someone who was (obviously!) planning to do the place up.

Do you think that every successful house auction currently (all 139 of them in Sydney this weekend!) are somehow rigged by the REI or something??

Beej


----------



## chops_a_must (23 November 2008)

Beej said:


> There are two flaws with this particular statistic/view:
> 
> 1) The use of average full time WAGES as the "multiple" by which house price norms are predicted. This is incorrect and leads to flawed analysis. Housing is important (culturally) to many/most Australians, and as such a significant proportion of our incomes (at all levels) will be devoted to housing - either through FHB purchase, sevicing mortgages, or funding renovations/improvements to our homes. As such, what matters to most people, and what defines AFFORDABILITY is AVERAGE HOUSEHOLD DISPOSABLE INCOME, NOT INCLUDING HOUSING COSTS. If you look at this stat, you will find a much closer correlation to historic price growth - eg it accounts for the change from 1 to 2 income households,



Ah yeah.

So what's 2 x 0? 3 x 0? 4 x 0 even? Which is likely to be the case for a lot of families, with mortgages, in the not too distant future, for years to come.

What the house prices have factored in over the last few years, is that everyone will have a job permanently for the next 30 years. It doesn't work like that, but that's how everything has been priced. There is absolutely no margin for error when it comes to home ownership and repayments, for a substantial chunk of home owners IMO.

And there was an tv news article about house prices continuing to fall yesterday over here in Perth. Seems like there is about 1 or 2 out of every house for sale, in my area at the moment.


----------



## So_Cynical (23 November 2008)

numbercruncher said:


> Link to that article Beej ? How much did this run down unit sell for ?




I saw the piece about the "renovators special" and the sale price was $650.000
(i think) so at 150 over reserve its fair to say it was a bit of a setup...the property 
was a classic looking proper terrace in need of lots of money and care.


----------



## Beej (23 November 2008)

chops_a_must said:


> Ah yeah.
> 
> So what's 2 x 0? 3 x 0? 4 x 0 even? Which is likely to be the case for a lot of families, with mortgages, in the not too distant future, for years to come.




LOL - so you are prediciting $0 as the national average wage figure??  Even with 10% unemployment that means 90% of people have a job...... might halt wage growth for a little while but, really, I can't see it going down to zero!!



> What the house prices have factored in over the last few years, is that everyone will have a job permanently for the next 30 years. It doesn't work like that, but that's how everything has been priced. There is absolutely no margin for error when it comes to home ownership and repayments, for a substantial chunk of home owners IMO.




Well not really: 33% of houses are owned with no mortgage at all still. Then, for the other 2/3 (of which half are rented out for all the property bears to live in!  ), the AVERAGE time for a mortage to be paid off is 7 years. So in fact virtually no one has the same mortgage for 30 years - that's just the contracted maximum term of the loan.

The whole impact of unemployment issue has been discussed before anyway. Unfortuneately, long term structural unemployment tends to effect those on the lower end of the socio-economic scale to a greater extent than those on the upper ends (lower skilled, less savings, less family financial support, etc etc). That group is less likely to own property anyway, so the potential impact of rising unemployment on house prices is usually greatly over-exagerated.



> And there was an tv news article about house prices continuing to fall yesterday over here in Perth. Seems like there is about 1 or 2 out of every house for sale, in my area at the moment.




Not surprising, compare Perth prices to Sydney prices over the last 10 years, and you would have to expect to see something of a return to the historical norm with respect to relative prices there, which means they have a way to fall yet. Sydney is about done now though I reckon.


----------



## Beej (23 November 2008)

He he - well seems Jennifer Hawkins is still bullish on quality Sydney property: http://www.smh.com.au/news/entertai...achside-stunner/2008/11/22/1226770798641.html



Cheers,

Beej


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## numbercruncher (23 November 2008)

> the AVERAGE time for a mortage to be paid *off* is 7 years




More misleading spruiker chit chat .....

Paid *out* should be how its written, this statistic is made up mostly of Home sales settling mortgages and refinances .....


So your dodgy run down Sydney unit sold for 650k - 150k above the 500 reserve or a 30pc premium in a market that falling - what a bunch of SUCKERS huh ? well if truth be known I bet it was a realestate institutes setup to try fool the masses ...... and gurantee the TV network some more advertising dollars ?? ..... yup thats the kind of world we live in.


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## spooly74 (23 November 2008)

Beej said:


> Well not really: 33% of houses are owned with no mortgage at all still. Then, for the other 2/3 (of which half are rented out for all the property bears to live in!  ), *the AVERAGE time for a mortage to be paid off is 7 years.* So in fact virtually no one has the same mortgage for 30 years - that's just the contracted maximum term of the loan.




Hi Beej,
A link or source to the above, particularly the highlighted?
Cheers


----------



## hotbmw (23 November 2008)

i just got a market appraisal for my newcastle beach apartment from a well respected agent who specialises in apartments in the city centre. 2 yrs ago next door sold for 650k. i just got told id get between 490k to 550k (best case). I purchased it for 433k - 5.5 rs ago.

im disappointed that i spent a good part of the last few years overseas so i didnt really keep much of an eye on whats really happening in the market. it shows that u really need to keep on eye on things even if its property, unlike what we have been told for well over a decade - property only goes up....

50k or so profit in almost 6 yrs, not much of an investment. so the prices really have come down a long way.

the agent said the commission fees are 2.6% gst inclusive. 

do u think on over 500k that 2% can be negotiated? does anyone have any experience advice on this?

Thanks
Rob


----------



## robots (23 November 2008)

hotbmw said:


> i just got a market appraisal for my newcastle beach apartment from a well respected agent who specialises in apartments in the city centre. 2 yrs ago next door sold for 650k. i just got told id get between 490k to 550k (best case). I purchased it for 433k - 5.5 rs ago.
> 
> im disappointed that i spent a good part of the last few years overseas so i didnt really keep much of an eye on whats really happening in the market. it shows that u really need to keep on eye on things even if its property, unlike what we have been told for well over a decade - property only goes up....
> 
> ...




hello,

i just got a valuation on my shares from Commsec I purchased 6yrs ago and its not looking too flash, gone nowhere as well hotbeemer

thankyou
robots


----------



## Glen48 (23 November 2008)

I would take what ever you can get and get out.
I had a house on 1313 SQM on the beach paid $72 10 yr late it was worth $100
The best thing is to live in the barest housing and invest your money in items which pay a better return.... which is hard to pick now ...DVD shops because every one will be at home waiting for their Dole chq.


----------



## Pommiegranite (23 November 2008)

hotbmw said:


> i just got a market appraisal for my newcastle beach apartment from a well respected agent who specialises in apartments in the city centre. 2 yrs ago next door sold for 650k. i just got told id get between 490k to 550k (best case). I purchased it for 433k - 5.5 rs ago.
> 
> im disappointed that i spent a good part of the last few years overseas so i didnt really keep much of an eye on whats really happening in the market. it shows that u really need to keep on eye on things even if its property, unlike what we have been told for well over a decade - property only goes up....
> 
> ...




Rob, sorry to hear that your property has lost so much value. I guess it is small consolation that you didn't buy in the last 12 months.

As for agent commissions, all I can say that it will be tough negotiating a lower rate. RE agents will tell sellers that times are tough and that they will have to 'work' extra hard to sell the property, hence the higher commission rate (on the flip side they will tell buyers that now is a great time to buy!). 

Good luck to you, and try playing them off one another. Also say that they don't have to do much work. Offer to do the viewings yourself. Remember, agents don't sell houses, the house/price sells itself.


----------



## Beej (23 November 2008)

hotbmw said:


> i just got a market appraisal for my newcastle beach apartment from a well respected agent who specialises in apartments in the city centre. 2 yrs ago next door sold for 650k. i just got told id get between 490k to 550k (best case). I purchased it for 433k - 5.5 rs ago.
> 
> im disappointed that i spent a good part of the last few years overseas so i didnt really keep much of an eye on whats really happening in the market. it shows that u really need to keep on eye on things even if its property, unlike what we have been told for well over a decade - property only goes up....
> 
> ...




Agents commissions can ALWAYS be negotiated. Offer as low as you want and then see what is the minimum they will take. In that price range pay no more than a total of ~$10k/2% including advertising costs.

PS re your profit - not the best market timing, you will have a MINIMUM of $50K (net) profit from your numbers, maybe as much as $100k. If it's your PPOR then that's a tax free annual capital appreciation/return of 2.5% -> 4% pa. Depending on your marginal tax rate, that's equivelant to a minimum of 3.5% effective gross return and a maximum of 6.5%. Add to that the rental return (either realised while you were away or effective when you were living there) of another 4% gross pa, and that's a 7.5% -> 10.5% gross annual return. Not that bad really. Of course if you have borrowed to buy then the actual return you have achieved on your directly invested capital would be several multiples of that again due to your leverage. Of course the bottom line is that unless you time things perfectly this would be a typical return from residential property over a relatively short period of time (5-ish years). At least you are in the black! Unlike most peoples share portfolio's acquired anytime in the last 3-4 years.

Cheers,

Beej


----------



## Mofra (23 November 2008)

numbercruncher said:


> More misleading spruiker chit chat .....
> 
> Paid *out* should be how its written, this statistic is made up mostly of Home sales settling mortgages and refinances .....



No, actually the average length of mortgage is Australia is just over 4 years, hence ERFs are generally set at 4 years for NBLs. MFAA tend to quote 4-5 years as average mortgage length. 

*cue bears assuming 100% LVR on median properties on median income comment here *


----------



## Beej (23 November 2008)

Glen48 said:


> I would take what ever you can get and get out.
> I had a house on 1313 SQM on the beach paid $72 10 yr late it was worth $100
> The best thing is to live in the barest housing and invest your money in items which pay a better return.... which is hard to pick now ...DVD shops because every one will be at home waiting for their Dole chq.




Hah! Live in the "barest" housing possible! No thanks! I like my well located home with ALL the luxuries, thanks all the same - as do my family. Life is for living, so live as well as you can afford to (without excessive or any non tax deductible debt of course) I say! What else is your money good for?? You can't take it with you! But you CAN live in your house when you retire and leave it to your kids after that!

Cheers,

Beej


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## Beej (23 November 2008)

spooly74 said:


> Hi Beej,
> A link or source to the above, particularly the highlighted?
> Cheers




It's often quoted all over the place - a quick Google gave me a few hits that refer to this stat as follows:

http://mrmortgage.com.au/mortgage-rates.htm
http://www.rebatehomeloans.com.au/introductory-honeymoon-interest-rates.htm
http://www.news.com.au/business/money/story/0,25479,23026800-5013951,00.html

They all refer to this, and the fact that the AAPR rate must be quoted based on a 7 year period for this reason as well.

Cheers,

Beej


----------



## Beej (23 November 2008)

hotbmw said:


> i just got a market appraisal for my newcastle beach apartment from a well respected agent who specialises in apartments in the city centre. 2 yrs ago next door sold for 650k. i just got told id get between 490k to 550k (best case). I purchased it for 433k - 5.5 rs ago.




PPS: You may not have "lost" as much as you think - there just may be reasons why the neighboring property was worth more than yours - is it identical? Eg, Same views? Same aspect? Exact same size/layout? Or are there differences?

Beej


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## cuttlefish (23 November 2008)

hotbmw said:


> the agent said the commission fees are 2.6% gst inclusive.
> 
> do u think on over 500k that 2% can be negotiated? does anyone have any experience advice on this?
> 
> ...





Rob - I've sold a few properties over the years.  First and foremost make sure you are happy with the agent that you choose - once you've signed the agency agreement its pretty much their show from then on and its largely out of your hands - so pick one that you trust and has a proven record of selling similar properties in the area.

Once thats out of the way the commission is always negotiable - but good agents tend to negotiate less than ones desperate for work.   I've tended to only knock a few points off the commission on the sales I've done - at the end of the day what you want is an agent that can and will extract that extra $5, $10 or $20k from a genuine buyer - and that will more than make up for a few points of commission.   (e.g. 0.5% of $500k = $2500).  Also an agent thats getting close to full commission may be more likely to focus their attention on your property rather than other ones - i.e. you want a happy and committed agent and if you're too stingy on the commission you pay them it may be counter productive.

When it comes to selling, particularly in a flat market, to a fair extent the market will determine the price - but a good agent will win the trust of the buyers and work to both close a sale and also to obtain the best price they can.

Some things to consider are:
* shorten the standard period on the agency agreement - they typically run for 3 months - get it down to 2 months - that way if you are unhappy with the agent you can move to a new one more quickly.  
* you could try a two part commission structure - though I'm not sure how effective it is - for example pay 2% for up to $490k sale price and then increase it by 0.1% for every $10k over the $490k sale price up to a maximum of 2.6% - that incents the agent to get a better price - but good agents tend to be motivated to get a good price anyway.  

Commissions do vary a lot - there are agents out there that will work for 1.8% or less - but you want a good agent that you are confident to do the job well.


----------



## numbercruncher (23 November 2008)

Beej said:


> It's often quoted all over the place - a quick Google gave me a few hits that refer to this stat as follows:
> 
> http://mrmortgage.com.au/mortgage-rates.htm
> http://www.rebatehomeloans.com.au/introductory-honeymoon-interest-rates.htm
> ...






None of those links say the average mortgage is " paid off " in 7 years .... One article specifies repaid or refinanced, the latter making the bulk im sure !

You were being intentionally misleading to make us think the average person paid off a property in 7 years from what I read


----------



## professor_frink (23 November 2008)

Glen48 said:


> I would take what ever you can get and get out.
> I had a house on 1313 SQM on the beach paid $72 10 yr late it was worth $100
> The best thing is to live in the barest housing and invest your money in items which pay a better return.... which is hard to pick now ...DVD shops because every one will be at home waiting for their Dole chq.




holy crap man, lighten up!


----------



## Beej (23 November 2008)

numbercruncher said:


> None of those links say the average mortgage is " paid off " in 7 years .... One article specifies repaid or refinanced, the latter making the bulk im sure !
> 
> You were being intentionally misleading to make us think the average person paid off a property in 7 years from what I read




No intentional misleading going on - I agree you are right that the stat is that on average a mortgage is "paid out" within 7 years, not necessarily paid off. My original point still stands though.

Personally, back when I was earning around the average wage give or take, I paid off my first mortgage in 7 years, so I know it can certainly be done! I was single then mind you, which helped! However, doing that really set me up well for later in life......

Cheers,

Beej


----------



## robots (23 November 2008)

Beej said:


> No intentional misleading going on - I agree you are right that the stat is that on average a mortgage is "paid out" within 7 years, not necessarily paid off. My original point still stands though.
> 
> *Personally, back when I was earning around the average wage give or take, I paid off my first mortgage in 7 years,* so I know it can certainly be done! I was single then mind you, which helped! However, doing that really set me up well for later in life......
> 
> ...




hello,

got a link for that?

hahahahaha

thankyou
robots


----------



## chops_a_must (23 November 2008)

Beej said:


> LOL - so you are prediciting $0 as the national average wage figure??  Even with 10% unemployment that means 90% of people have a job...... might halt wage growth for a little while but, really, I can't see it going down to zero!!



Nice strawman argument. How on earth did you come to conclusion that that was remotely what I was suggesting? 

And LOL indeed at the suggestion that 10% employment means 90% of people have a job. No wonder you can't see many down side risks in property if that's what your knowledge base tells you.



Beej said:


> Well not really: 33% of houses are owned with no mortgage at all still. Then, for the other 2/3 (of which half are rented out for all the property bears to live in!  ), the AVERAGE time for a mortage to be paid off is 7 years. So in fact virtually no one has the same mortgage for 30 years - that's just the contracted maximum term of the loan.



Turns out that that is just BS obviously.


----------



## hotbmw (23 November 2008)

its virtually identical. ok they had wooden floor boards mine has carpet.
same views, same furniture as part of the off the plan purchase with freedom furniture as designer





Beej said:


> PPS: You may not have "lost" as much as you think - there just may be reasons why the neighboring property was worth more than yours - is it identical? Eg, Same views? Same aspect? Exact same size/layout? Or are there differences?
> 
> Beej


----------



## hotbmw (23 November 2008)

hey robots

if i invested 433k into shares 5.5 yrs ago, and 9 months ago they were 900k, i would sell out

ill sell out of property now for 50k profit



robots said:


> hello,
> 
> i just got a valuation on my shares from Commsec I purchased 6yrs ago and its not looking too flash, gone nowhere as well hotbeemer
> 
> ...


----------



## hotbmw (23 November 2008)

Beej, im going to have to read your comments a few times to understand it  

i have bought and sold with this agent a few times in the past 6 years so surely he would settle for 2% as a return client.

i lived in the apartment for 2 years and rented it out for last 3 yrs.
i didnt revalue it after first 2 years, where the original growth was, i dont think there has been much increase in growth since then. im not sure how cgt will work. 50% rule and then only 3 yrs worth....?

tough times ahead. my friend borrowed 100% 3 months ago, he could be in real trouble in a year  its his first home and has no other major assets. if bank come knocking in a year asking for 50k to keep the loan ratio lower he would sell, have nothing and owe 50k. must be many people with this scenario  





Beej said:


> Agents commissions can ALWAYS be negotiated. Offer as low as you want and then see what is the minimum they will take. In that price range pay no more than a total of ~$10k/2% including advertising costs.
> 
> PS re your profit - not the best market timing, you will have a MINIMUM of $50K (net) profit from your numbers, maybe as much as $100k. If it's your PPOR then that's a tax free annual capital appreciation/return of 2.5% -> 4% pa. Depending on your marginal tax rate, that's equivelant to a minimum of 3.5% effective gross return and a maximum of 6.5%. Add to that the rental return (either realised while you were away or effective when you were living there) of another 4% gross pa, and that's a 7.5% -> 10.5% gross annual return. Not that bad really. Of course if you have borrowed to buy then the actual return you have achieved on your directly invested capital would be several multiples of that again due to your leverage. Of course the bottom line is that unless you time things perfectly this would be a typical return from residential property over a relatively short period of time (5-ish years). At least you are in the black! Unlike most peoples share portfolio's acquired anytime in the last 3-4 years.
> 
> ...


----------



## Beej (23 November 2008)

hotbmw said:


> i have bought and sold with this agent a few times in the past 6 years so surely he would settle for 2% as a return client.
> 
> i lived in the apartment for 2 years and rented it out for last 3 yrs.
> i didnt revalue it after first 2 years, where the original growth was, i dont think there has been much increase in growth since then. im not sure how cgt will work. 50% rule and then only 3 yrs worth....?
> ...




A home loan is not like a margin loan for shares! Ie the bank WILL NOT come knocking asking for extra cash because they think the value of a security has fallen! As long as the required loan repayments are kept up, the bank leaves the borrower alone. Given that interest rates are already 2% lower than 3 months ago, and likely to drop another 1+% before the end of the year, your friend is now paying 2/3 the interest that he was at the start, and therefore paying down the loan principle (unless interest only?) faster now by keeping up the same original payments. As long as he has income (Ie keeps a job etc), he will be fine, as will 90% of other people in the same situation, who as a whole only represent a very small proportion of existing home owners anyway, which means the market will also be fine.

There are certainly a lot of misconceptions around about how mortages work!

PS: As far as your property goes, usually if it was your Principle Place Of Residence (PPOR) through the entire period you owned it (ie you never owned another property at the same time to which you would be entitled tax free capital gain), and it was rented for < 6 years, then you should not have to pay any capital gains tax at all. Consult your accountant/tax advisor to confirm!

PPS: Sounds like you are quite the property trader if you have bought and sold a few places through the same agent over only a 6 year period!! How much commission did you negotiate with him for those other sale transactions??

Cheers,

Beej


----------



## hotbmw (23 November 2008)

i dont recall what i paid as i probably didnt really care back then.
i had a good paying job with NAB and i bought a house and apartment within a year. i left the bank 2 yrs later and had to sell the house and 3 yrs later it looks like im selling the apartment. i have travelled for 7-8 mths a year the past 3 years, and the 4 mths ive been here i have just lived at my mums as i wasnt here for long and she liked to have her son around so i left the apartment rented.
so does this still clasify? i own the 1 apartment, no other property. i rented it out for last 3 yrs of 5 yrs owned. i thought id still pay cgt for the 3 yrs MINUS 50% rule.

p.s. i dont know why but my friend locked his loan in for 5 yrs , 3 months ago......

it would cost thousnads to break this contract i imagine.





Beej said:


> A home loan is not like a margin loan for shares! Ie the bank WILL NOT come knocking asking for extra cash because they think the value of a security has fallen! As long as the required loan repayments are kept up, the bank leaves the borrower alone. Given that interest rates are already 2% lower than 3 months ago, and likely to drop another 1+% before the end of the year, your friend is now paying 2/3 the interest that he was at the start, and therefore paying down the loan principle (unless interest only?) faster now by keeping up the same original payments. As long as he has income (Ie keeps a job etc), he will be fine, as will 90% of other people in the same situation, who as a whole only represent a very small proportion of existing home owners anyway, which means the market will also be fine.
> 
> There are certainly a lot of misconceptions around about how mortages work!
> 
> ...


----------



## singlefished (23 November 2008)

Beej said:


> As long as he has income (Ie keeps a job etc), he will be fine, as will 90% of other people in the same situation, who as a whole only represent a very small proportion of existing home owners anyway, which means the market will also be fine.




Beej, are you trying to suggest that 90% of income earning individuals represents only a small proportion of existing home owners???

I'm guessing not but that's how I'm reading it... :


----------



## Pommiegranite (24 November 2008)

This article is from a couple of days ago, and pretty much sums up what we are facing:

http://www.businessspectator.com.au...the-debt-delusion-LKS2C?OpenDocument&src=srch



> *End of the debt delusion*
> 
> 
> 
> ...


----------



## prawn_86 (24 November 2008)

Nice article there Pommie. I particularly liked this:



> the true value of the assets and the true cash flow become clear




Cash flow is very important in these times, and i am now only buying stocks that i think will have relatively steady earnings and pay a healthy dividend. Im not looking for capital gains in the short term.

With regards to housing, i have always said, and will continue to say, it makes very little sense (in theory) to be buying an asset which has a negative cashflow. You wouldnt buy a business ike that unless you saw potential to turn it around, same should go with housing. (Neg gearing muddies the waters a little though)


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## chops_a_must (24 November 2008)

prawn_86 said:


> With regards to housing, i have always said, and will continue to say, it makes very little sense (in theory) to be buying an asset which has a negative cashflow. You wouldnt buy a business ike that unless you saw potential to turn it around, same should go with housing.



I'm of the same opinion as you Prawn my man.

You wouldn't take out a margin loan to reduce your tax, so why on earth would you do it with property?  It has always had me totally stumped. It really is an all in bet on capital gain, and with little downside protection.

Never understood it. Owner occupied excluded obviously.


----------



## Pommiegranite (24 November 2008)

chops_a_must said:


> I'm of the same opinion as you Prawn my man.
> 
> You wouldn't take out a margin loan to reduce your tax, so why on earth would you do it with property?  It has always had me totally stumped. It really is an all in bet on capital gain, and with little downside protection.
> 
> Never understood it. Owner occupied excluded obviously.




For investment properties, it comes down to a simple premise that someone else will pay off your investment loan. At the end of the term, you are left with and asset which you haven't paid for. At the same time negative gearing gives a tax break.

Unfortunately, for the masses, they are not accountants and are gambling on inflation and 100% occupancy for the term of the mortgage. Some of them do not even understand negative gearing and many are over negatively geared to even benefit from 'making a loss'


----------



## prawn_86 (24 November 2008)

Pommiegranite said:


> For investment properties, it comes down to a simple premise that someone else will pay off your investment loan. At the end of the term, you are left with and asset which you haven't paid for. At the same time negative gearing gives a tax break.




I have to admit i know very little about property, partly due to my age, partly due to not caring too much, but what you have stated above would not be the case very often in the current envirnment would it? You would need a cash flow positive or at least neutral property for this to happen, otherwise you would be dipping into your own pocket to help pay it off.


----------



## Beej (24 November 2008)

singlefished said:


> Beej, are you trying to suggest that 90% of income earning individuals represents only a small proportion of existing home owners???
> 
> I'm guessing not but that's how I'm reading it... :




No no  What I am saying, is that of all the very unwise people who may have taken out 100% LVR loans in the past say 1-2 years (Ie those who may face a negative equity situation currently), 90% of them will be fine, as their costs are now way down (due to falling interest rates) allowing them to build equity or reduce payments. I am suggesting that only a small proportion of that group would be likely to get in to trouble from here on (say if they lost their job etc, remembering that a significant majority will not lose their job, or will be able to find more work straight away if they do).

Then the second part is I am saying that this groups (Ie 100% geared borrowers who bought in the past 1-2 years) represent only a VERY small proportion of existing property owners. Which is why the whole potential forced sale causing a market crash scenario is way over-blown IMO.

Capisce?

Beej


----------



## numbercruncher (24 November 2008)

Beej said:


> A home loan is not like a margin loan for shares! Ie the bank WILL NOT come knocking asking for extra cash because they think the value of a security has fallen!





Do mortgage documents specifically say this ? Has it never happened before ?


----------



## cuttlefish (24 November 2008)

Prawn, Chops - as well as capital gains its important to consider how rent fits into the equation.

Simple example - here in Sydney (where prices boomed till 2003 but have been far less heated since), down the road a few blocks from me - there are second hand studio apartments for sale for $240k - they are pretty much the same price now as they were 5 years ago.  5 years ago the rents were $220/week, now the rents are *$330*/week.

If you got a place for $220k  (assume some further price reductions) then add on $10k buying costs to make $230k purchase.   The net interest cost on $230k at 7.7% is $17710/year.   Add on $2k levees and rates to get $19710 per year as net 'cost of ownership', which is *$380/week*.  That is based on 100% cost of borrowing.

So if you were a young bloke, fed up with living with flatmates (share accom in the area is about $200+/week) and wanting to get into a place of your own, then the cost of renting a studio is $330 while the cost of owning one is $380.   (based on 100% borrowing).

By the way - in the mid 90's those same apartments were available for $80k to $100k and the rents were around $120 to $150 a week.

In the 70's you could pick one up for $20k - I bet the rents were lower back then as well.

In 20 years time I'll be very surprised if you can rent one for only $380/week or buy one for only $240k.

Not trying to spruik property, but its worth having a balanced view. Location, demand, rents, land supply etc. all factor into the equation.   Like any investment class, just because it might be starting to appear cheap now, doesn't mean it won't get cheaper, and I wouldn't be encouraging knife catching in the property market any more than I would in the stock market - but its also important not to write it off altogether.  The expression 'safe as houses' didn't come about for naught.


----------



## Beej (24 November 2008)

prawn_86 said:


> I have to admit i know very little about property, partly due to my age, partly due to not caring too much, but what you have stated above would not be the case very often in the current envirnment would it? You would need a cash flow positive or at least neutral property for this to happen, otherwise you would be dipping into your own pocket to help pay it off.




With mortgage interest rates about to hit 5% right now (fixed rates of 5.99% already available) there are many properties on the market that will provide positive cash-flow from day 1 on an LVR of 100%. 

Having said that, most investors are long term - you use the negative gearing/negative cash-flow situation AT FIRST, with the tax benefit helping make up the difference. Over a period of time, the RENT goes up - your interest payments GO DOWN (as the principle is paid off). At some point all investment properties will turn cash-flow positive - at that point the property investor is sitting pretty..... Get it yet??

You guys here deride property investors so much,as if they are all a bunch of idiots. But I think the vast majority are actually well aware of their cash-flow position, state of the market, and how you actually make money from property etc. The key though is a LONG TERM VIEW. 

Cheers,

Beej


----------



## chops_a_must (24 November 2008)

cuttlefish said:


> Prawn, Chops - as well as capital gains its important to consider how rent fits into the equation.
> 
> Simple example - here in Sydney (where prices boomed till 2003 but have been far less heated since), down the road a few blocks from me - there are second hand studio apartments for sale for $240k - they are pretty much the same price now as they were 5 years ago.  5 years ago the rents were $220/week, now the rents are *$330*/week.
> 
> ...



As I said, owner occupied is different. 

Would I buy something if I won/ inherited/ whatever a million $? I'd say almost certainly. Would I invest in property if I had that much? Probably not, unless it was compelling.


----------



## chops_a_must (24 November 2008)

Beej said:


> Having said that, most investors are long term - you use the negative gearing/negative cash-flow situation AT FIRST, with the tax benefit helping make up the difference. Over a period of time, the RENT goes up - your interest payments GO DOWN (as the principle is paid off). At some point all investment properties will turn cash-flow positive - at that point the property investor is sitting pretty..... Get it yet??
> 
> You guys here deride property investors so much,as if they are all a bunch of idiots. But I think the vast majority are actually well aware of their cash-flow position, state of the market, and how you actually make money from property etc. The key though is a LONG TERM VIEW.
> 
> ...



I can buy a property correlated stock, be cashflow positive from day 1, and sell each June if it is in a negative capital position.

I don't get your point. 

The only time I can see property being good to negatively gear, is if it was property that was able to be developed for a larger gain later on, than what I am likely to lose in the short/ medium term. I guess the same applies if it is a cracker of a property in any case, that wasn't likely to be on the market often.


----------



## Beej (24 November 2008)

chops_a_must said:


> I can buy a property correlated stock, be cashflow positive from day 1, and sell each June if it is in a negative capital position.
> 
> I don't get your point.
> 
> The only time I can see property being good to negatively gear, is if it was property that was able to be developed for a larger gain later on, than what I am likely to lose in the short/ medium term. I guess the same applies if it is a cracker of a property in any case, that wasn't likely to be on the market often.




The point is that you get exposure to long term capital gain as well, with little/no invested capital up front, and a small amount of cash flow subsidy  for the first few years to make up the negative cash flow minus tax deduction portion. This "cash flow subsidy" would usually represent something in the order of 0.5% -> 1.5% max of the property purchase price initially, reducing each year until the cash-flow positive cross-over point is reached (that's what I always aimed for anyway). You don't need very much actual capital gain to get in front. Long term you will get massive capital gain, as well as significant positive cash-flow.

Of course there are always many alternative investments available. No one is saying property is always the best of the many available alternatives at all times. None the less, it is an asset class that will generate significant cash flow and capital gain over the long term, and in my view is an essential component of any diversified personal asset portfolio mix.

It only doesn't make sense if you honestly believe that in say 10 or 20 or even 30 years, a given existing property will not be worth more in absolute $$$ terms than it costs today. It has always been a long term investment - the fact that some people have been lucky with extra-ordinary capital gains in the past 5-10 years is just a bonus, and has given some people the idea there is easy short term money in property investment. Of course no-one here (not even the property bulls) believe that will be the case going forward from here (unless you develop). The easy money has come and gone (and of course some of us got a piece of that action, and some haven't!). But long term property will still prove to be a solid investment. Buy well and do your sums properly.

Cheers,

Beej


----------



## cuttlefish (24 November 2008)

chops_a_must said:


> As I said, owner occupied is different.
> 
> Would I buy something if I won/ inherited/ whatever a million $? I'd say almost certainly. Would I invest in property if I had that much? Probably not, unless it was compelling.




The thing is - even with 100% down - as an investment with the tax benefits (i.e. tax departments pays 46.5% of your costs if you're in the top tax bracket) - that apartment would only cost an investor about $30 a week to own.    And every year the rent goes up, even if its just $10/year rental increase, that gap gets smaller.  History says the rents in that area will go up - there is limited land supply, a complex and tedious approval process for new developments and it is in a location that has historically always had high demand for accomodation.

Now if you can take advantage of a dead market to buy developable land investments in the area without paying the bull market premium the multiplier effect on capital gains if/when they do come is enormous - but that is obviously more speculative than buying an established sound property returning a predictable income.


----------



## chops_a_must (24 November 2008)

Beej said:


> Of course there are always many alternative investments available. No one is saying property is always the best of the many available alternatives at all times. None the less, it is an asset class that will generate significant cash flow and capital gain over the long term, and in my view is an essential component of any diversified personal asset portfolio mix.



I don't disagree with you. Actually, I strongly agree with you.

For me, if I was investing in property, it would purely be for income. Obviously people over the last 5-10 years depending, have got the idea that capital gains are what property is about. For me, in my mind, it's not the right way to go about it.

Transaction costs are far too high, and it is too much of an illiquid market at any one time to be able to target that. There are many better methods to capture capital gains elsewhere in other assets.

In my mind, and the risk that I would be prepared to take, would limit me from buying investment property unless it was cashflow positive, or likely to become so in the short term. But that's just what is acceptable to me. And I haven't seen an argument at this stage that has convinced me to view it in a different way.


----------



## cuttlefish (24 November 2008)

chops_a_must said:


> I don't disagree with you. Actually, I strongly agree with you.
> 
> For me, if I was investing in property, it would purely be for income. Obviously people over the last 5-10 years depending, have got the idea that capital gains are what property is about. For me, in my mind, it's not the right way to go about it.
> 
> ...




I actually think this is a very sensible way to view property investment.  Property is a good place to store wealth and to generate a hassle free, inflation safe income.


----------



## numbercruncher (24 November 2008)

cuttlefish said:


> The thing is - even with 100% down - as an investment with the tax benefits (i.e. tax departments pays 46.5% of your costs if you're in the top tax bracket) - that apartment would only cost an investor about $30 a week to own.    .





Can you please walk us through this equation were an average priced unit fully financed only costs 30 bucks a week to own for an infestor.

It only works for top tax bracket people ?


----------



## finnsk (24 November 2008)

chops_a_must said:


> For me, if I was investing in property, it would purely be for income. Obviously people over the last 5-10 years depending, have got the idea that capital gains are what property is about. For me, in my mind, it's not the right way to go about it.
> 
> Transaction costs are far too high, and it is too much of an illiquid market at any one time to be able to target that. There are many better methods to capture capital gains elsewhere in other assets.
> 
> In my mind, and the risk that I would be prepared to take, would limit me from buying investment property unless it was cashflow positive, or likely to become so in the short term. But that's just what is acceptable to me. And I haven't seen an argument at this stage that has convinced me to view it in a different way.



I agree with you on this I would never invest in property if it is negative geared what will happen if my income disappeared for what ever reason eg. accident, sickness. With no income the investment property will be gone and properly also my PPOR.


----------



## cuttlefish (24 November 2008)

numbercruncher said:
			
		

> Can you please walk us through this equation were an average priced unit fully financed only costs 30 bucks a week to own for an infestor.
> 
> It only works for top tax bracket people ?




Current advertised asking price $240k
Current rent $330/week.
Assumed purchase price circa 10% discount to current market  ($220k).
Add purchase costs ($10k).

Net cost $230k,  100% financed.

Interest cost (cost of ownership) @ 7.7% =  $17710/annum
rates and levees circa $2,500/annum

Total cost of ownership = $389/week.
Rental income = $330/week.
Net loss = $59/week
Loss is tax deductable so comes off income.  If in top tax bracket that income would have been taxed at 46.5%.  Thus tax saving is .465*59 = $27.40/week  Thus cost to investor is approx *$32 *per week to own the unit.

(I've increased the rates/levees to $2500/year compared to my example earlier in the thread because that is probably more realistic).


----------



## Pommiegranite (24 November 2008)

The market seems to be capitulating!

http://www.news.com.au/business/money/story/0,25479,24696467-5013951,00.html


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## Pommiegranite (24 November 2008)

cuttlefish said:


> Current advertised asking price $240k
> Current rent $330/week.
> Assumed purchase price circa 10% discount to current market ($220k).
> Add purchase costs ($10k).
> ...




As this if for an interest only mortgage, where is the money going to come from to pay the capital at the end of the mortgage term?


----------



## CamKawa (24 November 2008)

Beej said:


> A home loan is not like a margin loan for shares! Ie the bank WILL NOT come knocking asking for extra cash because they think the value of a security has fallen!



I not 100% sure about that. If when the bank gets anxious enough about falling house prices I think they may do a quick drive buy the house for a re-evaluation and if the owners LVR is too far out of wack ask them to either sell or cough up the difference with cash, which maybe a sizeable amount. Either way a forced sale is on the cards. I know it's caught specuvestors out in NZ before.


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## Mofra (24 November 2008)

numbercruncher said:


> Do mortgage documents specifically say this ? Has it never happened before ?



I assume you mean the UCCC standard loan contract issued with the bog-standard mortgage documentation issued upon approval.

There isn't a specific provision that states a lender will (or even can) revalue a property, however upon extending a loan (term or credit) a lender will have the option of revaluing the property as these cases are often treated as a new loan with a new contract required to be issued.

I've had one case a years ago where a client wanted to borrow a little more for renovations, problem was they ripped out the entire kitchen _before_ the valuation. Unfortunately there isn't an IQ test stapled to the front on loan contracts, would save evryone alot of hassle.

BTW, non-confirming lenders (bluestone, liberty, etc) may have something a little diffrent but they only represent a very small segment of the mortgage market.


----------



## prawn_86 (24 November 2008)

Intersting cuttlefish 

Problem where we live, is that an apartment of that value only rents for $230 - $250 pw, so a long way off the $330 you used. Thats just different markets for you i guess

EDIT - and Pommies point of interest only, whats your take on that?


----------



## numbercruncher (24 November 2008)

cuttlefish said:


> Current advertised asking price $240k
> Current rent $330/week.
> Assumed purchase price circa 10% discount to current market  ($220k).
> Add purchase costs ($10k).
> ...





Thanks.

Is that typical in your target market, I mean 230k properties that rent for 330 a week ?

Where I live its pretty much the opposite a 350k property would get 300 a week rent. But prices seem to be levelling rapidly, have they crashed in your market ?


----------



## numbercruncher (24 November 2008)

But at this rate Cuttle up here in Qld we will have returns like you very soon do you think ?




> THE number of properties sold in Brisbane has slumped by 18.6 per cent in the past 12 months - the worst property market decline recorded in Australia.
> 
> Sales were down 10,000 compared with the same period last year. Just 40,868 homes changed hands during the year, compared with 50,211 in the 12 months to October 2007




http://www.news.com.au/couriermail/story/0...5011140,00.html

Still rather early in the great recession to hey


----------



## Beej (24 November 2008)

CamKawa said:


> I not 100% sure about that. If when the bank gets anxious enough about falling house prices I think they may do a quick drive buy the house for a re-evaluation and if the owners LVR is too far out of wack ask them to either sell or cough up the difference with cash, which maybe a sizeable amount. Either way a forced sale is on the cards. I know it's caught specuvestors out in NZ before.




No way can't happen with any mortgage contract I have ever signed. As Mofra said, maybe if you were re-financing or trying to extend the loan, but not otherwise. Just keep up the payments and you are sweet.

Cheers,

Beej


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## chops_a_must (24 November 2008)

Beej said:


> No way can't happen with any mortgage contract I have ever signed. As Mofra said, maybe if you were re-financing or trying to extend the loan, but not otherwise. Just keep up the payments and you are sweet.
> 
> Cheers,
> 
> Beej




What about equity loans?


----------



## Beej (24 November 2008)

chops_a_must said:


> What about equity loans?




Depends what you mean? An equity loan is still just a mortgage underneath. Again, if you are trying to change your existing loan into an equity loan, or extend an existing facility, maybe... but otherwise, no way. I suppose it would be worth a careful read of any new contract you were entering into to be sure, but I have never, ever heard of this happening, or being able to happen.

Beej


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## cuttlefish (24 November 2008)

numbercruncher said:


> Thanks.
> 
> Is that typical in your target market, I mean 230k properties that rent for 330 a week ?
> 
> Where I live its pretty much the opposite a 350k property would get 300 a week rent. But prices seem to be levelling rapidly, have they crashed in your market ?




I think its a reflection of how different markets are at different stages.  I probably wouldn't be buying in the current market in our area because I see room on the downside, and stocks offer better value at the moment imo.

In my part of Sydney the real boom period for development ended in around 2003.  There has been ongoing strength but not at the same heated rate - and the reality is that some prices - like the units I refer to - have stayed fairly flat over the past 5 years.   But the other thing it highlights is that if there is genuine demand for accomodation and lack of supply of accomodation it has to be reflected somehow - either in rents or in prices - which is again why the old 'location, location, location' adage is so important in property. 

If you buy in the outer suburbs of a regional town there is a lot of land supply but in the centre of a large and growing city land supply (and thus new accomodation supply) is more limited - and typically land supply that does appear comes from consolidation/gentrification.  (even an apartment investment can be a land investment if purchasing in a small block because consolidating several small blocks and demolishing them to build a larger complex is something that occurs).


----------



## cuttlefish (24 November 2008)

prawn_86 said:


> Intersting cuttlefish
> 
> Problem where we live, is that an apartment of that value only rents for $230 - $250 pw, so a long way off the $330 you used. Thats just different markets for you i guess
> 
> EDIT - and Pommies point of interest only, whats your take on that?





The main purpose of the example was to demonstrate how rental changes can affect the equation and that different markets can show different characteristics.  In relation to the interest-only vs  P&I it really comes down to the goal of the investor/purchaser and their appetite for risk I suppose.

I've never used interest only loans, I always pay down the principal as well but I can see why people may use them to bump up their leverage - which like all leverage if done at the right time will work wonders and done at the wrong time will send you bust.

And nobody should misconstrue the example as any kind of encouragement to buy or sell property at the moment - as I say the purpose is to provide a balanced viewpoint.  I think that its understandable to be nervous about both the economy and property markets at the moment.  (though the inflation genie is always something to keep an eye out for as well).


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## gfresh (24 November 2008)

In the old days, apparently they were getting pretty lax on proper valuations as the market was booming.. Now (from reading anecdotal) they're starting to get a bit stricter on what they finance, and tougher valuations before approving the loan. 

If the bank doesn't think the property is fairly valued for the amount they are lending, they won't approve the loan, simple. In the current environment, the banks are going to be a lot more careful on evaluating what they think the property may be worth before even approving the loan. The risk to both the borrower, and more importantly them is higher in a slow market if a forced sale is required. 

Also a problem for those using equity to buy further investment properties. What they "thought" they had as equity the banks may not quite see as high in dollar terms, denting some investors demand for obtaining more and more IP's. 

That's where the market has changing between now, and this time last year. 

Anyhow, year is pretty much over  No many sales I would imagine in the next few weeks leading up to xmas. First quarter will be interesting times. Could be recovery, could be things getting worse. I'm sure many potential sellers decided to wait it out until 2009 for the large number of listings to clear before giving it another go.


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## gfresh (24 November 2008)

For interest.. here is current FHOB share of market. Approximately: 20%


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## Beej (24 November 2008)

gfresh said:


> For interest.. here is current FHOB share of market. Approximately: 20%




Wow! Now there's a clear upward trend there in FHB numbers (at least proportionally) that has gone pretty much un-reported! It does however support anecdotal evidence that things in the sub $500k end of the market have actually been picking up - both volumes and prices, in the last couple of months in Sydney. Will be very interesting to see if that upward trend continues in Q4 (I expect it has).

Thanks for finding and posting that.

Cheers,

Beej


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## gfresh (24 November 2008)

Here it is broken down by State. NSW has definitely picked up in the FHOB proportion this year.


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## wayneL (24 November 2008)

Jeez! I stop by to say G'day and this thread is still going around in circles. LOL

FWIW, The UK market is swirling down the toilet with astonishing speed with Crash Gordon furiously trying to prop it up.

Auction Prices are back to 2001 levels in a lot of cases and not bad buying. But mainstream vendors asking prices are still in lala land with nothing moving at all. Lenders are basically demanding 75 - 60% LVR for the prime rate, with almost no deals at all at less than 15% deposit.

(Which IIRC was how it always used to be) 

Anyway... just saying hooroo.


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## chops_a_must (24 November 2008)

HEY HEY!!!


----------



## numbercruncher (24 November 2008)

wayneL said:


> Jeez! I stop by to say G'day and this thread is still going around in circles. LOL
> 
> FWIW, The UK market is swirling down the toilet with astonishing speed with Crash Gordon furiously trying to prop it up.
> 
> ...





Holy **** batman !

Welcome back 

Please post lots of scary bear pRon


----------



## Mofra (24 November 2008)

wayneL said:


> Jeez! I stop by to say G'day and this thread is still going around in circles. LOL



You sound surprised :
Welcome back.


On a different tack, RBA ready to slash rates again:

http://www.news.com.au/business/money/story/0,25479,24697151-5016110,00.html


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## Pommiegranite (24 November 2008)

wayneL said:


> Jeez! I stop by to say G'day and this thread is still going around in circles. LOL
> 
> FWIW, The UK market is swirling down the toilet with astonishing speed with Crash Gordon furiously trying to prop it up.
> 
> ...




Haha...I wondered what had happened to you until I saw you on HPC. Not enough bear food here for you?


----------



## Pommiegranite (24 November 2008)

Mofra said:


> You sound surprised :
> Welcome back.
> 
> 
> ...





News.com might want to remove the following link, for ealted articles, from their page:

http://www.news.com.au/business/money/story/0,,23771312-5016110,00.html


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## Glen48 (24 November 2008)

Will banks lent if they know the market could or is in dire straights?
Who foots the bill with mortgage insurance if a whole lot of properties tank?
If you were a bank manager wouldn't you want a lot higher deposit or just be the the rest and think this is a slight down turn?
I wouldn't be lending money to any one for any thing in this climate.


----------



## Adam A (24 November 2008)

First home buyers are like lambs to the slaughter,i think its an absolute disgrace that the grant has been increased
They will be the first ones to lose their homes once unemployment kicks in 

Minimum deposit 
Minimum savings record
Minimum equity
Helping hand rubish,more like helping them put a noose around their neck


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## Pommiegranite (24 November 2008)

Glen48 said:


> Will banks lent if they know the market could or is in dire straights?
> Who foots the bill with mortgage insurance if a whole lot of properties tank?
> If you were a bank manager wouldn't you want a lot higher deposit or just be the the rest and think this is a slight down turn?
> I wouldn't be lending money to any one for any thing in this climate.




Glen, its heading the way it is in the UK. Soon anyone without at least a $100k deposit will not be able to buy. This will completely remove first home buyers from the equation, with disastrous effects cascading up the chain.

Its time to batten down the hatches and save, save, save.

...but then again...this is Mars...and here things are different


----------



## robots (24 November 2008)

Pommiegranite said:


> Glen, its heading the way it is in the UK. Soon anyone without at least a $100k deposit will not be able to buy. This will completely remove first home buyers from the equation, with disastrous effect cascading up the chain.
> 
> *Its time to batten down the hatches and save, save, save.*




hello,

gee sounds familiar?

thankyou
robots


----------



## Mofra (24 November 2008)

Glen48 said:


> Will banks lent if they know the market could or is in dire straights?
> Who foots the bill with mortgage insurance if a whole lot of properties tank?
> If you were a bank manager wouldn't you want a lot higher deposit or just be the the rest and think this is a slight down turn?
> I wouldn't be lending money to any one for any thing in this climate.



a. Yes, there are always good clients to lend money to
b. The Mortgage Insurers (they are seperate companies)
c.  Lending criteria has completed most of the tightening phase already
d.  Each to their own


----------



## numbercruncher (24 November 2008)

> Rates tipped to fall to 1960 levels
> 
> Monday November 24, 2008, 3:42 pm
> 
> ...




http://au.biz.yahoo.com/081124/2/224lg.html


----------



## Pommiegranite (24 November 2008)

robots said:


> hello,
> 
> gee sounds familiar?
> 
> ...




Trollbots, unfortunately for most of the negatively geared, saving is not an option. I can understand your dilema though.


----------



## robots (24 November 2008)

hello,

awesome news Number, what a ride man 

want be too good for the people piling the dollars into those online "high" interest (cough cough) accounts

as long as you doing something though, 

few more $ for some cafe latte's and ruski's after 2nd December 2008, just helping out the economy

thankyou
robots


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## robots (24 November 2008)

hello,

wont be to many negative gearer's around soon Pommie after looking at the article Number posted, 

neutral and positive more like it , now what is it? we all buy on yield

money box crew will have to go a bit harder on the savings, ING down to 5.5%

what a day pom, 

thankyou
robots


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## Beej (24 November 2008)

Pommiegranite said:


> This will completely remove first home buyers from the equation, with disastrous effects cascading up the chain.




What a load of alarmist rubbish! Look at the stats a few posts back that show a CLEAR uptrend in the number of FHBs as a proportion of property purchases - especially in the last quarter, and especially in Sydney. This proportion will be even higher this quarter.

Beej


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## numbercruncher (24 November 2008)

Beej said:


> What a load of alarmist rubbish! Look at the stats a few posts back that show a CLEAR uptrend in the number of FHBs as a proportion of property purchases - especially in the last quarter, and especially in Sydney. This proportion will be even higher this quarter.
> 
> Beej





But there was tons less sales - so the number of FHBs didnt increase just the proportion as a percentage !

I suggest you run with the low interest rate thing rather than manipulate other statistics.


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## Nyden (24 November 2008)

What I fail to understand; is as to whether or not low interest rates are entirely a good thing for house prices? Granted, it means that the people that manage to hold onto their jobs will be in a far better position, but surely low rates are an indication of the economy?

If unemployment skyrockets, and folk who are losing their jobs simply cannot afford to service their loans ... and are forced to sell, and/or declare bankruptcy (should the sale price be inadequate for mortgage) - surely this will have a hugely detrimental affect on house prices?

You surely must ask yourself why there are forecasts for such low rates ... there must be some truly dire predictions for the Australian economy.


----------



## finnsk (24 November 2008)

If house prices fall say 20% will that be the value of the house or the dirt?
If it is the dirt that falls, will that mean to goverment taxes on land will fall as well?
Surely a newly built house to the value of $100.000 cant devalue to $0.00 over a few mounts?


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## Indie (24 November 2008)

Nyden said:


> What I fail to understand; is as to whether or not low interest rates are entirely a good thing for house prices? Granted, it means that the people that manage to hold onto their jobs will be in a far better position, but surely low rates are an indication of the economy?
> 
> If unemployment skyrockets, and folk who are losing their jobs simply cannot afford to service their loans ... and are forced to sell, and/or declare bankruptcy (should the sale price be inadequate for mortgage) - surely this will have a hugely detrimental affect on house prices?
> 
> You surely must ask yourself why there are forecasts for such low rates ... there must be some truly dire predictions for the Australian economy.





Interest rates are just a side show. But I think you're right. There are warning signs everywhere.

Higher unemployment and tighter credit has put an end to the bull market in real estate. First at the top of the market, then the middle, then the bottom. The idea that cashed up buyers will continue coming in and bidding up prices to higher highs is pure delusion. There will always be buyers, just as there are in the stock market. But they're turning up in fewer numbers with less cash. 

Lots of people on this forum have made a good dollar out of RE over the years. Some still talk it up as if the bull has only paused for breath. How many of those are looking to buy into the market now and put their money where their mouth is? I'm guessing not many.


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## Beej (24 November 2008)

numbercruncher said:


> But there was tons less sales - so the number of FHBs didnt increase just the proportion as a percentage !
> 
> I suggest you run with the low interest rate thing rather than manipulate other statistics.




And your point is?? Exactly the same as mine I think! I never asserted higher FHB in absolute numbers, just as a proportion of active sales, therefore debunking the myth being put out here that all first home buyers are desserting the market and therefore setting the market up for some great mythical crash many here are dreaming of and waiting for.

FYI - lower sales volumes and higher FHB proportional sales are actually very significant stats that indicate the market is very close to the bottom right now..... if there was some sort of great crash occurring then sales volumes would be increasing, not decreasing.

EDIT: PS; Thanks for reminding us about the rapidly falling interest rates - more on this later....

Beej


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## Kipp (24 November 2008)

Nyden said:


> What I fail to understand; is as to whether or not low interest rates are entirely a good thing for house prices? Granted, it means that the people that manage to hold onto their jobs will be in a far better position, but surely low rates are an indication of the economy?
> 
> If unemployment skyrockets, and folk who are losing their jobs simply cannot afford to service their loans ... and are forced to sell, and/or declare bankruptcy (should the sale price be inadequate for mortgage) - surely this will have a hugely detrimental affect on house prices?




I fail to see how low interest rates can be anything but a positive for house prices.  You are assuming that low interest rates will trigger higher unemployment?  Granted, that the RBA is lowering interest rates to try and avoid a recession, but I can't see how lowering them causes unemployment to increase?

To my mind, low interest rates will (partially) save real estate from collapsing too much for 2 reasons: firstly, less people will be at risk at default for mortgages.  A drop of 8% to 6% would mean a drop of $2000mth to $1500mth repayments- big difference.  And of course, it makes it more attractive for potential buyers- especially those renting.  I have not noticed my landlord passing on the saving of his mortgage on to me?!  

Mind you, rental yields in Australia are still pretty pathetic compared to the UK- where it is not so hard to be positive or neutrally geared.  (well, a year ago anyway...)


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## Passive (24 November 2008)

Any astute investor is not buying at the moment but is actively doing their research - increasingly as the bears lambast this investment vehicle, shares keep plunging and plunging - 50% off the highs is monstruous in comparison to the 10% drop in Perth for example of the same time frame- when rates are low, interest lost in real estate, banks looking to lend and an economy VERY FAR from being in trouble except from the negative carping of the press and easily intimidated inexperienced punters we are looking at some real potential developing.

Time to look is there and there are people looking to buy. The moment there is an uptick in sentiment watch the floodgates open in favour of real estate, when that comes is anyones guess but the sky has not fallen in when I last looked!


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## Nyden (24 November 2008)

Kipp said:


> I fail to see how low interest rates can be anything but a positive for house prices.  You are assuming that low interest rates will trigger higher unemployment?  Granted, that the RBA is lowering interest rates to try and avoid a recession, but I can't see how lowering them causes unemployment to increase?
> 
> To my mind, low interest rates will (partially) save real estate from collapsing too much for 2 reasons: firstly, less people will be at risk at default for mortgages.  A drop of 8% to 6% would mean a drop of $2000mth to $1500mth repayments- big difference.  And of course, it makes it more attractive for potential buyers- especially those renting.  I have not noticed my landlord passing on the saving of his mortgage on to me?!
> 
> Mind you, rental yields in Australia are still pretty pathetic compared to the UK- where it is not so hard to be positive or neutrally geared.  (well, a year ago anyway...)




No. What I'm suggesting is that since the RBA are most likely going to drop the rates so much - this is reflective of the forecasts for our economy. If unemployment was not to rise, they wouldn't be dropping rates  The RBA drops rates when they economy is in the toilet, and at the rate they're dropping them ... something is very seriously wrong with Australia, but few know it.


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## Passive (24 November 2008)

Low rates in this economy are a preemptive strike from the govt based on the international hiatus. With property stimulus in place plus the active programmes to kickstart a supposedly at risk economy - the basis for the next boom is being laid - Rudd is encouraging the FHB to get in, rates will be down dramatically and once the serious time of the credit squeeze eases rates will HEAVILY favour real estate for a time to come as the RBA will need a hell of a long time to push rates up again. Baby boomers will put their money there well before trusting the ASX. We are in for a pro property time in the next 5 years as we have never seen before.


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## Beej (24 November 2008)

Thanks Kipp and Passive for some insightful comments. Passive - the point you make about astute buyers researching the market carefully right now is very true. I've tried to hint at this to the guys here before by reminding them that you actually have to get out and about "on the ground" to understand what is actually going on in a particular R/E market, and find opportunities you might be interested in, not just surf the net reading GHPC forums and looking at median house price stats. But it mostly falls on deaf ears!

Cheers,

Beej


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## numbercruncher (24 November 2008)

Rentals are yielding like 4 to 5pc at current prices , hardly awesome stuff ....

our good for nothing banks exceed 10 pc .....




> We are in for a pro property time in the next 5 years as we have never seen before.





Thats just spruiker bollocks.  amusing though.


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## Passive (24 November 2008)

Nyden said:


> No. What I'm suggesting is that since the RBA are most likely going to drop the rates so much - this is reflective of the forecasts for our economy. If unemployment was not to rise, they wouldn't be dropping rates  The RBA drops rates when they economy is in the toilet, and at the rate they're dropping them ... something is very seriously wrong with Australia, but few know it.




What ? You have some special insight? All the real experts - RBA - and more dispute this - all the action is being taken to counter this sort of mindless self fulfilling negativity - papers sell with this sort of bs. Alll the facts show we are not in recession. Have to love this line of reasoning. Leave rates where they are - we will pay because we have high rates
Drop rates  - aaahhh a conspiracy must be afoot because rates are dropping. Like a driver trying to avert an accident - do we assume the driver is drunk or using his initiative.


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## Beej (24 November 2008)

numbercruncher said:


> Rentals are yielding like 4 to 5pc at current prices , hardly awesome stuff ....
> 
> our good for nothing banks exceed 10 pc .....




You'd rather buy bank shares? I thought the great housing price crash is going to send them all bust???? 

PS - nothing wrong with locked in, starting, 4-5% rental yields that will only INCREASE over time.

Beej


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## Pommiegranite (24 November 2008)

Passive said:


> *Low rates in this economy are a preemptive strike from the govt based on the international hiatus.*




Nope. Low interest rates would have been a 'preemptive strike' had they been cut 12 months ago. 

The RBA were caught with their pants down, and this effort of pulling them up is only going to end up with getting caught in the zipper. It is going to be very painful.


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## Pommiegranite (24 November 2008)

Beej said:


> You'd rather buy bank shares? I thought the great housing price crash is going to send them all bust????
> 
> PS - nothing wrong with locked in, starting, 4-5% rental yields that will only INCREASE over time.
> 
> Beej




If RE's success is linked with the big 4 bank's success, then why would anyone take a 5% yield in property at the top of a RE boom, when instead you can buy ANZ stock 50% off, with a 15% yield?


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## Passive (24 November 2008)

Beej said:


> Thanks Kipp and Passive for some insightful comments. Passive - the point you make about astute buyers researching the market carefully right now is very true. I've tried to hint at this to the guys here before by reminding them that you actually have to get out and about "on the ground" to understand what is actually going on in a particular R/E market, and find opportunities you might be interested in, not just surf the net reading GHPC forums and looking at median house price stats. But it mostly falls on deaf ears!
> 
> Cheers,
> 
> Beej




Beej

The 90's were substantially worse - rates high, unemployment comfortably double and no one would touch property. Bought heavily and when boom came a while later - the bears responded that any fool could have made money - but any fool did not - long term asset that produces results when you buy well. Kills any other asset class. Spruiker - no way - just benefitted from some vision and will do so again when the time is right.


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## Nyden (24 November 2008)

Passive said:


> What ? You have some special insight? All the real experts - RBA - and more dispute this - all the action is being taken to counter this sort of mindless self fulfilling negativity - papers sell with this sort of bs. Alll the facts show we are not in recession. Have to love this line of reasoning. Leave rates where they are - we will pay because we have high rates
> Drop rates  - aaahhh a conspiracy must be afoot because rates are dropping. Like a driver trying to avert an accident - do we assume the driver is drunk or using his initiative.




No special insight mate, just a brain 

The RBA, experts? Where's the smiley for rolling on the floor ... governments world wide got this entire thing wrong! From the start when they proclaimed this mess would be contained, right up to Rudd saying how Robust our economy is ... only to have him spend up the surplus weeks later.

The experts have been telling people not to sell stocks since the losses weren't even half of what they are now. Now they're trying to do the same with housing - the experts call it a dip, the government is trying to stem falls. .. Sigh. De ja vu, anyone?

It's too late to save the economy; the damage is already done - and the self-fulling negativity is here to stay for quite a long time.

Gosh, seems like every month you hear about some facility being closed down in Australia ... thousand jobs here, couple of hundred there, it all adds up.


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## numbercruncher (24 November 2008)

Kipp said:


> I fail to see how low interest rates can be anything but a positive for house prices.  You are assuming that low interest rates will trigger higher unemployment?  Granted, that the RBA is lowering interest rates to try and avoid a recession, but I can't see how lowering them causes unemployment to increase?
> 
> To my mind, low interest rates will (partially) save real estate from collapsing too much for 2 reasons: firstly, less people will be at risk at default for mortgages.  *A drop of 8% to 6% would mean a drop of $2000mth to $1500mth repayments*- big difference.  And of course, it makes it more attractive for potential buyers- especially those renting.  I have not noticed my landlord passing on the saving of his mortgage on to me?!
> 
> Mind you, rental yields in Australia are still pretty pathetic compared to the UK- where it is not so hard to be positive or neutrally geared.  (well, a year ago anyway...)




that drop is on an interest only loan ? dont forget the principle in your repayment figure.

Im reading you UK lot have had a price crash yet you claim neutral or positive gearing as the norm a year ago ? I can see its probable now after the crash but surely not 12 months back ....

And yes rental yields are pathetic here 3 to 5pc - If rates go as low as they predict new entry property investors "might" break even on yield. And its possible home ownership will be cheaper than rent, *if rates stay low *....

We might be in for a decade of Japanese style !

Australian RE seems more like gambling to me than investing at this moment ...


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## Beej (24 November 2008)

Pommiegranite said:


> Nope. Low interest rates would have been a 'preemptive strike' had they been cut 12 months ago.
> 
> The RBA were caught with their pants down, and this effort of pulling them up is only going to end up with getting caught in the zipper. It is going to be very painful.




So residing in Manchester is giving you a birds eye view of what's been going on in the economy over here has it Pommie?? 

Eg - I was out for Yum-Cha on Sunday in Sydney - just a local Chinese place on the lower north shore (not even Chinatown etc). It was PACKED! huge line-up to get in (lucky we had made a booking!). Most restaurants around here are still nearly always full Wed-Sat evenings. I can tell you that although the economy might have slowed, we are NOT yet in recession in Australia (unlike where you are living at the moment - perhaps that is warping your perspective???).

I think the RBA has done the right thing - last year would have been too soon to cut - for a start it would have overheated the housing market further (it was booming last year here remember), plus inflation really was building, wage pressures building - basically full employment still. The miners iron ore and coal contracts etc were being negotiated for ridiculously high prices, and terms of trade were heading rapidly in one direction - up. All of this has only really started to soften over here in the last 6-9 months, so the RBA is actually pretty spot on I would say, and they have acted decisely, and pre-emptively as the real issues have started to emerge.

Cheers,

Beej


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## Beej (24 November 2008)

Pommiegranite said:


> If RE's success is linked with the big 4 bank's success, then why would anyone take a 5% yield in property at the top of a RE boom, when instead you can buy ANZ stock 50% off, with a 15% yield?




Personally, I'd buy both! 

Beej


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## Passive (24 November 2008)

Pommiegranite said:


> Nope. Low interest rates would have been a 'preemptive strike' had they been cut 12 months ago.
> 
> The RBA were caught with their pants down, and this effort of pulling them up is only going to end up with getting caught in the zipper. It is going to be very painful.




You are right they were caught with their pants down and they are leading the market down until traction - and traction will come and when it does it will create a massive stimulus. RBA is quite inept and its this ineptitude that is laying the next mother of all booms. Their interest rate regime is constantly creating a boom and bust cycle because they are dependant on after the fact stats. What you guys bandy about are 5% yields on what time frame. Many property investors have bought their properties 5 years back for 200k. Maybe now that is worth 500k and based on only 10k down, plus negative gearing, rental yield is a hell of a lot higher than 4% - what do you base the return on. Your yield curves are just a nonsense.


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## Passive (24 November 2008)

Beej said:


> Personally, I'd buy both!
> 
> Beej




A lot easier to do on a Line of Credit against some good old collateral - as safe as houses - would still avoid margin lending though as we don't know where the shares are heading. Oh guys where do the banks get these good earnings from?  Good old mortgage holder.Heh heh - you guys contradict yourselves in the same breath. Beej I am a buyer of bank share and a trader - panic merchants make it easy.


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## numbercruncher (24 November 2008)

I actually think it is within the realms of possibility that houseprices increase alot ....

But not in real terms, an Inflationary screwup by central banks is very possible ....

Currently, short term I see deflation happening and more likely to continue.

You just need to keep your finger on the pulse and adapt to market changes.


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## Passive (24 November 2008)

numbercruncher said:


> I actually think it is within the realms of possibility that houseprices increase alot ....
> 
> But not in real terms, an Inflationary screwup by central banks is very possible ....
> 
> ...




Valid comment - inflationary pressures are being put into place that could inleash some havoc. The upside is that the value of your debt will also diminish with the inflation rate as well. In real terms it will be a challenge to preserve value and that will be the acid test - which asset - I would rather have something useful.


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## ROE (24 November 2008)

Property double every seven year, so get in now before it's too late .

Price cannot fall because we are under supply and immigration keep coming in to this country, let me repeat price can not fall.

Let wind back the clock to Japan in the 80's, the same argument
price cannot fall, economy is doing great everyone has job and interest rate at record low plus we have 125-130 Million people on a lot less land than NSW how can anyone lose money in property, they not making any more land

Interest rate in Japan hovering around 1-2% for decades and Yield is 5% or 6% why the hell people don't buy property in Japan any more?

I mean you borrow at 2% you rent out at 5%, damn Japanese are stupid people ... why why why ?

because they got a debt deflation problem that we haven't seen yet..
Asset keep dropping every year for the last 20 years so why buy when your asset keep depreciating...

Some aussie banks stock yield 10% but people aren't buying cos they scare the share price may tank to the floor 

Imagine a scenario where yield may start to look good but price keep going backward that start to scare the hell out of people..end of the story

lot of US properties on pretty good yield why aren't people buying, I mean LA ...you cant lose money right great location everyone want to live there.. US is about to go into debt deflation mode and lucky they have Japan to look forward to and know what's coming

it's a fact it's got nothing to do with anti-properties, when it goes too far something has to happen and that something we just have to wait and see.

ask yourself a question, would you buy anything knowing it has a fair chance of depreciating?
and what if something **** happen to you along the way while the asset is depreciated and that something maybe your job, you be in a hell of a lot of trouble.


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## numbercruncher (24 November 2008)

Yes I read today the average 35 year old Japanese investor back in the 80s is now over 60 and still not got his cash back !


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## lusk (24 November 2008)

Nyden said:


> No. What I'm suggesting is that since the RBA are most likely going to drop the rates so much - this is reflective of the forecasts for our economy. If unemployment was not to rise, they wouldn't be dropping rates  *The RBA drops rates when they economy is in the toilet, and at the rate they're dropping them ... something is very seriously wrong with Australia, but few know it.*




They are slashing rates because the amount of loans taken out are dropping rapidly, money supply and economic growth require debt to grow.


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## Passive (24 November 2008)

Comparing Japan to Australia is absolutely puerile and presupposes so much and assumes so much and extrapolates so much - every nation has its own dynamics - Japan is VERY different to Australia - ridiculous comparison and to say we will go down their path is countered by me saying it has not!


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## Beej (24 November 2008)

ROE said:


> [snipped - straw man argument drivel + irrelevant and dubious Japanese economic commentary probably lifted from GHPC forums]




ROE - you are the robot's of the bear side of this argument! 

Beej


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## Glen48 (24 November 2008)

We need to get away from the ideology that every one should own a house they are just another consumable the same a Boat or a 4WD and do nothing to help the GDP.
House designs should be regulated and a CGT say over 1M be imposed.
To stop a repeat for this FWD we have the ideal situation to explore new ideas and head of in a new direction.
But dream on it will never happen.


----------



## chops_a_must (24 November 2008)

Pommiegranite said:


> If RE's success is linked with the big 4 bank's success, then why would anyone take a 5% yield in property at the top of a RE boom, when instead you can buy ANZ stock 50% off, with a 15% yield?



Indeed. And I've said so elsewhere. Property looks like an awful investment at the moment when you look at other asset classes at the moment. Can't see a reason for any fresh money going into property for the foreseeable future.

And with those bank shares Pommie... positive geared from day 1. But hey... why not margin it up to take a massive loss as well if you don't want to pay so much tax. :

Whereas the only way I can think of positive gearing a house at the moment, goes something like this:

1) Buy house
2) Install meth lab
3) Sell drugs

Result = LOTS of positive _gear_ing.


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## Beej (24 November 2008)

chops_a_must said:


> Whereas the only way I can think of positive gearing a house at the moment, goes something like this:
> 
> 1) Buy house
> 2) Install meth lab
> ...




No - RENT the house out to crooks who take care of 2) and 3) and charge an appropriate rent premium! That way you don't carry either the financial, or the "freedom" risk 

Beej


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## ROE (24 November 2008)

Beej said:


> ROE - you are the robot's of the bear side of this argument!
> 
> Beej




but most of my stuff are facts, go and research on Japanese property market and US current property market.

LA properties been going backward every single quarters for the last few years.. Read on all economics book, they tell you what happen when
you got a debt deflation come into the economy.

2 things are certain that is death and tax and in economic
1 thing is certain when debt deflate, asset depreciate.

but what economy got to do with it stupid, house price double every seven years go property go  the debt deflation is too close to the truth and too scary for some


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## ROE (24 November 2008)

Passive said:


> Comparing Japan to Australia is absolutely puerile and presupposes so much and assumes so much and extrapolates so much - every nation has its own dynamics - Japan is VERY different to Australia - ridiculous comparison and to say we will go down their path is countered by me saying it has not!




we will see when debt deflation comes into play .. Japan or no Japan
debt deflation is universal... look at the US and UK when Debt deflation comes into play but again Australia is so unique, it' very different from all other countries in the world ..

This time it's different is the term they used on the stock market bull 

Actually look at NZ that is closes to Australia they have negative gear and they dont get tax on capital gain, that a formular for permanent property price rise...check out NZ property market now, it tank pretty bad too.

oh but NZ they have more sheep than us so we are different from them again


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## chops_a_must (24 November 2008)

Beej said:


> No - RENT the house out to crooks who take care of 2) and 3) and charge an appropriate rent premium! That way you don't carry either the financial, or the "freedom" risk
> 
> Beej




You're right, I just got greedy. 

It is the inevitable outcome of high vacancy rates though. Probably why Perth has had such a bad reputation with bikies and labs (I think we've been the speed capital of Australia as long as I can remember), as we have traditionally had very high vacancies.


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## ROE (24 November 2008)

Glen48 said:


> We need to get away from the ideology that every one should own a house they are just another consumable the same a Boat or a 4WD and do nothing to help the GDP.
> House designs should be regulated and a CGT say over 1M be imposed.
> To stop a repeat for this FWD we have the ideal situation to explore new ideas and head of in a new direction.
> But dream on it will never happen.




I believe in free market, let people buy and sell at what ever price they want  .... It works in my favor when I see a bubble I slowly quit and I wait till there is blood on the street then I join the game 

Right now lot of blood on the asx soon I think there will be blood in RE ..
and if my guess is wrong with RE then I'm still good knowing I live rent free and my properties has not drop but if there is blood I'm ready to action for more 
the first sign of debt deflation is here 
http://www.news.com.au/business/money/story/0,28323,24697151-5016110,00.html

so celebrate when you got a mortgage then buy a bottle of alcohol to drink when you realize the asset price heading south ... text book play out in the real world

take note the word asset property people, it doesn't mean it's just property this is what it means "a single item of ownership having exchange value." so shares, property, your boat
they all consider asset.


----------



## wayneL (24 November 2008)

Beej said:


> What a load of alarmist rubbish! Look at the stats a few posts back that show a CLEAR uptrend in the number of FHBs as a proportion of property purchases - especially in the last quarter, and especially in Sydney. This proportion will be even higher this quarter.
> 
> Beej




How many of those FHBs were cashed up immigrants who aren't really FHBs at all. A mate of mine built a BIG two story home in the leafy part of Berwick and sold it to FHBs***


***Wealthy English Baby Boomers who had come to Oz to retire. Got the "buy a 1st house bribe" as well.


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## Glen48 (25 November 2008)

ABC Late Line tonight ran a story about China's RE market slowing with RE agents standing around without a prospect all day, their power consumption is down 4% and OZ economy is set to suffer more of a down turn... BHP 5 bucks any one?


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## robots (25 November 2008)

hello,

another great night of awesome writings, 

and in this great country of ours we all have the freedom to do as we please, people can *rent* and people can *buy*, fabulous

its no big deal brothers

thankyou
robots


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## Indie (25 November 2008)

Beej said:


> No - RENT the house out to crooks who take care of 2) and 3) and charge an appropriate rent premium! That way you don't carry either the financial, or the "freedom" risk
> 
> Beej





Now we're getting somewhere. I'm open to investing in RE again and this looks like an interesting opportunity. I was wondering where the next "driver" for economic growth was going to come from. I'm in.


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## Passive (25 November 2008)

ROE said:


> but most of my stuff are facts, go and research on Japanese property market and US current property market.
> 
> LA properties been going backward every single quarters for the last few years.. Read on all economics book, they tell you what happen when
> you got a debt deflation come into the economy.
> ...




You obviously need to research Japan a lot more. Up to 97% of Japan is not migrant. Don't have home ownership culture like us and no negative gearing. Still silly comparison.


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## robots (25 November 2008)

hello,

good evening fellow trolls, whats happening?

quiet on the RE scene today with all the shonk exchange action, just business as usual for many I guess in this fine country

away she goes, 

thankyou
robots


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## boxoid (25 November 2008)

Hey everyone,
I've been lurking here for over two months and I've decided it's time to post with my dilemma. 

I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.

I'm keen to make the jump at some point to purchase a house and have been patiently waiting for the last couple of years for prices to either drop or stabalise, realistically I should have bought two years ago prior to the massive price rises, but I didn't.

Do you think that prices will drop in the ACT or will they remain stable because of the government and defence housing requirements?

Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government?

Or should I sit tight keep saving and just wait a little longer?

boxoid


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## numbercruncher (25 November 2008)

Hello 

Bit of stress getting around apparently ?




> Rich stressed as bonuses culled
> Tuesday, 25 November 2008
> 
> Amanda Gome
> ...




http://www.smartcompany.com.au/Free-Articl...ses-culled.html


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## robots (25 November 2008)

boxoid said:


> Hey everyone,
> I've been lurking here for over two months and I've decided it's time to post with my dilemma.
> 
> I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.
> ...




hello,

gfresh has posted some great extrapolations of the buying equation and g may post again, 

if you in for the long haul go for it, go and look at new construction (off the plan) and then please please go and look at current existing apartments especially those 15-25yrs old,

save, save, save

thankyou
robots


----------



## Glen48 (25 November 2008)

Buy now and get cashtrated....save ..save... save buy in years time.


----------



## IFocus (25 November 2008)

boxoid said:


> Hey everyone,
> I've been lurking here for over two months and I've decided it's time to post with my dilemma.
> 
> I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.
> ...




Currently there no hurry, pricing wise the bias is to down side for 2009 and likely into 2010.

Ideally you buy when you can best afford a property, I think the current outlook is a move hopefully back to the mean of affordability no guarantee but the bias is in that direction.

No matter what you read here prices will fall or at least soften as the economy slows and unemployment rises and confidence falls its a typical cycle.

Its worth doing your home work to buy the best you can afford in the best area that has shown steady consistent +10% grow over the last 30 years

If you can get you head around possible future demographics all the better


----------



## cuttlefish (25 November 2008)

boxoid said:
			
		

> Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government




Following on from Robots comment - why buy off the plan?  More often than not you end up paying a premium that might far outweigh the FHB grant.  

I would advise looking at second hand apartments and getting a good feel for prices and make sure the off the plan apartment price is competitive with established properties.  In some rare cases they are but my experience is that they are typically priced at a significant premium to established properties.   

The age of a property doesn't tend to determine its resale price - location, aspect, size, maintenance requirements are the primary drivers.  New kitchens and bathrooms are relatively easy to put in when the time is right (i.e. ideally when you are ready to sell, not at the time you buy).

There are some depreciation tax benefits for off the plan but that rarely makes up for the premium paid.  

Also location is the most important thing and usually the best locations already have existing established properties on them - new developments quite often are in a compromised location  (not always though - look at the toaster on circular key in Sydney - a good example of where off the plan buying was a great idea and provided a unique opportunity).


----------



## Glen48 (25 November 2008)

Some thing more to ponder from Alan Kohler et al


I was brought up cold on the weekend when interviewing Lend Lease chief executive Greg Clarke for Inside Business on the ABC: He said: "People are off highly leveraged vehicles and the most highly leveraged vehicle in the world is the Australian household." 

Actually, he's not quite correct. The most highly leveraged households in the world are those in the UK, where debt is 180% of annual disposable income, according to Shane Oliver of AMP Capital Investors. Australia is next on the household debt league table, at about 160% of disposable income.

Greg Clarke is from the UK and still spends a lot of time doing business there. He said: "I think the UK is going to see a once in 100 year economic event. I think it's probably looking at two to three years of recession." Australia's debt, don't forget, is not far below Britain's. 

Analysts at Merrill Lynch have put out a research report describing Australia as the most "at risk" country in the world.

Echoing what everyone now says about the Australian economy, Clarke added that the "countervailing" factor to the high leverage of Australian households is that the Chinese economy is growing at 8%, which is "pretty good". 

So we need China's domestic stimulus to work, and we need the rest of the world's governments to do their bit to soften the landing of the global economy so that China's exports don't collapse entirely. 

Like most such things, the G20 meeting in Washington over the weekend was an expensive and elaborate piece of theatre, designed to soothe our fears and "talk up" the global economy. Action was put off till next year; with luck the show would do the trick. 

In the same vein, Finance Minister Lindsay Tanner was on the ABC's Insider's program yesterday, refusing even to utter the word "deficit" for fear of harming confidence. No one in the government will mention the word for that reason, even though we all know a deficit is both inevitable and necessary. 

The three forecasts for Australian GDP growth next year are: Treasury 2%; IMF 1.8%; Reserve Bank 1.5%. Bear in mind that Treasury's explanation for having a higher forecast than the Reserve Bank is that it is able to factor in rate cuts that the Reserve can't.

*****

This is undoubtedly one of the things Australia has going for it: its comparatively high interest rates offer plenty of scope for cutting. Money markets are pricing in a 100 basis point cut in the official cash rate in December. Whether or not that occurs, the cash rate target will be below 4% before long and probably at 3%. (It is now 5.25%.)

The other thing that we're supposed to have going for us - a big federal budget surplus - is disappearing fast. 

As the global economy loses momentum far more quickly than anyone expected, with Europe in recession already, today's announcement that Japan has gone into recession, the UK headed for something approaching depression and China slowing down to some extent at least, the surplus has probably gone already.


----------



## chops_a_must (26 November 2008)

boxoid said:


> Hey everyone,
> I've been lurking here for over two months and I've decided it's time to post with my dilemma.
> 
> I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.
> ...




Canberra probably has one of the most unusual dynamics in the housing industry in Australia. Always a squeeze on rentals, as no-one wants to buy there, but a lot of highly paid workers with secure employment make it a good rental market.

Have you thought about getting something slightly larger to be able to take on someone to pay rent, at the same time as paying it off? There are some nice places in Canberra going up, or have recently gone up, that are quite large and nice apartment types.

Cheers.


----------



## Beej (26 November 2008)

chops_a_must said:


> Canberra probably has one of the most unusual dynamics in the housing industry in Australia. Always a squeeze on rentals, as no-one wants to buy there, but a lot of highly paid workers with secure employment make it a good rental market.
> 
> Have you thought about getting something slightly larger to be able to take on someone to pay rent, at the same time as paying it off? There are some nice places in Canberra going up, or have recently gone up, that are quite large and nice apartment types.
> 
> Cheers.




Now that is some good advice! When I was younger and bought my first place, I had flat-mate(s) in there most of the time paying my mortgage off for me  Works a treat!



			
				boxoid said:
			
		

> Do you think that prices will drop in the ACT or will they remain stable because of the government and defence housing requirements?




Re the timing right now, there is no particular need to rush in, but if you find the place you want in a location you like, and can negotiate a reasonable price (where the numbers work for YOU), then I'd say go for it. But remember it is a buyers market, and is likely to remain that way until the economy picks up some time in the future. 

EDIT: Of course Canberra is a bit of a wild card in some respects, as it can be driven by different factors that may be out of phase with the broader economy.

Cheers,

Beej


----------



## Mofra (26 November 2008)

boxoid said:


> I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.



Howdy,

Might be worth crunching some numbers if you are keen on an off the plan property - it might be cheaper for you to buy as an investor, take advantage of deductability of interest, depreciation & holding costs, and continue to rent. FHOG is a nice carrot but over a cycle of a few years you still may come out in front as an investor rather than an occupier. With a higher net monthly cashflow, you will also have a little more in your pocket for other investments and/or living expenses. You can also consider living there for 12 months to obtain the FHOG, then moving out and then treating the property as a rental.

Good luck


----------



## gfresh (26 November 2008)

..depends if you get stamp duty exemptions on PPOR in Canberra whether worth living there 12 months. In QLD basically no stamp duty at all for FHB primary residence - but have to live there 12 months.

Ahhh Goldcoast, beautiful one day... in heavy debt the next:




> http://news.theage.com.au/business/mortgage-stress-in-vaucluse-gold-coast-20081126-6huf.html
> 
> Mortgage stress in Vaucluse, Gold Coast
> 
> ...


----------



## Ageo (26 November 2008)

Pommiegranite said:


> If RE's success is linked with the big 4 bank's success, then why would anyone take a 5% yield in property at the top of a RE boom, when instead you can buy ANZ stock 50% off, with a 15% yield?




I wonder if ANZ will stick to paying the same dividend thow with all this mess (and loss in profits)? can anyone confirm this?


----------



## Beej (26 November 2008)

Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2

Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread! 

Cheers,

Beej


----------



## numbercruncher (26 November 2008)

Beej said:


> Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2
> 
> Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread!
> 
> ...




Same chap called a crash in 2004 ...



> Prepare for a property crunch
> By Ross Gittins
> June 29, 2004




http://www.theage.com.au/articles/2004/06/28/1088392600154.html

Maybe hes Bipolar ?


----------



## wayneL (26 November 2008)

Beej said:


> Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2
> 
> Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread!
> 
> ...



Deja Vu....

UK bulls tried to use the same arguments.


----------



## Beej (26 November 2008)

wayneL said:


> Deja Vu....
> 
> UK bulls tried to use the same arguments.




Yes well, that was obviously silly then because the UK property market was and is completely different to AU and driven by many different factors and circumstances! 

Beej


----------



## aleckara (26 November 2008)

wayneL said:


> Deja Vu....
> 
> UK bulls tried to use the same arguments.




Have to agree with this. The real truth though is that no one here really knows. We only know risk factors. The expected probability is of course a slight down, but there are other cases that could easily happen. The housing market is very illiquid and if unemployment keeps creeping up then the majority of the market doesn't matter, just the sellers coming in vs buyers and there isn't many of them in any markets atm - just that the sellers are holding on. You could say there is pent up demand (off market demand) but you could also say there is investors holding on (off market supply).


----------



## numbercruncher (26 November 2008)

Is Australia driven by our booming Labour market ?? 




> Demand for skilled workers continues to weaken in a further sign that unemployment will rise in coming months.
> 
> The Department of Education, Employment and Workplace Relations (DEEWR) skilled vacancies index in November dropped 4.8 per cent, to be 29.1 per cent lower than a year earlier.
> 
> ...




http://news.smh.com.au/business/skilled-vacancies-drop-48-in-november-20081126-6i66.html


----------



## Beej (26 November 2008)

numbercruncher said:


> Same chap called a crash in 2004 ...
> 
> http://www.theage.com.au/articles/2004/06/28/1088392600154.html
> 
> Maybe hes Bipolar ?




Many people here were making the crash prediction that far back too! And in 3-4 years we will be looking but at this thread in the exact same light 

PS: That 2004 article doesn't actually predict a national housing market crash at all anyway, it seemed to be talking more specifically about the Melbourne inner city unit glut at that time, and prediciting pain for negatively geared investors in those types of properties specifically, also stating he thought OOs would be fine:



			
				RossGittins said:
			
		

> There's little doubt the cycle's correction phase will involve big falls in house and apartment prices, and I expect thousands of negatively geared investors to do a lot of dough. But I don't expect much damage to owner-occupiers and, hence, the macro economy.
> 
> Of course, no one can be sure whether the landing will be soft or hard. All we can say is we won't know until well after the federal election.




Cheers,

Beej


----------



## Pommiegranite (26 November 2008)

Beej said:


> Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2
> 
> Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread!
> 
> ...




*Soft Landings*

2 men are pushed out an aeroplane, one with a parachute and one without.

The victim with the parachute represents a property where the owner has a job, and therefore survives the fall. 

The jumper without a parachute represents a property where the owner has just lost his job, and therefore dies.

Soft landing or not, the guy with the parachute has plumetted the same amount as the guy without the parachute.

Its not how soft the landing is, its about how far the ground is.


----------



## numbercruncher (26 November 2008)

Well said Pommie


----------



## Beej (26 November 2008)

Pommiegranite said:


> *Soft Landings*
> 
> 2 men are pushed out an aeroplane, one with a parachute and one without.
> 
> ...




An amusing, but completely irrelevant analogy!

PS: A better analogy would say the soft landing guy is the pilot - who stayed in the air after the other two jumped out (of the market!) 

Beej


----------



## ROE (26 November 2008)

Meanwhile, the once booming Perth property market has recorded its third consecutive quarterly fall in the median house price - a phenomenon not seen in 25 years - as talk of a recession eats into consumer confidence.

Real Estate Institute of Western Australia president Rob Druitt said the Perth market was moving into uncharted territory with a combination of falling house prices and dwindling sales. 

--dont we have migrant keep coming to WA for work and they have shortage of accommodation there.. how can house price going backward there  these guys must be bull****ing, it cant be true, how price double every 7 years.


By dollar value, the worst performing area is now Helensvale on the Queensland Gold Coast, but Sydney's affluent eastern suburbs also make the list.

"The highest average mortgage size for loans that are defaulting is in Bronte, on the eastern beaches of Sydney, where the average loan defaulting is $1.1 million," Mr McCarthy said.

-- this is a nice rich suburb everyone want to live in, how can price drop, it's impossible... How price double every 7 years.

and of course the good old argument WA and QLD is different from other states 
like I said debt deflation is universal it doesnt care where you live in the world.


----------



## chops_a_must (26 November 2008)

There is no housing shortage. It's a furphy.

A whole heap of dwellings seem to come on the market early last year here.

But what I think is interesting, WA has been dragging the whole Australian economy along with it the last few years...yet everywhere else has gone along with it in terms of asset prices... yet wont come down with it.  That argument confuses me.

Not many other places have had the wages growth that we've had, yet they are being priced as if they had.

Occupancy will become the big issue here now though. I live in a high specuvestor, rental area, and the amount of properties for sale around here is enormous. And not many of them are selling at all.


----------



## gfresh (26 November 2008)

I would like to know where these properties are going too.. this is what doesn't stack up for me. 

I can pick suburbs on the GC with close to 300 properties for sale presently. Who is going to buy them? Who are the sellers? Where are all the hordes of young FHB's waiting to buy (on the goldcoast much older demographics) ? How long can they sit there? 

Surely a property listed, removed, relisted, and sitting there for months must have a motivated seller that has to meet the market eventually. Seeing as they are persisting with the sale process, means they must require a sale. There are some here that have been on the market for some 6 months, a long time to hope for a turnaround. 

Really, if interest rates are on their way down, demand is large, everybody has manageable debt, and prices are reasonable (as is claimed), they should all be selling themselves very easily.


----------



## gfresh (26 November 2008)

NZ's largest bank now requires 20% deposits as of Thursday

So... how long before that happens here? What makes us so special? 

http://news.theage.com.au/business/anz-national-tightens-home-lending-rules-20081126-6ids.html



> ANZ National, the largest bank in New Zealand, is requiring people buying a house to have a 20 per cent deposit.
> 
> The policy, which applies from Thursday to new loan applications, is a tightening from its previous position of a 10 per cent deposit.
> 
> ...


----------



## Nyden (26 November 2008)

gfresh said:


> NZ's largest bank now requires 20% deposits as of Thursday
> 
> So... how long before that happens here? What makes us so special?
> 
> http://news.theage.com.au/business/anz-national-tightens-home-lending-rules-20081126-6ids.html




Is it even 10% here; what with the first home buyers grant? I seem to recall commercials offering no deposit ... almost like Harvey Norman  ... wish they offered no interest for 2 years as well!


----------



## ROE (26 November 2008)

gfresh said:


> I would like to know where these properties are going too.. this is what doesn't stack up for me.
> 
> I can pick suburbs on the GC with close to 300 properties for sale presently. Who is going to buy them? Who are the sellers? Where are all the hordes of young FHB's waiting to buy (on the goldcoast much older demographics) ? How long can they sit there?
> 
> ...




We are different mate, our house price wont fall, people are just going to buy our property at higher price than we buy last year

that the jingle people give when they denied the fact..we don't know why it wont fall but it wont fall because we are different.
We are not Japan, or US or UK or Europe or like our neighbor NZ

we are Aussie oi oi oi.

I wonder where do they get the cash from? a tree out in the backyard?

Let take a mining boom not long ago ..stronger for longer was on everyone lips..China will consume us all, if it's not China, it will be India, then Vietnam. Oops what happen now look like China doesn't want our stuff any more, where the hell is India and Vietnam damn they don't seem to show up on the radar either

I quote oversea stuff  too often, from now on I will quote Aussie stuff.
so they can tell we live in different states until it hits their states then I don't know what excuse they use next..we are in different suburbs?


----------



## Nyden (26 November 2008)

ROE said:


> I quote oversea stuff  too often, from now on I will quote Aussie stuff.
> so they can tell we live in different states until it hits their states then I don't know what excuse they use next..we are in different suburbs?




Different house numbers mate, 30-50 won't fall 20% just because some from 1-29 have :


----------



## ROE (26 November 2008)

Beej said:


> Many people here were making the crash prediction that far back too! And in 3-4 years we will be looking but at this thread in the exact same light
> 
> PS: That 2004 article doesn't actually predict a national housing market crash at all anyway, it seemed to be talking more specifically about the Melbourne inner city unit glut at that time, and prediciting pain for negatively geared investors in those types of properties specifically, also stating he thought OOs would be fine:
> 
> ...




Actually house price doesn't need to fall for people money to go down the toilet because most borrow heavily and negative gear, so every year you subsidize someone rental and your money go down the toilet.

Should the unfortunate happen to those people, ie divorce, sick, out of a job..many years of money going down the toilet plus fore closure will ensure they drowned for many years to come

but just in case house price fall as well they are truly in the hell hole.

what debt give you in a boom it can also take it away in a bust and a whole lot more.

Ask Rupert Murdoch if you ever meet him, he tell you what debt can do to you  ...he been through it and throught his sheer charm and luck he just manage to escape the hell hole...and vouch to never touch the leverage beast again


----------



## joeyr46 (26 November 2008)

have seen a lot of things about supply demand driving prices more supply less demand = lower prices 
More demand less supply = higher prices
Simple fundamentals
House prices are hard to judge because of skewed or wrong facts about supply demand but interest rates are simple (forget the idea that the fed says what interest rates are they follow along, rates are really set by supply demand just like everything else) when money is being borrowed rates rise (one of the assests we buy with the money is houses, there price goes up If we,re not borrowing money rates come down we don't buy houses as well as other assets.
Prices don't fall immediately but they do come down if the supply exceeds demand (or ability to buy)  and that means if we have too much debt already they will come down like everything else as we repay debt in the next 4 to 5 years. If your an owner occupier (debt free you don't care or should'nt) but if you have mortgage as long as your still employed lower interest rates will help you pay it off sooner and as long as you stop thinking interms of your house being an investment the value doesn't matter. It's just a figure


----------



## apra143 (26 November 2008)

gfresh said:


> I would like to know where these properties are going too.. this is what doesn't stack up for me.
> 
> I can pick suburbs on the GC with close to 300 properties for sale presently. Who is going to buy them? Who are the sellers? Where are all the hordes of young FHB's waiting to buy (on the goldcoast much older demographics) ? How long can they sit there?
> 
> ...




Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.

I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen 

Maybe a $300k property is more in my price range. Even then, job security (or ability to find a new job if I lost my current one) would be my #1 concern. Not touching the property market until the employment situation improves, I'd imagine others buyers would be doing the same thing. The improved FHB grant and rate cuts are simply not enough.

Wouldn't most FHB's be GenY's who have HECS debt and possibly a car to pay off (not to mention other credit card debts)? They would also be entering a very competitive global job market in possibly the worst financial conditions ever faced, with starting salaries in the $50k-$70k range. Let's not even touch the crazy prices for rent or property. It's hard to imagine such people even considering shouldering another ball and chain (aka mortgage), let alone starting a family. The mind boggles


----------



## prawn_86 (26 November 2008)

Nice post Apra.

I am a bit younger than you, just coming out of uni next yr, and i know the odds of me getting a job in my industry are pretty slim, and even if i do i could be gone pretty quickly if this global meltdown continues.

I am lucky enough to have a partner, but we will just be diligently saving (the diff between rent and mortage plus a bit extra)for 5 or so years before we even consider buying a PPOR


----------



## robots (26 November 2008)

apra143 said:


> Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.
> 
> I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen
> 
> ...




hello,

hope everyone having a great day,

and rent is not a ball and chain? i am sure the pensioners and retiree's may have a different view 

as many keep showing that graph practically no-one saves, but you doing well man

think about 20yrs, 25yrs or 30yrs down the track you will be 45+ and maybe living rent free as such, great position to be in even if that is your only venture into RE

keep up the good work, it gets easier

thankyou
robots


----------



## prawn_86 (26 November 2008)

robots said:


> hello,
> 
> hope everyone having a great day,
> 
> ...




Possibly your most readable and understandable post to date Robots


----------



## Indie (26 November 2008)

apra143 said:


> Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.
> 
> I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen
> 
> ...





You are going to do very well with such a considered and unemotional approach to investing.


----------



## Temjin (26 November 2008)

apra143 said:


> Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.
> 
> I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen
> 
> ...




Well done apra. Your thinking alone will put you far ahead of the pack. Unfortunately, most people don't think like that because emotion tend to overpower them. The need to buy a house is just too strong to resist for them, and regardless of how unaffordable it is.


----------



## numbercruncher (26 November 2008)

I see the " handout crew " that Von Norman and Robots dislike so much are at breaking point ( like the Goverments budget ? ) ......




> The welfare sector says it's at breaking point and needs an immediate $300 million cash injection to keep services running.
> 
> Representatives of the social service sector met in Canberra on Wednesday to nut out a plan to deal with the financial crisis.
> 
> *The sector says demand for services like housing, counselling and emergency relief has more than doubled over the past few months.*




http://news.ninemsn.com.au/article.aspx?id=672255


----------



## Mofra (26 November 2008)

numbercruncher said:


> I see the " handout crew " that Von Norman and Robots dislike so much are at breaking point ( like the Goverments budget ? ) ......



You quoted demand for housing! 
NC, you're supposed to be praying for widespread misery & destitution!

You're gonna get kicked out of the bears club.... :


----------



## chops_a_must (26 November 2008)

Mofra said:


> You quoted demand for housing!
> NC, you're supposed to be praying for widespread misery & destitution!
> 
> You're gonna get kicked out of the bears club.... :




I think it means demand for emergency housing for those fleeing violence and eviction etc. Which has been basically non-existent for a while now.


----------



## ROE (26 November 2008)

apra143 said:


> Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.
> 
> I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen
> 
> ...




You be millionaire and debt free soon enough with that sort of thinking   nice and slow no need to run when you cant walk yet but alas most people learn to run before they can walk, now they pay the price of tripping over


----------



## robots (26 November 2008)

hello,

"The sector says demand for services like housing, counselling and emergency relief has more than doubled over the past few months."

thats a clear explanation, sure put domestic violence into emergency relief but the rest can get a job and do it like everybody else,

unemployment still under 5%, wow under 5%

we will accept you Numbercruncher when the bears boot you out, 

thankyou
robots


----------



## YChromozome (26 November 2008)

ROE said:


> You be millionaire and debt free soon enough with that sort of thinking   nice and slow no need to run when you cant walk yet but alas most people learn to run before they can walk, now they pay the price of tripping over




I don't know why people fear recessions and depressions. They simply take from the people who thought they knew what they were doing and give it to the people who do know what they are doing.

As for the Sydney Morning Herald; Do they know what they are doing?




Signed,

Confused.


----------



## chops_a_must (26 November 2008)

robots said:


> sure put domestic violence into emergency relief but the rest can get a job



That's the problem numbnuts, neither group can get shelter.


----------



## ROE (26 November 2008)

numbercruncher said:


> I see the " handout crew " that Von Norman and Robots dislike so much are at breaking point ( like the Goverments budget ? ) ......
> 
> 
> 
> ...




Charity should start building cheap housing accommodation and cater for the needy .. Housing should be for shelters , the rest of the money should be invest in infrastructure and other useful purposes other than pure speculation on capital gain.


----------



## robots (26 November 2008)

chops_a_must said:


> That's the problem numbnuts, neither group can get shelter.




hello,

you talking about evictee's? go rent another place, thats the choice they have made 

plenty for rent you keep telling us, re.com.au is loaded with all sorts

thankyou
robots


----------



## chops_a_must (26 November 2008)

robots said:


> hello,
> 
> you talking about evictee's? go rent another place, thats the choice they have made
> 
> ...




I'm talking about emergency accommodation having a waiting list of up to 12 months in a lot of areas. 

You clearly live on a different planet robots. 

No idea.


----------



## robots (26 November 2008)

hello,

the salvo's, mission's, church groups are absolutely loaded

they are chameleon's, instead of selling off properties why don't they develop into low cost housing for there punters,

they wont because it will cost them a fortune in maintenance, keep your money in pocket and let these groups run themselves

thankyou
robots


----------



## robots (26 November 2008)

chops_a_must said:


> I'm talking about emergency accommodation having a waiting list of up to 12 months in a lot of areas.
> 
> *You clearly live on a different planet robots.*
> 
> No idea.




hello,

thats right

thankyou
robots


----------



## chops_a_must (26 November 2008)

robots said:


> hello,
> 
> the salvo's, mission's, church groups are absolutely loaded
> 
> ...



WTF? How can you say something like that?

When you choose to join the real world robots, let us know, hey.

I really would laugh if you came a cropper for the disdain you show for people. The world is much better off without the attitude you display, that's for sure.

To back my point up. This was a pretty easy find on google for instance:




> Posted April 10, 2008
> 
> A not-for-profit housing organisation in Western Australia's great southern has warned Albany is in desperate need of short-term crisis accommodation for homeless people.
> 
> ...


----------



## robots (26 November 2008)

hello,

get some wealth figures on the church groups for instance, many of them have more coin than Buffet,

they have numerous divisions and it astonishes me they dont themselves build more gear if thats there operation (helping people)

cycling around i see these places getting sold off

thankyou
robots


----------



## robots (26 November 2008)

hello,

man, i would be homeless too if i didnt get up mon-fri and go to work 

thankyou
robots


----------



## ROE (26 November 2008)

robots said:


> hello,
> 
> get some wealth figures on the church groups for instance, many of them have more coin than Buffet,
> 
> ...




Church group are not charity, they serve a different purpose...Church money are for spread the word of god mainly and charity is something they do as well but their main purpose is spreading god's work.

Whether you like it or not is another question but every group has their purpose.. Coffee business group promote drink coffee, Woolworths promote fresh food.

People like Hardly Normal promote animosity against disadvantage people.

Charity is there to help people in desperate need and these guys do it for free and they need all the support they can get.


----------



## cuttlefish (26 November 2008)

robots said:


> the salvo's, mission's, church groups are absolutely loaded




I don't know about the others in that list, but there is no doubt the church is loaded ... look at the prime land that they own (check out where the worlds churches are located).  Half of Sydney North Head's luxury houses are on land leased from the church - its probably over a $100 million worth of land in that pocket alone (possibly much much more).  People pay a million just for a lease on a block of land let alone freehold.

Of course that doesn't help the people that do need the crisis accommodation ... and unfortunately society is unlikely to improve in any hurry on that front.


----------



## chops_a_must (26 November 2008)

robots said:


> hello,
> 
> get some wealth figures on the church groups for instance, many of them have more coin than Buffet,
> 
> ...




What part of "not-for-profit" don't you understand?  

Any money they have, gets spent on their causes. They don't do anything else.

Have you ever done any charity work knob-bots? I'm not talking mickey mouse stuff like red cross etc, I mean serious nitty gritty charity work.


----------



## ROE (26 November 2008)

cuttlefish said:


> I don't know about the others in that list, but there is no doubt the church is loaded ... look at the prime land that they own (check out where the worlds churches are located).  Half of Sydney North Head's luxury houses are on land leased from the church - its probably over a $100 million worth of land in that pocket alone (possibly much much more).  People pay a million just for a lease on a block of land let alone freehold.
> 
> Of course that doesn't help the people that do need the crisis accommodation ... and unfortunately society is unlikely to improve in any hurry on that front.




that the trouble with people, they find excuses not to help..oh the churches is loaded they don't need help or this person is this  and so and so has house on the harbor, anything but dig deep.


why not just accept that if I just give some of that may go to someone who really need it..When I give I dont give a ****, some of that will go to the needed, yes some of that will filled up someone coffer but 

if everyone question and make excuses to make them feel better for not helping then well they will never give anything to anyone and Charity is a very lonely place.


----------



## robots (26 November 2008)

chops_a_must said:


> *What part of "not-for-profit" don't you understand?*
> 
> Any money they have, gets spent on their causes. They don't do anything else.
> 
> Have you ever done any charity work knob-bots? I'm not talking mickey mouse stuff like red cross etc, I mean serious nitty gritty charity work.




hello,

exactly "not for profit", they could have $1 in the bank or $10bil in the bank its still not for profit and call on the Gov to step in while the exec's at the joint pump up the $

no, 

thankyou
robots


----------



## prawn_86 (26 November 2008)

ROE said:


> that the trouble with people, they find excuses not to help..oh the churches is loaded they don't need help or this person is this  and so and so has house on the harbor, anything but dig deep.
> 
> 
> why not just accept that if I just give some of that may go to someone who really need it..When I give I dont give a ****, some of that will go to the needed, yes some of that will filled up someone coffer but
> ...




This is a great post ROE. People just need to assume that at least some of the money they give will reach its target. Too many people say "oh not enough money goes to the cause" and then dont give anything 50% of 0 is still 0, whereas 50% of $1 is 50c.

Its not that hard to give really, and we should be thankful if we are more fortunate than others.

I give 10% of my Net income (after rent, food and utility bills) to charities of my choice. If i can as a student there are many more people out there who could...


----------



## cuttlefish (26 November 2008)

ROE]that the trouble with people said:


> This is a great post ROE. People just need to assume that at least some of the money they give will reach its target. Too many people say "oh not enough money goes to the cause" and then dont give anything 50% of 0 is still 0, whereas 50% of $1 is 50c.
> 
> Its not that hard to give really, and we should be thankful if we are more fortunate than others.
> 
> I give 10% of my Net income (after rent, food and utility bills) to charities of my choice. If i can as a student there are many more people out there who could...




A couple of points.   Firstly ... don't make assumptions about the amount of money people do or don't give to charity based on the facts they provide about the wealth of the catholic church.

Actually ... thats my only point.


----------



## Naked shorts (26 November 2008)

Beej said:


> Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2
> 
> Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread!
> 
> ...




Give me $2000 and i can get any crap you want in the SMH. Why do you read that? honestly.




boxoid said:


> Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government?
> 
> Or should I sit tight keep saving and just wait a little longer?
> boxoid




You have 20k...You have three options.

1. Buy your house on debt and pay off your bank manager's new Porsches for 10+ years.
2. Buy your house, let flatmates pay off your bank managers Porsches (as others on this thread have suggested)
3. Continue posting here, read everything of this forum, learn to trade and get your bank manager to buy your old Porsches

I appologise for my ignorance to your situation.


----------



## chops_a_must (26 November 2008)

prawn_86 said:


> I give 10% of my Net income (after rent, food and utility bills) to charities of my choice. If i can as a student there are many more people out there who could...



Pretty much.

I'm sure I've given more to charities as a poor student in the past, and continue to do so on a relatively low income, than most people here do.

A seriously piss poor showing on these boards by people who really have done pretty well, and could give a tiny amount, that would probably amount to more than what you or I could.

The sad thing is, and the reality of the current position of the world, that some of the people from here, probably are, or are going to be living on the street over the next few years. That really is the situation that we are faced with. The arrogance and attitude when faced with the reality of this is absolutely appalling.


cuttlefish said:


> A couple of points.   Firstly ... don't make assumptions about the amount of money people do or don't give to charity based on the facts they provide about the wealth of the catholic church.
> 
> Actually ... thats my only point.



Secondly, you have not given any indication as to sympathy for the most needy in society at all. Rather, you have taken the ground of someone admittedly with a strong dislike for those in society most disadvantaged.

I really do not hope that is your actual position, but it does appear it is.

Thirdly, there are other organisations that you can give to that aren't church based, or are in the very least multi-denominational that work in this field.


----------



## wayneL (26 November 2008)

A couple of recent articles for your amusement:

House prices drop £100,000 in two WEEKS as sellers race to secure sales before Christmas

Asking prices for homes are being slashed by up to £100,000 to secure sales in the run-up to Christmas.
In the last two weeks, *sellers have finally faced up to the "new reality" *of the depressed London market a*fter months of denial*, figures reveal today.
They show that hundreds of asking prices have been dramatically cut in the past fortnight, with reductions in the two most expensive boroughs averaging more than £100,000. 

Dubai's Palm Jumeirah sees prices fall as crunch moves in
Property prices on the Palm Jumeirah, the island in Dubai that has been dubbed the ‘eighth wonder of the world’,* have plummeted by as much as 40pc since September* amid fears that the global credit crisis is stalling the emirate’s economy.


Edinburgh house prices fall 11.4 per cent
Scotland's property market succumbs to the crunch

It's official. The credit crunch now has Edinburgh in its grips. More than £20,000 has been wiped off the average value of an Edinburgh home this year, according to The Edinburgh Solicitors Property Centre, and the number of homes being sold has halved. (EDINBURGH WAS SUPPOSED TO BE IMMUNE)


House price falls hit 20pc
House prices have already fallen by 20pc from their peak, according to one of Britain's largest property websites.


----------



## wayneL (27 November 2008)

...and the **** is only just starting to hit the fan.

Unemployment is going to skyrocket all over the west.


----------



## cuttlefish (27 November 2008)

chops_a_must said:


> Secondly, you have not given any indication as to sympathy for the most needy in society at all. Rather, you have taken the ground of someone admittedly with a strong dislike for those in society most disadvantaged.
> 
> I really do not hope that is your actual position, but it does appear it is.
> 
> Thirdly, there are other organisations that you can give to that aren't church based, or are in the very least multi-denominational that work in this field.




Chops - I probably don't give as much to charity as I should but I do provide to some worthwhile causes (well I believe them to be anyway).  

Wouldn't surprise me if Robots does as well.

I'm not about to relate a life story but I'm pretty sure I'm not naive to the realities of life and the shi t that some people go through.


----------



## chops_a_must (27 November 2008)

cuttlefish said:


> Chops - I probably don't give as much to charity as I should but I do provide to some worthwhile causes (well I believe them to be anyway).
> 
> Wouldn't surprise me if Robots does as well.
> 
> I'm not about to relate a life story but I'm pretty sure I'm not naive to the realities of life and the shi t that some people go through.



That's all I wanted to know. 

And may you or I in the future, never be in that position. 

And may all your trades on gold... well... turn to gold.


----------



## wayneL (27 November 2008)

The folly of believing in the never ending boom:

Diary of a repossession: One couple describes the agony of losing their luxury £400,000 home in the credit crunch


----------



## mazzatelli1000 (27 November 2008)

wayneL said:


> The folly of believing in the never ending boom:
> 
> Diary of a repossession: One couple describes the agony of losing their luxury £400,000 home in the credit crunch




Wow, like the market, when things go down, it goes down hard!!!

Lost their business and house!!


----------



## numbercruncher (27 November 2008)

wayneL said:


> The folly of believing in the never ending boom:
> 
> Diary of a repossession: One couple describes the agony of losing their luxury £400,000 home in the credit crunch




Doh, pretty much another case of the greedy becoming the needy .... they pretty much thought and acted along the lines of your average punter thou it seems - irrational to us bears/realists ..... but oh well they have theie house and a roof over their heads ...


----------



## Mofra (27 November 2008)

cuttlefish said:


> *Wouldn't surprise me if Robots does as well.*
> 
> I'm not about to relate a life story but I'm pretty sure I'm not naive to the realities of life and the shi t that some people go through.



After reading the last page it'd surprise me


----------



## Aussiejeff (27 November 2008)

wayneL said:


> A couple of recent articles for your amusement:
> 
> House prices drop £100,000 in two WEEKS as sellers race to secure sales before Christmas
> 
> ...




WOW!

Not the headline.... that's passe.

But, [size=+2]The Ghost Of WayneL[/size] is ba-a-a-ack! :bananasmi

Now THAT'S good news!!  


FYI, in Wodonga ("Wodonga? Where TF is _Wah-don-gah????_" I hear you ask - ummm, it is in the Far North East of Mexico (err.. Victoria to you Cockroaches, Sandgropers, Crows and Cane Toads) I have noticed the Real Estate section in our local community newspaper appears to be becoming crammed full of *"NEW LISTING"*, *"PRICE REDUCED"* and *PRICE SLASHED* offerings. There were only five "SOLD" listings in the 20 odd pages.

In comparison around the same time last year the same magazine pages were packed full of "SOLD" and "HOUSES WANTED - URGENT" listings.

Oh what a difference a year makes.

All we need now is for the banks to inevitably up their loan deposit % rates to offset their reduced loan % rates and the circle of gloom will be complete....


----------



## professor_frink (27 November 2008)

wayneL said:


> The folly of believing in the never ending boom:
> 
> Diary of a repossession: One couple describes the agony of losing their luxury £400,000 home in the credit crunch




what a sad story

Really quite scary that people who are well and truly old enough to remember what it's like to live through a recession would leverage up their home to buy and IP, then a month later, leverage up even more to buy a business, then turn around and splurge on a couple of new cars at the same time.


----------



## prawn_86 (27 November 2008)

professor_frink said:


> Really quite scary that people who are well and truly old enough to remember what it's like to live through a recession would leverage up their home to buy and IP, then a month later, leverage up even more to buy a business, then turn around and splurge on a couple of new cars at the same time.




Mankind in general doesnt learn from their mistakes/the past, hence why we are doomed to send ourselves extinct eventually


----------



## gfresh (27 November 2008)

George Santayana: Those who cannot remember the past are condemned to repeat it. 

Interesting read above.. 



> November 2008: We are reeling with anger. HBOS has accepted an offer of just *£255,000* for Richmond House. We can't believe how uncaring it is to sell the house for such a ridiculous price.




I feel no sympathy whatsoever however  How can you be "reeling in anger" at that price you greedy little turds?!!



> March 2006: Two days later, our offer of *£159,500* was accepted, and within a week we'd found a buyer for our old house. A couple of months later, we moved in.




 they've made £96k pounds (or approximately $225k in convict money) and they have the audacity to think that is still a bad price? They're lucky to even get a good premium on what they paid for it.. 

Just because the old "smart dad" failed to do proper due diligence on the business, doesn't mean they can suddenly fall back on the value of their house to save them, which they believe "should fetch" 2x what they paid for it just 2 years before. 

Hope they enjoy living in bedsits, because that is all they deserve.


----------



## Temjin (27 November 2008)

wayneL said:


> The folly of believing in the never ending boom:
> 
> Diary of a repossession: One couple describes the agony of losing their luxury £400,000 home in the credit crunch




Sad story indeed, I was hooked on the article while still at work. lol

But kudos to their sons who are willing to share the burden with their parents. Even know they are getting themselve into debt too. 

I bet a lot of stories like this will become a common place over the next 2-3 years.


----------



## wayneL (27 November 2008)




----------



## sinner (27 November 2008)

I thought it was a bit naive. RE agent calls with offer 20k off asking price (so I assume 380k GBP offer), you decline indignantly and then refuse the bank their keys several times and finally hand them in just before you're gonna get kicked out and complain 'cos by that time all you could get was just over half of asking!

Boohoo you could've taken 380, more than double what you paid and walked away 50-70 up from what the bank wanted in the end after they tacked on "equity maaaate" and reposession fees! Used this to pay off the CC and you're done!


----------



## prawn_86 (27 November 2008)

Nice vid Wayne


----------



## wayneL (27 November 2008)

sinner said:


> I thought it was a bit naive. RE agent calls with offer 20k off asking price (so I assume 380k GBP offer), you decline indignantly and then refuse the bank their keys several times and finally hand them in just before you're gonna get kicked out and complain 'cos by that time all you could get was just over half of asking!
> 
> Boohoo you could've taken 380, more than double what you paid and walked away 50-70 up from what the bank wanted in the end after they tacked on "equity maaaate" and reposession fees! Used this to pay off the CC and you're done!




The Endowment Effect causes people to check their brains at the gate.


----------



## professor_frink (27 November 2008)

sinner said:


> I thought it was a bit naive. RE agent calls with offer 20k off asking price (so I assume 380k GBP offer), you decline indignantly and then refuse the bank their keys several times and finally hand them in just before you're gonna get kicked out and complain 'cos by that time all you could get was just over half of asking!
> 
> Boohoo you could've taken 380, more than double what you paid and walked away 50-70 up from what the bank wanted in the end after they tacked on "equity maaaate" and reposession fees! Used this to pay off the CC and you're done!




if you re read the article, the agent requested them to drop the offer by 20K, it didn't say that they had an offer on it


----------



## sinner (27 November 2008)

Frinky (if I can call you that),

All I know is, if I was 50,000+GBP in debt with my unemployed husband on the verge of bankruptcy, my own weekly income of 500GBP a week not meeting nescessities or the leverage on my investment property...

If the agent called me up with any suggestion that would at least put me back in the black (realised or not), I would take it. They probably could have at least broken even on investment and equity (if not some extra for smaller debt) if they didn't behave so irrationaly and more important STUBBORNLY during this period.

Instead they held out until holding out any longer would be illegal, as is their right, fair enough, but they should not complain about the price when they exercised their right to remain in the house and refuse the bank the keys or reasonable sale they should accept the consequences (half of asking price).


----------



## professor_frink (27 November 2008)

sinner said:


> Frinky (if I can call you that),
> 
> All I know is, if I was 50,000+GBP in debt with my unemployed husband on the verge of bankruptcy, my own weekly income of 500GBP a week not meeting nescessities or the leverage on my investment property...
> 
> ...




all good sinner, you are right, they should have been trying to get rid of it for whatever they could get as quick as they could get it in those circumstances. You seemed to be making the earlier comment based on the assumption they had refused the offer, so I thought I'd point out it may have not been the case.

Cheers


----------



## sinner (27 November 2008)

Heard today from a mate on the outlier of Brisbane, rental agents are asking "off the record, can't prove a thing" in his words, to get paid up two weeks in advance even if it's not in the contract...


----------



## nomore4s (27 November 2008)

rotflmao @ Waynes video.

"I should hold a sign saying idiot above my head" lmao.

On that couple, only got themselves to blame really.
Buying a BMW and a car for the son before the business had even started to repay the money used to buy it is a bit silly imo. Also how much due diligence was done on the business? Not much by the sounds of it. Just because the business is turning over 1.3mil a year doesn't mean it is actually making a cent in profit.

Leverage even on a so called "safe investment" like property can burn you when the :fan. Alot of people are over leveraged into property now due to drawing on the equity in their homes to fund lifestyles that they really can't maintain. I think we will see alot more of this type of thing happening in the near future.


----------



## Temjin (27 November 2008)

hahah nice video there Wayne.

I saw one for the drop of gold prices not long ago using the same movie scene. It was just as funny too! 

Yep, it's definitely "different" here.


----------



## ROE (27 November 2008)

wayneL said:


>






man I couldn't stop laughing, that video was so well done..they capture all the jingles


----------



## ROE (28 November 2008)

did someone wish Hardly Normal going broke? 
http://www.australianit.news.com.au/story/0,24897,24709404-5013040,00.html


----------



## Mofra (28 November 2008)

Recovery in 09?

http://www.news.com.au/business/money/story/0,28323,24715508-14327,00.html


----------



## Aussiejeff (28 November 2008)

Mofra said:


> Recovery in 09?
> 
> http://www.news.com.au/business/money/story/0,28323,24715508-14327,00.html




Yeah, as the article indicates mainly for NEW HOME buyers. 

It's the established homes sector that is wallowing. A year or two from now you can expect some of these very same NEW HOME buyers will be joining the burgeoning queues of "established homes for sale" - whether by choice or by default as interest rates inevitably climb back up.

It's all a bit messy.

All my friends and relatives in Perth say the same thing - the ESTABLISHED homes market has gone as flat as the Perth coastline, whereas some NEW homes and some NEW units are still selling. Not much good if you already own an established home (or two or more) and are wanting or needing to sell one (or both or more).

Good luck.


----------



## numbercruncher (28 November 2008)

Mofra said:


> Recovery in 09?
> 
> http://www.news.com.au/business/money/story/0,28323,24715508-14327,00.html





Might have somethign to do with the 50k properties the Gov is supporting via the affordable rental scheme, pretty good deal for an investor ..... Investors are dumping their old rundown ****boxes and upgrading to brand new government supported ones !


It works like this if you build a new IP house/unit that rents out for 300pw in the market, Instead you rent it out to lower/middle income earner for 240pw (20pc less) - the Fed Gov gives you 6k p/a and the state gov 2k p/a. Thats 160 p/w in Gov grants for 10 years - 400pw rental return instead of the 300!.....

Dont you love the amount of Cash the Gov pours into RE !


So this is robably a temporary spike time will tell ....


----------



## gfresh (28 November 2008)

Aussiejeff said:


> It's the established homes sector that is wallowing. A year or two from now you can expect some of these very same NEW HOME buyers will be joining the burgeoning queues of "established homes for sale" - whether by choice or by default as interest rates inevitablydfclimb back up.




I agree.. as rates come down people who were waiting to jump in, will jump in, but who is going to come after that to continue the momentum? It's not going to happen without the economy booming again. 

The market will get difficult in 2009 as people lose their jobs, and the lenders really tighten up in, as we have seen in UK, and now NZ. Those under 35 (FHB bracket) have only vague memory of recessions, and many will be caught off guard. 

While the last recession ended in 1991, it wasn't until 1994 that the housing market, and in general conditions picked up again. 

I don't see things going upwards in any sustained fashion at least until 2010, with any major rises not seen until 2012. Indicators such as ABS housing finance figures should be a fairly good indicator when recovery has begun. More loans granted = more investors and people entering the market. 

The bottom no doubt will be called by the property spruikers endlessly for the next 12 months I'm sure, just as accurately as the pundits have said the sharemarket has bottomed for the last 12 months


----------



## gfresh (28 November 2008)

hehe - the challenge is on!



> 'Rate cut Rory' bets his boots on house prices
> 
> November 28, 2008 - 11:16AM
> 
> ...




http://business.theage.com.au/busin...-his-boots-on-house-prices-20081128-6mis.html

I like it


----------



## Mofra (28 November 2008)

gfresh said:


> http://business.theage.com.au/busin...-his-boots-on-house-prices-20081128-6mis.html
> 
> I like it



This is great - maybe the ABC can do a doco or two on the countdown to the big walk. I don't think we'll see any land speed records broken


----------



## xoa (28 November 2008)

Now that the budget is on the deficit highway, it'll be harder for the gum mint to prop up the housing bubble. 

It'll be interesting when the FHB grant expires early next year. :grinsking


----------



## Beej (28 November 2008)

gfresh said:


> hehe - the challenge is on!
> 
> 
> 
> ...




I can't wait to see Prof Keen on the top of the mountain in that ""I was hopelessly wrong on home prices! Ask me how" T-shirt 

Cheers,

Beej


----------



## Beej (28 November 2008)

gfresh said:


> While the last recession ended in 1991, it wasn't until 1994 that the housing market, and in general conditions picked up again.




Whilst what you say is correct, from 1991 onwards (in Sydney at least) prices did start to slowly tick up (a few % a year) between 1992 and 1994. Ie the bottom of the market was clearly hit during 1991 as the economy hit rock bottom. Good houses were also very thin on the ground then as well, meaning that although the stats showed a bottom, it was actually very difficult to find those "bargains".

Beej


----------



## numbercruncher (28 November 2008)

xoa said:


> Now that the budget is on the deficit highway, it'll be harder for the gum mint to prop up the housing bubble.
> 
> It'll be interesting when the FHB grant expires early next year. :grinsking




Very true ....


Much harder to waste cash that you dont have ! easy to loose votes when your at the helm when the economies going down the gurgler to boot ....


----------



## Temjin (28 November 2008)

Beej said:


> I can't wait to see Prof Keen on the top of the mountain in that ""I was hopelessly wrong on home prices! Ask me how" T-shirt
> 
> Cheers,
> 
> Beej




lol I also can't wait to see Rory Robertson to do the same either! In general sense, either one would just be funny to see. hah

Do anyone know how Rory Robertson came to his "less than 1% chance of house prices going below 40%"? and that it "effectively requires a meltdown of the nation's financial system"? 

Yep, his shiny, propertiary economic computer models designed by his highly paid PHDs who believe the past can predict the future and are completely ignorant of black swan events. 

Do they even realise it is these very FLAWED computer models that caused the whole subprime mess in the first place? Ohhhh, 10 degree sigma events happened, shouldn't happen in a billion years, it's impossible, but it did! doh!  

I hope he isn't putting faith in his computer model. Nassim Taleb is always right on this, black swan event will eventually kill it.

If I were Steve keen though, I wouldn't bet on it. Not that I don't faith in my own prediction, but I would be in a loss-loss situation even if I win. The public will hate me deeply for making such a gloom and doom prediction and would probably blame me for kick starting the "negative sentiment" that eventually become self-fulfilling.


----------



## chops_a_must (28 November 2008)

Temjin said:


> Ohhhh, 10 degree sigma events happened, shouldn't happen in a billion years, it's impossible, but it did! doh!



Not to mention these "10 sigma" 1 in 100 year events, have happened 4 times in the last 25 years on the markets.


----------



## MR. (28 November 2008)

Temjin said:


> If I were Steve keen though, I wouldn't bet on it. Not that I don't faith in my own prediction, but I would be in a loss-loss situation even if I win. The public will hate me deeply for making such a gloom and doom prediction and would probably blame me for kick starting the "negative sentiment" that eventually become self-fulfilling.




Not just Steve Keen / The 7:30 report, but every media outlet kick started the negative sentiment.  For weeks the media kept on going at it.  My guess (hope) some of these reporters will now start feeling the pinch from their reporting.

Although it was going to happen anyway,  the media in general did a bloody good job of kick starting the Australian property freefall.


----------



## Naked shorts (28 November 2008)

MR. said:


> Not just Steve Keen / The 7:30 report, but every media outlet kick started the negative sentiment.  For weeks the media kept on going at it.  My guess (hope) some of these reporters will now start feeling the pinch from their reporting.
> 
> Although it was going to happen anyway,  the media in general did a bloody good job of kick starting the Australian property freefall.




They are the ones who got everyone into property in the first place. Ever remember seeing "buy this area" segments on certain current affairs shows? I know i did, I also know i laughed.


----------



## robots (28 November 2008)

hello,

http://business.theage.com.au/business/nab-slashes-fixed-rates-20081128-6mr1.html

here we go brothers, gee down to 5.69% for 3yrs, awesome

hope everyone well, enjoy the night, thats all i am allowed to say

thankyou
robots


----------



## CamKawa (28 November 2008)

From tonights ABC news. Looks like the number of home loans has fallen off a bit.


----------



## CamKawa (28 November 2008)

Spot the bubble.


----------



## robots (28 November 2008)

hello,

just shows me people have woken up to the US, the biggest stooge country in the world, you only have to read ASF to see all the articles about the place

and welcome Australia, no 9mm required to go to the supermarket in Aus

thankyou
robots


----------



## Vizion (28 November 2008)

Your a funny person robots, I'm a tad confused though if your not into shares why you post so much... & I just cant decide if your serious or mad :bonk:


----------



## Temjin (28 November 2008)

Vizion said:


> Your a funny person robots, I'm a tad confused though if your not into shares why you post so much... & I just cant decide if your serious or mad :bonk:




We are all used to his comments, Vizion. It does make the thread a lot more interesting though.  He really loves his own little "world". 

But it's true that this is an AUSSIE STOCK forum, not real estate. Why isn't he venturing the Somersoft forum anyway? Lots of like minded people.


----------



## sinner (29 November 2008)

I think while I personally disagree with a lot of what robots says, to me it is more valuable to have available an opposite view to your own rather than everyone having the same view. 

This is the house prices thread, not the stock prices thread.

Keep it coming robots, you're the property bull we love to hate :


----------



## ROE (29 November 2008)

Vizion said:


> Your a funny person robots, I'm a tad confused though if your not into shares why you post so much... & I just cant decide if your serious or mad :bonk:




How dare you suggest robots buy share, shares goes up and down, property goes up forever ..


----------



## Beej (29 November 2008)

CamKawa said:


> From tonights ABC news. Looks like the number of home loans has fallen off a bit.




It's funny though how you state that the "number of home loans have FALLEN off a bit", when in fact what this chart tells you is that the RATE OF GROWTH of home loans (total value) has slowed - and yet is STILL GROWING. Ergo, there is still more total cash out there for housing purchases this year, than there was last year, and the same will apply next year etc....

Cheers,

Beej


----------



## Pommiegranite (29 November 2008)

Australian panic reaches New York Times


http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9E04E5DC1238E233A25756C1A96E9C94639ED7CF


----------



## Glen48 (29 November 2008)

I see in that article BHP shares were 15 pounds same as to days $30.00.


----------



## professor_frink (29 November 2008)

Glen48 said:


> I see in that article BHP shares were 15 pounds same as to days $30.00.




Is there a point to that comment?


----------



## Pommiegranite (29 November 2008)

Glen48 said:


> I see in that article BHP shares were 15 pounds same as to days $30.00.




Its irrelevent unless we know how many shares were on issue back then.


----------



## IFocus (29 November 2008)

Here is one for the Bot cannot say I agree today's Australian

*Signs of recovery in property market*

http://www.theaustralian.news.com.au/story/0,25197,24723428-601,00.html


----------



## Beej (29 November 2008)

IFocus said:


> Here is one for the Bot cannot say I agree today's Australian
> 
> *Signs of recovery in property market*
> 
> http://www.theaustralian.news.com.au/story/0,25197,24723428-601,00.html




The statistics presented in this article for October mirror exactly what I saw out there actually looking + selling and buying during Oct/Nov.

FYI - I'm looking at a unit in Sydney at the moment in a blue chip area close to harbour, CBD etc that is currently providing a NET (after costs) rental return of 5%. Given that there are fixed rates currently available at 4.99% (which from Dec I reckon you would be able to lock in for 3+ years), that means I could finance it 100% and be neutrally geared from day one. As rents increase it will turn quickly into a source of positive cashflow, with $0 up front capital invested by me. Plus being in a blue chip area of Sydney, I still believe that the long term capital growth prospects would be very good - at an absolute minimum inflation plus a bit, and at best a lot more than that. These are the sorts of opportunities that are out there RIGHT NOW if you get out and look - and given those numbers, I really can't see this situation lasting for too much longer.....

Cheers,

Beej


----------



## IFocus (29 November 2008)

Beej said:


> The statistics presented in this article for October mirror exactly what I saw out there actually looking + selling and buying during Oct/Nov.
> 
> FYI - I'm looking at a unit in Sydney at the moment in a blue chip area close to harbour, CBD etc that is currently providing a NET (after costs) rental return of 5%. Given that there are fixed rates currently available at 4.99% (which from Dec I reckon you would be able to lock in for 3+ years), that means I could finance it 100% and be neutrally geared from day one. As rents increase it will turn quickly into a source of positive cashflow, with $0 up front capital invested by me. Plus being in a blue chip area of Sydney, I still believe that the long term capital growth prospects would be very good - at an absolute minimum inflation plus a bit, and at best a lot more than that. These are the sorts of opportunities that are out there RIGHT NOW if you get out and look - and given those numbers, I really can't see this situation lasting for too much longer.....
> 
> ...




I think the risk is still to the down side in housing prices in some if not most sectors given we are yet to see the slowing world economy effects to fully flow into the Oz economy particularly rising unemployment.

This is more a realization for 2009 and maybe flowing into 2010.

The rapid fall in interest rates is also a guide to how nasty the RBA sees the future outlook and if they go for 1% next Tuesday then that's panic mode and IMHO time for risk aversion not risk seeking.

I think bigger opportunities will come up in 2009 / 10 and that there will be plenty of time to sort through them. 

I just cannot see a driver for a rapid recovery which will primary need to be a freeing up of easy credit if any thing credit is likely to have a tighter set of regulations steming easey flow and limiting rapid credit expansion.

Guess as always we will just have to wait and see.


----------



## IFocus (29 November 2008)

I guy I know is trying to sell his property in one of the Rockingham areas here in WA and last week the paper advertised it by mistake a $100K less than the asking price.

He had already dropped the price significantly before this

There was not one inquiry.


----------



## Beej (29 November 2008)

IFocus said:


> I guy I know is trying to sell his property in one of the Rockingham areas here in WA and last week the paper advertised it by mistake a $100K less than the asking price.
> 
> He had already dropped the price significantly before this
> 
> There was not one inquiry.




And yet the house I just sold in Sydney had over 80 people/groups look at it over only 4 weeks - go figure! Probably shows the difference between the Sydney market and others (as I keep pointing out). WA and SEQ are the main area's that got over-heated and pushed the national median price stats up in the past 2-3 years, while Sydney was much more subdued. As a result most falls in median prices from here on will come mainly from those 2 areas IMO, and Sydney (+probably Melbourne) will slowly come up from the bottom which they seem to be bouncing along about now, with some outstanding opportunities for both PPOR upgrading and investment presenting themselves.

Deals like the one I am looking at just confirm this IMO - the rental yields are getting so good that the risk of investing is lower than it has been for many a year - who can remember a time when cash-flow positive from day 1 residential R/E investment options were available in Sydney? Why become paralysed by fear of what is only short term capital risk when for zero $$ invested up front now you can set up a long term cash generation machine for yourself? Plus get long term capital appreciation as well?

Cheers,

Beej


----------



## Glen48 (29 November 2008)

Nab have online a presentation about the economy:
Try  Economic Presentation given by Spiros
> Papadopoulos, Senior Economist, nabCapital on Wednesday


----------



## numbercruncher (29 November 2008)

ANZ and NAB nowrequire 20pc deposit for NZ homebuyers ....

Hope they do the same here  - makes it real again


----------



## ROE (29 November 2008)

Beej said:


> The statistics presented in this article for October mirror exactly what I saw out there actually looking + selling and buying during Oct/Nov.
> 
> FYI - I'm looking at a unit in Sydney at the moment in a blue chip area close to harbour, CBD etc that is currently providing a NET (after costs) rental return of 5%. Given that there are fixed rates currently available at 4.99% (which from Dec I reckon you would be able to lock in for 3+ years), that means I could finance it 100% and be neutrally geared from day one. As rents increase it will turn quickly into a source of positive cashflow, with $0 up front capital invested by me. Plus being in a blue chip area of Sydney, I still believe that the long term capital growth prospects would be very good - at an absolute minimum inflation plus a bit, and at best a lot more than that. These are the sorts of opportunities that are out there RIGHT NOW if you get out and look - and given those numbers, I really can't see this situation lasting for too much longer.....
> 
> ...




good deal, get it before you price out forever or someone put in a higher price


----------



## IFocus (29 November 2008)

Beej said:


> *WA and SEQ are the main area's that got over-heated and pushed the national median price stats up in the past 2-3 years*
> Beej




Yes certainly the case here in WA


----------



## juddy (29 November 2008)

Something I'm not aware of and can't find the answer to. Just thought some of the brains on here might be able to answer it. 

In US mortgage holders can just walk away from their mortgages whereas in Aust. bankruptcy excludes mortgage and HECS fees. What about the UK?


----------



## CamKawa (29 November 2008)

juddy said:


> Something I'm not aware of and can't find the answer to. Just thought some of the brains on here might be able to answer it.
> 
> In US mortgage holders can just walk away from their mortgages whereas in Aust. bankruptcy excludes mortgage and HECS fees. What about the UK?



Dunno about the UK but I didn't realize that even going bankrupt couldn't get you out of your mortgage here.

"Going bankrupt will not cancel your mortgage, HECS repayments or court fines."
source: http://www.abc.net.au/cgi-bin/common/printfriendly.pl?/catapult/basics/s1555121.htm

Specuvestors in Australia could be in for a world of pain.


----------



## MR. (29 November 2008)

Beej said:


> WA and SEQ are the main area's that got over-heated and pushed the national median price stats up in the past 2-3 years, while Sydney was much more subdued. As a result most falls in median prices from here on will come mainly from those 2 areas




SEQ (South East Queensland) its a bit of a mess here.  RayWhite (Northern Gold Coast) auctioned 20 odd properties Wednesday just gone.  None sold prior to auction and none sold under the hammer.  First time this has happened here.  Last month was awful too, but better than this month, with two sold before auction and a few under the hammer.  Buyers here are few and far between.  Lots of lookers but few making offers of any substance.  

Properties are building up "FOR SALE" because they are slow to move. 

A house around the corner was bought as a renovator earlier this year with a recommendation by an agent.  It was renovatored, went to auction a few months ago and didn't sell.  The price was not high enough at 1.2 million.  They wanted 1.3 million.  Two months later (last month) the property went to auction "again".  The highest price after auction was 1.125 million.  The vendors didn't sell.  The house I noticed last week has no FOR SALE sign out the front and it is up for rent.  They wanted more than 1.3 million.  The last offer was at 1.125 million.  They are not following the market down.  
I wonder how this will end after the tennants do a bit of damage.

As for the "Australian" article above. I assume there's a conflict of interest here by the interviewed.


----------



## robots (29 November 2008)

hello,

fantastic news out from the recovery article, Melbourne plodding along well and with the colonel at RBA reducing IR for the "money renters' next week paradise is rolling on man,

its going to be an embarrassing sight for people with all those dollars in those ing direct and other online "high interest" accounts, they will have to take "high interest" out of the marketing campaign

bloody hell what happened to the 10% interest rates for the money renter? 

no big deal brothers, rent, buy, squat, mobile home, trailer park, tent, tee pee its all available in this great place, 

thankyou
robots


----------



## So_Cynical (29 November 2008)

robots said:


> hello,
> 
> fantastic news out from the recovery article, *Melbourne* plodding along well and with the colonel at RBA reducing IR for the "money renters' next week *paradise* is rolling on man,




robots u used the words Melbourne and Paradise in the same sentence. :nono::thankyou:


----------



## robots (29 November 2008)

hello,

yes thank you

thankyou
robots


----------



## So_Cynical (29 November 2008)

Nov 29, The Age - Home buyers walking away from the top end of town.

LUXURY house buyers are walking away from deposits worth up to $400,000, preferring 
to forfeit the cash rather than pay millions more in the midst of a financial crisis.

The deposit dilemma comes as investors offload what has become a major extravagance, 
the holiday house at the beach. More than four times the number of properties are listed 
for sale in towns such as Lorne and Torquay than at this time last year.

Agents say a buyer last week failed to pay more than $3 million to settle the sale of a 
Victorian terrace in one of South Yarra's most distinguished streets after agreeing to 
buy it in July.

http://www.theage.com.au/national/h...y-from-the-top-end-of-town-20081128-6n0y.html


----------



## numbercruncher (29 November 2008)

Yes 400k is nothing for Melbournites to throw away on a wager they reckon , be it houses or crown casino - same difference !!


----------



## wayneL (30 November 2008)

FRom the Financial Times - enjoy:

http://www.ft.com/cms/s/0/408e23ec-bd8e-11dd-bba1-0000779fd18c.html?nclick_check=1



> Investors bet on record property crash
> 
> By Daniel Thomas, Property Correspondent
> 
> ...


----------



## robots (30 November 2008)

hello,

ring the bell can you when it happens in Aus, seems still plenty of money to waste on gambling,

so much for tough times, fairytale?

thankyou
robots


----------



## juddy (30 November 2008)

juddy said:


> Something I'm not aware of and can't find the answer to. Just thought some of the brains on here might be able to answer it.
> 
> In US mortgage holders can just walk away from their mortgages whereas in Aust. bankruptcy excludes mortgage and HECS fees. What about the UK?





I think I found it. Very similar to Australia from what I can see (am no bankruptcy expert). Debt must be paid through forced sale, plus any equity in property is taken to pay other debts?

Some sad stories here.

http://myvesta.org.uk/faq/categories/Bankruptcy/Property+-+UK/ 


Is that right Wayne?


----------



## xoa (30 November 2008)

wayneL said:


> FRom the Financial Times - enjoy:
> 
> http://www.ft.com/cms/s/0/408e23ec-bd8e-11dd-bba1-0000779fd18c.html?nclick_check=1




Wow.. if UK prices fall another 30%, I'm definitely going to have to move there. Speculators' pain is ordinary people's gain.


----------



## Beej (30 November 2008)

Sydney auction clearance rate 47% for the weekend - 181/382 sold: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej


----------



## ROE (30 November 2008)

One thing people haven't factor in is that housing index derivatives are going to start trading on the ASX in the next 2 years. 

That going to make housing hell more volatile and people can now short on housing bubble 

I be joining the shorter on this one if the price currently sit at this level...and if price start the decline it set the trend for shorter to come in and bell the hell out of it.


----------



## professor_frink (30 November 2008)

ROE said:


> *One thing people haven't factor in is that housing index derivatives are going to start trading on the ASX in the next 2 years. *
> 
> That going to make housing hell more volatile and people can now short on housing bubble
> 
> I be joining the shorter on this one if the price currently sit at this level...and if price start the decline it set the trend for shorter to come in and bell the hell out of it.




anyone taking bets as to how long it will be before shorting is banned on that one


----------



## 9Dragons (30 November 2008)

i agree with steve keen, perception that house price will never go down  is just insane.


----------



## ROE (30 November 2008)

9Dragons said:


> i agree with steve keen, perception that house price will never go down  is just insane.




Well Steve got 100 years of data to back him up and event unfolding for the last 100 years...the others just got popular quotes and scare tactics 

Let rephrase some jingles
House can only goes up don't know why but it just goes up 

House price double every 7 to 10 years clearly they don't understand compounding formula

Lack of supply keep price stable clearly they don't understand the instrument of debt and money supply... 

it's different here or it's different this time but as history show it does differentiate when it comes to recession or people out of money.
people dont spend, company start sacking people, people don't have money, banks tighten lending so less money flow around, down comes the price.

Buy now or be price out forever.. how can you be price out forever when house price average 3-4 times earning through out history and it likely to be the case well into the future...if it far exceed the 3-4 time earning the market will soon correct to that level.


----------



## Indie (30 November 2008)

ROE said:


> One thing people haven't factor in is that housing index derivatives are going to start trading on the ASX in the next 2 years.
> 
> That going to make housing hell more volatile and people can now short on housing bubble
> 
> I be joining the shorter on this one if the price currently sit at this level...and if price start the decline it set the trend for shorter to come in and bell the hell out of it.





As a renter I am shorting the market. My landlord is losing money every day and subsidizing my lifestyle in the process. My cash in the bank earning interest and my investments are out-performing the RE market. As Robots said: "so much for tough times"

I'm heading down to the Stokehouse for a latte with a beer chaser. Another day in paradise.....


----------



## MR. (30 November 2008)

http://www.theage.com.au/national/h...y-from-the-top-end-of-town-20081128-6n0y.html

"More than four times the number of properties are listed for sale in towns such as Lorne and Torquay than at this time last year."

I wonder what prices are being put on these properties?  I bet at this stage its at the upper end.

If *one *house in the street sells for a good sum when property is scarce.  Automatically everyone thinks their property is worth the same in that street.  But it was only one buyer which parted with the sum.  The rest of the twenty odd properties did not change hands in that street but now everyone has got a figure in their head.  Should be very familiar!   

It took one buyer to pay $150- for a share of Rio Tinto and everyone was happy because now all shares are worth $150- each.  
What is it now... $46-.


----------



## MR. (30 November 2008)

*Down with doomsayers*

http://www.goldcoast.com.au/article/2008/11/15/22941_gold-coast-real-estate.html

"People need to remember we are suffering from a financial crisis, not a property crisis," she said.


So the two arn't linked ??????????


----------



## singlefished (30 November 2008)

robots said:


> hello,
> 
> ring the bell can you when it happens in Aus, seems still plenty of money to waste on gambling,
> 
> ...






_http://au.biz.yahoo.com/081129/2/22e0q.html

*Victoria's real estate market slumps*

"People are so scared to bid and they (the buyers) are like vultures, hanging around out the front trying to carve $200,000 or $300,000 off the asking price," group director Barry Plant said.

Adding to homeowners' pain will be Real Estate Institute of Victoria figures showing Victorians have spent almost $14 million on failed auctions in less than four months._


*Ding, Ding....*


----------



## jeflin (30 November 2008)

MR. said:


> *Down with doomsayers*
> 
> http://www.goldcoast.com.au/article/2008/11/15/22941_gold-coast-real-estate.html
> 
> ...




A lot of toxic assets on the balance sheets of financial institutions arise out of the subprime mortgages. So if they aren't linked, that is an interesting perspective for me.


----------



## Glen48 (30 November 2008)

Anything connected  with money other than Gold is doomed and will go down there is no other answer, sadly until every thing collapses and re-sets at a lower price only then we can start again.
Strange how people will sit in a house dropping $20-50K PA and think they are doing the right thing yet if their supper or Caravan does the same its a disaster.
This is like some one how comes home early after getting the sack and collects the mail and find there has been no mortgage payment made for 18 mths, the house car is not insured, the supper has not been paid, bankcard has been extended to 3 times the old limit, the house re financed for 3 times the original amount, and his wife is a addicted gambler and your bank account is over drawn by many K... what do you do?... you sell what you can but there are no buyers...so you join the rest and wait years....
This will be the longest post on record and a good why to track history when the next bubble comes around.


----------



## Beej (30 November 2008)

Glen48 said:


> Anything connected  with money other than Gold is doomed and will go down there is no other answer, sadly until every thing collapses and re-sets at a lower price only then we can start again.
> Strange how people will sit in a house dropping $20-50K PA and think they are doing the right thing yet if their supper or Caravan does the same its a disaster.
> This is like some one how comes home early after getting the sack and collects the mail and find there has been no mortgage payment made for 18 mths, the house car is not insured, the supper has not been paid, bankcard has been extended to 3 times the old limit, the house re financed for 3 times the original amount, and his wife is a addicted gambler and your bank account is over drawn by many K... what do you do?... you sell what you can but there are no buyers...so you join the rest and wait years....
> This will be the longest post on record and a good why to track history when the next bubble comes around.




I don't even understand what half this drivel is on about???? What are you trying to say? We should all go and love in caves and eat baked beans or something because "the end is nigh"????? You can go and do that - me I'm going for a spa and then a swim...... such a great day outside today!


----------



## inenigma (30 November 2008)

I've already been for my swim at the beach.  The wife and I were looking last year for an investment property, just when the organic matter hit the oscillating device....  We decided not to continue.  I'll keep an eye on the market for the next few years.....


----------



## Temjin (30 November 2008)

ROE said:


> One thing people haven't factor in is that housing index derivatives are going to start trading on the ASX in the next 2 years.
> 
> That going to make housing hell more volatile and people can now short on housing bubble
> 
> I be joining the shorter on this one if the price currently sit at this level...and if price start the decline it set the trend for shorter to come in and bell the hell out of it.




Can't wait for the property derivatives either. Though the minimum size (for margin) per contract is probably out of range for a lot of people. 

Housings aren't as volatile because of its valuation method and frequency. Just wait till we have a system that have everyone's home be VALUED for every minute by thousand of ppls with the "average" priced instantly transmitted to the owner's see. I bet he/she would say properties are just as volatile.  It's all a perception.


----------



## beerwm (30 November 2008)

if you have a 300k loan on a house you bought at 300k.
you arent going to sell it for any less. [unless you have to]

in the US,

if you have a 300k loan and cant support it, you have to sell it for less.

its just a matter of 'forced supply', 

is there a forced supply in Oz?

think about it.


----------



## prawn_86 (30 November 2008)

beerwm said:


> if you have a 300k loan on a house you bought at 300k.
> you arent going to sell it for any less. [unless you have to]
> 
> in the US,
> ...





If you cant meet the repayments on a home here, ie cant support the loan, the bank will forclose on you, so its no difference.

I cant see what else you could have meant by that comment


----------



## beerwm (30 November 2008)

i was just refering to those ppl who think Au's housing market is heading in the direction of the US housing market.

and the fundamental difference between the 2


----------



## prawn_86 (30 November 2008)

beerwm said:


> i was just refering to those ppl who think Au's housing market is heading in the direction of the US housing market.
> 
> and the fundamental difference between the 2




House prices have already dropped by about 10% here in Aus, even more in some places.

So if you had a 300k loan, as per your example, and cant afford to meet the payments the bank would foreclose and you would be forced to sell at less than what you paid. So your example is flawed, and it doesnt seem to have anything to do with fundamental differences between the 2 markets (which some members have already shown that there is not that much difference)


----------



## Mofra (30 November 2008)

beerwm,

Are you referring to the difference in cost pursual between the US & Australia?
The loans in the US are generally non-recourse, which means upon reposession, the lende rmust make up any shortfall between sale cosst & loan + fees. In Australia it works differently - you can't just hand the keys back and walk away from the property, as you are liable for costs in the event of a shortfall of funds after a forced sale.

You may also be referring to the demographic difference between Australia and the US, as the urban/rural demographic is close to perfectly inverse.


----------



## beerwm (30 November 2008)

my example was not that the 300k home in oz would not have to foreclose, because ofcourse it would.

i was just stating that due to the position of home loans in the US, the housing market has had an influx of houses, 'forced supply'

while in oz this isnt happening, [to the same degree atleast]

im stating that property decline is only a result of the current financial crisis/ global recession and is thus proportionate, not just a correction of a housing bubble


----------



## numbercruncher (30 November 2008)

singlefished said:


> _http://au.biz.yahoo.com/081129/2/22e0q.html
> 
> *Victoria's real estate market slumps*
> 
> ...






Hilarious ! Trying to get property down to fair value is vulture behaviour , but ignoring fundamentals and tricking the market up wasnt ??


----------



## shaunQ (30 November 2008)

beerwm, it is happening, but not as forced yet. Margin calls force investors to rethink all their holdings. Unemployment forces people out of over-leveraged properties. As house prices fall, a domino effect takes place with more selling. If a recession or bad sentiment is around, again, people save and aren't as keen to take on debt, reducing demand. The opposite of supply is demand. If supply increases and demand decreases at the same time, then it doubles in its effect. Its a spiral that will take years to play out completely. 

I think the market is currently going through a bit of a reaction rally, because of lowering rates but will continue downwards more severely next year as the recession/unemployment sinks in.

I heard a statistic the other day that 1/3 of QLD is employed by the mining industry. Another third, I am just guessing, would probably be tourism/retail. QLD has been a major focus for speculative property investors, similar to the US style property speculation. Some regions will be hit harder than others - QLD and WA the worst.

Most other major stock-market crashes have caused a property crash within 3 years. The US and UK are both experiencing major drops. Australia has one of the highest personal debts in the world, higher than the US, and yet - you think we will be immune?


----------



## robots (30 November 2008)

hello,

check check brothers, 

14.7% for St Kilda Sept Quarter 08, 

I am with you Indie, another day in paradise

thankyou
robots


----------



## So_Cynical (30 November 2008)

Beej said:


> Sydney auction clearance rate 47% for the weekend - 181/382 sold: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf
> 
> Cheers,
> 
> Beej




Nice link Beej...Some standouts - houses in good areas (Sydney)

Ashfield: 36 Gower St 3 br h $600,000
Banksia: 13 Monahan Av 3 br h $395,000 (Nth Rockdale) 
Beaconsfield: 90 Victoria St 2 br h $482,000 (Sth Alexandria)
Darlinghurst: 58 Chisholm St 2 br h $402,000
Leichhardt: 33 Albert St 3 br h $620,000

This gives me some hope ill be able to continue living in Sydney and own 
something nice here, one day soon....Whats SP mean (in the result column)


----------



## cutz (30 November 2008)

SP sold prior (to auction)


----------



## So_Cynical (30 November 2008)

cutz said:


> SP sold prior (to auction)




OK cool, thanks....in that case ill also include.

Newtown: 43 Kent St 2 br h $420,000
Normanhurst: 4/59 Campbell Av 2 br h $445,000
Leichhardt: 46 MacKenzie St 2 br h $680,000


----------



## numbercruncher (30 November 2008)

robots said:


> hello,
> 
> check check brothers,
> 
> ...




You keep telling us this but Enzo from the REIV dissagrees ! Seems like Melbournes getting torched to me .... Maybe hes just talkin it down to snap up some bargains eh ?



> Four-bedroom homes in the inner east, which includes suburbs such as Kew, Camberwell, Canterbury, Richmond and Hawthorn, posted a 13.2% fall in the September quarter.
> 
> Three-bedroom inner-east houses have also faired badly, tripling the city median with a drop of 9.9%.
> 
> ...




http://www.domain.com.au/Public/Article.aspx?id=1226318725038&index=NationalIndex&headline=Premium%20suburbs%20bear%20brunt%20as%20real%20estate%20market%20reels


Maybe it was just your house that went up 15pc Robi ? I mean that coat of paint did wonders mate


----------



## robots (30 November 2008)

numbercruncher said:


> You keep telling us this but Enzo from the REIV dissagrees ! Seems like Melbournes getting torched to me .... Maybe hes just talkin it down to snap up some bargains eh ?
> 
> 
> 
> ...




hello,

i think you should run you're highlighter over ST Kilda East properly brother, i have reported that for misleading and dishonest conduct (on par with RE agents I reckon)

probably was Number, fabulous isnt it 

thankyou
robots


----------



## numbercruncher (30 November 2008)

Same difference ?

anyways there was NO 15pcprice jump for St kilda is my main point, you must of dreamt it ? whole of melbourne is down ...

same article .....



> Regions that performed better than the 3.3% drop across Melbourne (reflecting strong demand) included inner-city two-bedroom homes with a fall of 2.1%,


----------



## robots (30 November 2008)

hello, 

more spin, you a car salesman Number?

thankyou
robots


----------



## numbercruncher (30 November 2008)

This info is from Mlebournites queen of property bulls Enzo, from the REIV !

Are they unreliable these days ?


----------



## Naked shorts (30 November 2008)

I really cant wait for these property "gurus" to go bankrupt. I see far too many of them around, all blinged up, thinking they are the sh*t and they are better then everyone else. 

They have caught onto a cycle where they think property always goes up and in effect, buy and sell property off one another, "making money". Kind of like a ponzi scheme.

I smell humble pie cooking.


----------



## robots (30 November 2008)

numbercruncher said:


> This info is from Mlebournites queen of property bulls Enzo, from the REIV !
> 
> Are they unreliable these days ?




hello,

amazing, you believing him NOW! wasnt he always unreliable

man this place is fantastic, what a high just being here speaking bollocks with all the brothers,

wayneL pops up an article from a bank and its now gospel, what happened to vested interest

thankyou
robots


----------



## grace (30 November 2008)

shaunQ said:


> beerwm, it is happening, but not as forced yet. Margin calls force investors to rethink all their holdings. Unemployment forces people out of over-leveraged properties. As house prices fall, a domino effect takes place with more selling. If a recession or bad sentiment is around, again, people save and aren't as keen to take on debt, reducing demand. The opposite of supply is demand. If supply increases and demand decreases at the same time, then it doubles in its effect. Its a spiral that will take years to play out completely.
> 
> I think the market is currently going through a bit of a reaction rally, because of lowering rates but will continue downwards more severely next year as the recession/unemployment sinks in.
> 
> ...




Very sensible post here.  There has never been a time in history that 

1.  the property market has not followed the sharemarket down after a major correction and
2.  the australian property market has not followed the rest of the world down.

The catalyst will be job losses.  It is starting to happen.  Banks are also requiring a higher % deposit.

Credit is drying up all over the place.  

Every day I see about 2 small mining company's filing for voluntary administration.  

All of these mines employ people/contractors.

Actually, it is the contractors that we don't see figures on in the unemployment stats.

Anyway, I just see property following the sharemarket down.  It is just that little bit slower to react, but that has always been the case in history too.


----------



## Vizion (30 November 2008)

robots said:


> hello,
> 
> i think you should run you're highlighter over ST Kilda East properly brother, i have reported that for misleading and dishonest conduct (on par with RE agents I reckon)
> 
> ...




Not sure what your reporting robots or even whom? can you clear that up for me please?

Was it this bit in the article that your asking us to check again?  because it clearly states.

*It was a similar case for three-bedroom homes in the inner-south where homes across St Kilda East, Prahran, Caulfield North and Armadale have slipped for the three months to September by 12%.*

You own units don't you?  the article mentions 3 bedroom houses maybe the units have not gone down?


----------



## robots (30 November 2008)

grace said:


> Very sensible post here.  There has never been a time in history that
> 
> 1.  the property market has not followed the sharemarket down after a major correction and
> 2.  the australian property market has not followed the rest of the world down.
> ...




hello, 

"past performance is no indication of future performance" is that how it goes,

gee its tough now on Sunday night with no Idol

thankyou
robots


----------



## xoa (30 November 2008)

Every month the RE agents keep blaming one thing after another for the deteriorating market: horse races, long weekends, weather, holiday season.. I wonder what it will be next time.


----------



## robots (30 November 2008)

hello,

what a night, all the fav's are popping up: xao, Number, a new guy called vision45

your parents sitting tight on the properties xao?

the joints rocking

thankyou
robots


----------



## Beej (30 November 2008)

So_Cynical said:


> OK cool, thanks....in that case ill also include.
> 
> Newtown: 43 Kent St 2 br h $420,000
> Normanhurst: 4/59 Campbell Av 2 br h $445,000
> Leichhardt: 46 MacKenzie St 2 br h $680,000




Yep that's right - the Sydney market in particular is a very broad and large R/E market - everything from 2 bed units from $150k and 3 bed houses from $250k, up to $10M+ harbourside mansions, and everything in between. Sort of put's to bed all the BS about an affordability crisis doesn't it? Rather it just shows that it's all more about an "expectation crisis" really at the moment..... However, there are some good opportunities around right now for sure.

Cheers,

Beej


----------



## So_Cynical (30 November 2008)

Beej said:


> Yep that's right - the Sydney market in particular is a very broad and large R/E market - everything from 2 bed units from $150k and 3 bed houses from $250k, up to $10M+ harbourside mansions, and everything in between. Sort of put's to bed all the BS about an affordability crisis doesn't it? Rather it just shows that it's all more about an "expectation crisis" really at the moment..... However, there are some good opportunities around right now for sure.
> 
> Cheers,
> 
> Beej




Good houses in good areas are still unaffordable to me and im a very 
average person....sure i can afford to buy out in North St Marys or 
Liverpool etc, but i have an expectation of living happily.

A terrace in Newtown for under 370 will do me.  and where not there yet.


----------



## Beej (1 December 2008)

So_Cynical said:


> Good houses in good areas are still unaffordable to me and im a very
> average person....sure i can afford to buy out in North St Marys or
> Liverpool etc, but i have an expectation of living happily.
> 
> A terrace in Newtown for under 370 will do me.  and where not there yet.




Like I said - it's an EXPECTATION crisis, not an affordability one...... that's why prices will never fall as low as you are hoping. Do you really think people who live in St Mary's, Penrith, Liverpool, Camden etc etc are all unhappy? You may be surprised to find large numbers of extremely happy people living in area's like that! I bet there are more unhappy people in Mosman right now.....

People in your situation have 4 choices, 3 of them practical ones:

1) Make or earn more money until you can afford to buy where you want to live

2) Buy where you can afford now, pay off, and then upgrade later

3) Keep renting (and saving) and try and keep ahead (a flat market will enable this, but who knows for how long?)

4) Wait for prices to crash until you (and of course EVERYONE else) can get what you want for the price YOU think is fair. 

Of course the problem with 4) is the pent up demand will never actually allow this to happen, so option 4) is for dreamers IMO 

Cheers,

Beej


----------



## Aussiejeff (1 December 2008)

robots said:


> hello,
> 
> what a night, all the fav's are popping up: xao, Number, a new guy called vision45
> 
> ...




hello,

robots your joints rocking because the foundations are being white-anted.

thankyou
ozziebots


----------



## Junior (1 December 2008)

Beej said:


> Like I said - *it's an EXPECTATION crisis, not an affordability one...... *that's why prices will never fall as low as you are hoping. Do you really think people who live in St Mary's, Penrith, Liverpool, Camden etc etc are all unhappy? You may be surprised to find large numbers of extremely happy people living in area's like that! I bet there are more unhappy people in Mosman right now.....
> 
> People in your situation have 4 choices, 3 of them practical ones:
> 
> ...




I'm sorry, but this statement is laughable.  The stats clearly show that housing affordability in Australia is at all time lows due to aggressive credit expansion over the past 10-20 years.  Rising unemployment and tighter lending standards will accelarate the correction/crash in housing prices...it's simply a matter of will prices drop by 20% or 60%?


----------



## Beej (1 December 2008)

Junior said:


> I'm sorry, but this statement is laughable.  The stats clearly show that housing affordability in Australia is at all time lows due to aggressive credit expansion over the past 10-20 years.  Rising unemployment and tighter lending standards will accelarate the correction/crash in housing prices...it's simply a matter of will prices drop by 20% or 60%?




What I find laughable is how all you guys state a speculative view as if it is a FACT!

EDIT: Oh and PS, affordability has actually improved dramatically in the last 6-12 months due to lower interest rates and median house price falls in the order of 5-10% depending on the area, so it is not true to say affordability is at an "all time low" - that was last years news.

Beej


----------



## aleckara (1 December 2008)

Beej said:


> Like I said - it's an EXPECTATION crisis, not an affordability one...... that's why prices will never fall as low as you are hoping. Do you really think people who live in St Mary's, Penrith, Liverpool, Camden etc etc are all unhappy? You may be surprised to find large numbers of extremely happy people living in area's like that! I bet there are more unhappy people in Mosman right now.....
> 
> People in your situation have 4 choices, 3 of them practical ones:
> 
> ...




While I don't necessarily agree that housing will not tank I do think Beej is right about expectations of people for their first property, especially people that are young and just moving into the housing market.

Sure close to the city is great if you are a university student or are a professional working in the city but most of the people who I know who do not fit into either category would rather not raise their family in one of those really small terraces in the city. They see the pollution, the concrete, the traffic, etc. as a bad thing. Tradies, developers, etc a lot of them do live in quite nice places either in the west, or on the outskirts of Sydney (north, south and west) due to the amount of land there.

Living in Sydney these terraces (particularly inner west ones) are the last thing I would buy but its all personal preference. I love the outdoor air, the wide open spaces, and the green that is where I live.

Part of the Sydney affordability problem is that the cities are the centre of everything. If jobs were a lot more spread out it wouldn't be as big of a deal.


----------



## Temjin (1 December 2008)

Beej said:


> What I find laughable is how all you guys state a speculative view as if it is a FACT!
> 
> EDIT: Oh and PS, affordability has actually improved dramatically in the last 6-12 months due to lower interest rates and median house price falls in the order of 5-10% depending on the area, so it is not true to say affordability is at an "all time low" - that was last years news.
> 
> Beej




Isn't it ironic that everyone else are making predictions here regardless of their view. 

You are essentially doing the same thing by predicting that house prices WILL NOT CRASH and will CONTINUE to rise over the next few years. Both "possible" scenarios has not happened yet and cannot be completed ruled out. 

As for affordability, no one is going to argue that it has lowered since the global credit crisis on an average median price to average income earned basis. But at the same time, no one can argue that houses have become more unaffordable (using the same criteria) over the past 10-20 years due to the massive credit expansions that had been mentioned so many times.


----------



## robots (1 December 2008)

hello,

hey hey, check this man:

http://www.news.com.au/heraldsun/story/0,21985,24732514-664,00.html

look at that the humble building worker still kickin it in the top ten sensational, 

nirvana, rates droppin like flippers at the club, $ hitting the pocket all day long in the building scene

hope everyone having a great day

thankyou
robots


----------



## robots (1 December 2008)

hello,

and for all the trippers out there, this tonite:

http://www.theage.com.au/national/smiley-face-will-appear-in-tonights-sky-20081130-6np2.html

thankyou
robots


----------



## Mofra (1 December 2008)

Temjin said:


> Isn't it ironic that everyone else are making predictions here regardless of their view.
> 
> You are essentially doing the same thing by predicting that house prices WILL NOT CRASH and will CONTINUE to rise over the next few years. Both "possible" scenarios has not happened yet and cannot be completed ruled out.



In fairness Temjin, could you point out where anybody on this thread has predicted a rise and given the % rise (or even a range) expected?


----------



## numbercruncher (1 December 2008)

Look how home ownership for the bogans across the Tasman is going .....




> The great New Zealand dream of owning a home, particularly in Auckland, had been taking a hammering for years before the mayhem that erupted on US financial markets.
> Home ownership figures increased from 61.4 per cent to 73.8 per cent between 1951 and 1991 but the march has been relentlessly downward since.
> The 2006 census showed that 54.5 per cent of houses nationally were owned by their occupants; in Auckland, the figure had dropped to below 51 per cent.





We are possibly in the same league now with only 5 percent of Gen-Ys being tricked into the debt slavery/property bubble ?


----------



## 2BAD4U (1 December 2008)

Mofra said:


> In fairness Temjin, could you point out where anybody on this thread has predicted a rise and given the % rise (or even a range) expected?




+100% by 2016.

This is provided we haven't all been killed by the sky falling on our heads.


----------



## numbercruncher (1 December 2008)

2BAD4U said:


> +100% by 2016.
> 
> This is provided we haven't all been killed by the sky falling on our heads.





In real terms or is that the Dose of Inflation CBss are about to lob on us ?


----------



## 2BAD4U (1 December 2008)

That's with inflation. Governments (economies) need inflation, despite what they say to make people feel good. House prices WILL continue to rise.  In 5 years time people will look back at 2008 as part of history, just like we do now with every other boom / bust cycle through out history.


----------



## robots (1 December 2008)

hello,

here we go real terms, real inflation, real % increases

its all irrelevant Number, its a zero game, a given 

thankyou
robots


----------



## ROE (1 December 2008)

He pretty much say house price double every 7-8 years  ... Only house will ever goes up. Quick buy now before you are price out FOREVER.

I like to see him buying too though because it's going to double in 2016 so you sure to make money, how can you possibility lose when you double your money 8 years from now.
come back here in 8 years to see if median price some where around 700K to 800K


----------



## 2BAD4U (1 December 2008)

ROE said:


> He pretty much say house price double every 7-8 years  ... Only house will ever goes up. Quick buy now before you are price out FOREVER.
> 
> I like to see him buying too though because it's going to double in 2016 so you sure to make money, how can you possibility lose when you double your money 8 years from now



EXACTLY!!

You would like to see me buying? - well I am. (Number 4 for the record).


----------



## numbercruncher (1 December 2008)

ROE said:


> He pretty much say house price double every 7-8 years  ... Only house will ever goes up. Quick buy now before you are price out FOREVER.
> 
> I like to see him buying too though because it's going to double in 2016 so you sure to make money, how can you possibility lose when you double your money 8 years from now





Like those kIWIs - Down from 73pc to 51pc owner ocupied in 2 decades, only like 2 more generations and 1 person will own all the houses - awesome !

Maybe even a descendant of Robots will own them all ?he/she might even give free rent to the handout crew to save them hangin around 44 gallon drums to keep warm at night?


----------



## ROE (1 December 2008)

2BAD4U said:


> EXACTLY!!
> 
> You would like to see me buying? - well I am. (Number 4 for the record).




Great, you be millionaire soon  it will double in 8 years time...
buy another 4, you make double what you would have make in 8 years..easy money


----------



## 2BAD4U (1 December 2008)

ROE said:


> Great, you be millionaire soon  it will double in 8 years time...
> buy another 4, you make double what you would have make in 8 years..easy money




Not quite, there are these little things called interest and capital gains tax that have to be paid.  Throw in to the mix management fees and maintenance and what's left over is a tidy little nest egg.  Cook in a superannuation found until dry and then through it away......oh hang on, that's already happened.  Pffft, give me houses any day.


----------



## ROE (1 December 2008)

2BAD4U said:


> Not quite, there are these little things called interest and capital gains tax that have to be paid.  Through in to the mix management fees and maintenance and what's left over is a tidy little nest egg.  Cook in a superannuation found until dry and then through it away......oh hang on, that's already happened.  Pffft, give me houses any day.




capital gain is cheap, you keep them for more than a year you get 50% discount
so if you buy a 400K house ..8 year times it's 800K you only pay capital gain on 200K so you make at least 300K profit ..cash in hand...why worry I mean for every house you buy you make 300K ... you be one of the richest people in Australia before long .. like I say house can only goes up and never down..
house price double every 7-8 years


----------



## 2BAD4U (1 December 2008)

300k less interest of 224k (400k @ 7% over 8 years interest only loan) that only leaves 76k. Less selling fees / commission of 30k??? we're down to 46k.


----------



## numbercruncher (1 December 2008)

2BAD4U said:


> EXACTLY!!
> 
> You would like to see me buying? - well I am. (Number 4 for the record).




Interest rates are tumbling surely you should leverage up and get 4 more !!

You are destined for uber wealth ..... see your bank manager now !


----------



## ROE (1 December 2008)

2BAD4U said:


> 300k less interest of 224k (400k @ 7% over 8 years interest only loan) that only leaves 76k. Less selling fees / commission of 30k??? we're down to 46k.




Interest rate are falling though, soon it hit 2% to 3% maybe even zero like Japan then you pay nothing at all for those properties.

See you bank manager tomorrow  dont delay cos you may be price out forever in the next house you want to get


----------



## 2BAD4U (1 December 2008)

ROE said:


> Interest rate are falling though, soon it hit 2% to 3% maybe even zero...




But you need to allow for when they are back up to 9%+, but atleast I'll have money left over to spend on bait so I can go fishing.


----------



## numbercruncher (1 December 2008)

2BAD4U said:


> But you need to allow for when they are back up to 9%+, but atleast I'll have money left over to spend on bait so I can go fishing.





Nah its a new paradgim ! 2pc interest rates and endless tenants paying 10pc yield !

Get in before its too late !


----------



## 2BAD4U (1 December 2008)

10%!!!!!!!!! Gotta get me some of those tenants.


----------



## ROE (1 December 2008)

2BAD4U said:


> But you need to allow for when they are back up to 9%+, but atleast I'll have money left over to spend on bait so I can go fishing.




No I didn't factor that in silly me  no wonder I sold all my properties last year 
oh well I'm price out forever now but I believe in god so hopefully he make house price come down again
so I can buy it again cheaper...


----------



## Temjin (1 December 2008)

numbercruncher said:


> Nah its a new paradgim ! 2pc interest rates and endless tenants paying 10pc yield !
> 
> Get in before its too late !




Plus endless capital growth @ 10% p.a. if interest rates is so low! $$$ for everyone! Paradise is coming!


----------



## robots (2 December 2008)

hello,

man, I am going to have to start hitting people up for copyright here

will contact the internet forum authorities to speak about intellectual property royalties,

have a great day, enjoy the cut at 2.30pm will tune in the wireless to hear the decision, i am on 75 basis points

thankyou
robots


----------



## Aussiejeff (2 December 2008)

robots said:


> hello,
> 
> man, I am going to have to start hitting people up for copyright here
> 
> ...




hello,

man, I'll see your 75bp and raise you 25.

love this poker game.

thankyou
ozziebots


----------



## wayneL (2 December 2008)

Im turning japanese
I think Im turning japanese
I really think so
Turning japanese
I think Im turning japanese
I really think so
Im turning japanese
I think Im turning japanese
I really think so
Turning japanese
I think Im turning japanese
I really think so


----------



## CamKawa (2 December 2008)

wayneL said:


> Im turning japanese
> I think Im turning japanese
> I really think so
> Turning japanese
> ...



The video is much better than your singing wayne. 
http://www.youtube.com/watch?v=PQyClNEfncg


----------



## Aussiejeff (2 December 2008)

wayneL said:


> Im turning japanese
> I think Im turning japanese
> I really think so
> Turning japanese
> ...




Yeah. I reckon Bernanke's eyes have been getting squinty of late  ... 

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

Dec. 1 (Bloomberg) -- *Federal Reserve Chairman Ben S. Bernanke said he has “obviously limited” room to lower interest rates further* and may use less conventional policies, such as buying Treasury securities, to revive the economy.

The U.S. economy “will probably remain weak for a time,” even if the credit crisis eases, Bernanke said today in a speech in Austin, Texas. While the Fed can’t push interest rates below zero, “the second arrow in the Federal Reserve’s quiver -- the provision of liquidity -- remains effective,” he said. http://www.bloomberg.com/apps/news?pid=20601087&sid=ajcLVDMwN5To&refer=home

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

Well, well, well. Now we see what will happen to OUR Li'l Ozzie Econ when WE have run out of any more room to make further interest rate cuts (say, in 12 months time - or less?)

Save your house hunting pennies till then....


----------



## ROE (2 December 2008)

Aussiejeff said:


> hello,
> 
> man, I'll see your 75bp and raise you 25.
> 
> ...




I'm all in 1.25 .. look like property going to double again not in 7-8 years but maybe as little as 5 years  .... it's the fastest rate cut ever in Australia history so the usually 7-8 years double now need to speed up to 5 years 

Only properties will goes up ..don't invest in shares now it's keep going down the drain....interest rate cut only helps property investors doesn't help anyone else.


----------



## Aussiejeff (2 December 2008)

ROE said:


> I'm all in 1.25 .. look like property going to double again not in 7-8 years but maybe as little as 5 years  .... it's the fastest rate cut ever in Australia history so the usually 7-8 years double now need to speed up to 5 years
> 
> Only properties will goes up ..don't invest in shares now it's keep going down the drain....*interest rate cut only helps property investors doesn't help anyone else.*




Indeed.

My CBA Cash Management interest rate seems to have dropped to around 5% if my monthly interest payment is to be believed. Only 2 months ago it was still around 6.5%!! 

At this rate, I may as well pull my cash reserves out and stash it under the mattress by the end of Jan 2009! Where is this all heading? There's no point in having money in a bank if it pays you less than the fees and inflation take out. Will the Rudd GuvMint guarantee the cash I hide under my mattress? 

For the burgeoning numbers of self-funded retirees and pensioners who rely heavily on more conservative cash accounts etc (especially in hard-hit super), the plunge in bank interest rates will be all bad and the negative flow on effect to the economy (less money earned through interest=less money spent by pensioners/retirees) will be huge - probably easily off-setting any gains made by home mortgage holders (who will be more likely to try and pay more off their mortgages with any further interest rate cuts, rather than spending it on consumables). All this at a time when DEFLATION is starting to stalk the planet.

IMO of course.


----------



## Ruincity (2 December 2008)

ROE said:


> I'm all in 1.25 .. look like property going to double again not in 7-8 years but maybe as little as 5 years  .... it's the fastest rate cut ever in Australia history so the usually 7-8 years double now need to speed up to 5 years
> 
> Only properties will goes up ..don't invest in shares now it's keep going down the drain....interest rate cut only helps property investors doesn't help anyone else.




First: I was under the impression housing doubles every 10 or so years.. 
Second: With lending rates almost non existant in both UK and the US and property still falling what makes you think we are so special?

I am keen to buy some property myself but i'm just not so sure.. 
Auction clearance rates over the weekend were simply terrible and I believe that the current downward plunge in Perth/WA may be the cancerous start to the bigger picture....


----------



## ROE (2 December 2008)

Ruincity said:


> First: I was under the impression housing doubles every 10 or so years..
> Second: With lending rates almost non existant in both UK and the US and property still falling what makes you think we are so special?
> 
> I am keen to buy some property myself but i'm just not so sure..
> Auction clearance rates over the weekend were simply terrible and I believe that the current downward plunge in Perth/WA may be the cancerous start to the bigger picture....




no way cant happen it..it's DIFFERENT here  
we have all the money in the world to keep the price double every 7-8 years
everyone else has money problem but not Aussie.

Aussies maybe out of a job but we still have money to jack up the price.

The world maybe in recession but Aussie never will, we got dirt to ship to the Chinese and they dont want it any more but still we got money, lot of it 
if we run out we just print some more like Pauline Hanson once said...what money problem? we can solve it by go to the mint and print more.


----------



## numbercruncher (2 December 2008)

Average Aussie is now lighting the BBQ with $100 bills just for giggles !!

House prices to double annually 

DOW down 8pc last night, Aussie RE up 8pc this month ....

Just read the newspapers, every money renting reporter in the nation is predicting the same thing .....


Ozi Ozi Ozi !


----------



## Aussiejeff (2 December 2008)

numbercruncher said:


> Average Aussie is now lighting the BBQ with $100 bills just for giggles !!
> 
> House prices to double annually
> 
> ...




:bananasmi  :bananasmi  :bananasmi


----------



## Beej (2 December 2008)

Ruincity said:


> First: I was under the impression housing doubles every 10 or so years..
> Second: With lending rates almost non existant in both UK and the US and property still falling what makes you think we are so special?
> 
> I am keen to buy some property myself but i'm just not so sure..
> Auction clearance rates over the weekend were simply terrible and I believe that the current downward plunge in Perth/WA may be the cancerous start to the bigger picture....




Just ignore ROE - he just thinks he is being clever, by repeating over and over a mantra ("house price double every 7 years!"), that no-one around here has ever actually said or argued. He really is in the "house prices will crash and we will turn into Japan and the sky is falling etc etc" camp, which to me looks just as ridiculous and unlikely as his current smart-ar%e rubbish.

In terms of looking to buy - if you are in WA/Perth I would wait for a while - but do watch the market closely. It's not all about statistics - the stats can provide one view of the market but that doesn't mean you will find the place YOU want to buy at some low price (unless you are not at all fussy). The way to take advantage of property downturns is to be out there doing your research, ready to pounce when the distressed sale of a place you want pops up (or hangs around for a while). Crunch your numbers if it works for you (eg, it would be cheaper to buy than to rent into the future), then go for it. Remember even if house prices only just out-pace inflation, you will still have made a solid investment (due to the leverage).

Does anyone here think a house will be worth less in say 20 years than it costs today????

Don't be overly influenced by all the BS and negativity in forums like this one and the internet in general. Do your own research on the ground. Remember many people here have a vested interest in a property crash (eg how many posters here are also active on the Global Housing Price Crash forum?), although of course many are quick to label any with differing opinions on the outlook "property spruikers!".

Cheers,

Beej


----------



## numbercruncher (2 December 2008)

Yes they are pesky doomsdayers making up stories !

We must never let them threaten our ultimate pyramid scheme (those pesky bankers tightening the standards have us nervous though) ..

Every young person is a potential buyer, tell them tales of never ending richness.

The money renting crowd will reign supreme ! Accomodtion for the masses at 8x income is the norm ! Its different here , we have Koala's !!!!



And anyhow, in the absolute worst case the Government will bail us out.

Just busy flippin Mcmansions for loose change folks!


----------



## 2BAD4U (2 December 2008)

Beej said:


> ..no-one around here has ever actually said...



I did.


2BAD4U said:


> +100% by 2016.
> 
> This is provided we haven't all been killed by the sky falling on our heads.






numbercruncher said:


> The money renting crowd will reign supreme !




People have to live somewhere and the shift for decades has been from government provided housing to private rentals.  This is why they allow negative gearing, it's cheaper than having to actually provide the housing. All you doomsday group paint the picture that people will be living in the streets and parks on mass. Can see it now, people fighting over cardboard boxes and tin sheets.


----------



## professor_frink (2 December 2008)

Beej said:


> Does anyone here think a house will be worth less in say 20 years than it costs today????




It shouldn't really be an issue for anyone that's an owner occupier. Unless of course the house you currently live in is the only one to lose value whilst every other one in the country charges ahead. Owner occupiers should actually look forward to that  as a possibility when they sell and upgrade down the track


----------



## Indie (2 December 2008)

Beej said:


> J
> Does anyone here think a house will be worth less in say 20 years than it costs today????





I think you are right. Houses will be worth more, in dollars, 20 years from now. But I think you know this fact alone doesn't make RE a good investment choice since there are many other factors that come into play.

Beej, I know from experience what a great inflationary hedge property is. How do you think RE will perform in a deflationary environment?


----------



## wipz (2 December 2008)

Aussiejeff said:


> Indeed.
> 
> My CBA Cash Management interest rate seems to have dropped to around 5% if my monthly interest payment is to be believed. Only 2 months ago it was still around 6.5%!!
> 
> ...




It's not too late - buy gold now


----------



## Beej (2 December 2008)

Indie said:


> I think you are right. Houses will be worth more, in dollars, 20 years from now. But I think you know this fact alone doesn't make RE a good investment choice since there are many other factors that come into play.




Indie - sure, don't disagree that from an investment perspective you need to look more closely at the after inflation returns. My comments above were more about the PPOR/OO point of view.



> Beej, I know from experience what a great inflationary hedge property is. How do you think RE will perform in a deflationary environment?




That's a good question - my view is that due to the demand side pressures on rental accommodation, that rental returns/growth will remain solid into the future, even through a possibly deflationary environment (which I think would only be short term anyway, and at this stage is only a possibility, no where near a certainty). At the moment, some residential property investment is starting to stack up quite well on a pure cash flow basis, so given this, I think this paints a good picture into the future, as long as you have an eye on the long term.

Cheers,

Beej


----------



## Temjin (2 December 2008)

Beej said:


> Crunch your numbers if it works for you (eg, it would be cheaper to buy than to rent into the future), then go for it. Remember even if house prices only just out-pace inflation, you will still have made a solid investment (due to the leverage).




Yes, definitely CRUNCH the numbers to work out. For house prices to be solid investment even if it only "just" out-pace / track inflation while UNDER leverage, you need to have long term interest rate to be sustained BELOW inflation. 

You must be dreaming if this will happen for a long long time. Everyone must have enjoyed the credit boom so much that it seem to be the economic norm! 



			
				Beej said:
			
		

> Does anyone here think a house will be worth less in say 20 years than it costs today????




No, because house prices (or rather, LAND PRICES) have historically rose along with wage/inflation growth. 

If inflation is so good for house prices, maybe we should all head off to Zimbabwe and we will all be billionares and our houses would worth quadrillions. 



			
				Beej said:
			
		

> Don't be overly influenced by all the BS and negativity in forums like this one and the internet in general. Do your own research on the ground. Remember many people here have a vested interest in a property crash (eg how many posters here are also active on the Global Housing Price Crash forum?), although of course many are quick to label any with differing opinions on the outlook "property spruikers!".




lol And be influenced by those who have a "vested interest" in properties and be extreme optimistic about everything and deny all realities and facts? 

Perhaps he should visit internet forums like http://www.somersoft.com.au/forum.htm because almost everyone own an IP there and hardly anybody think house prices will fall?

And it's funny how you generalise that alot of us are active in that GHPC whatever forums and that we label anyone else with different opinions. Isn't the same for you who label anyone else who has a different opinion from you as doom and gloomer and being unrealistic about how different Australia is?  

This is a share investment forum after all.  And I agree with Van Tharp on his psycological teaching. Everyone have their own perception of reality and will viciously deny / reject beliefs/opinions that do not matches their own. Only a major PHYSICAL incident (like a massive drawdown / trade losses) would change their thinking.


----------



## Beej (2 December 2008)

But Temjin at least you are trying to make sensible arguments (even if I don't agree with your premise or outlook), unlike ROE and Numbercruncher who for the last couple of pages have just been complete idiots.

Beej


----------



## numbercruncher (2 December 2008)

You dont agree with us Beej ?

Its different in Australia !!

Becareful of the drop bears though


----------



## gfresh (2 December 2008)

They are being silly, but many of the comments put out by the (now very precious it seems!) property bulls over the years have been equally silly, so I think fair is fair for some comeuppance. 

It's funny how people get so defensive about the property asset class, and that is what is entertaining to read the human condition so obviously on display - greed, fear, jealousy, anger, frustration, relief. Dismiss shares, and most shareholders will just agree, yeah, whatever, shares sometimes crash. It's not so hard 

Here goes another market down the tube, Dubai this time.. 	:xmaswave

http://www.businessspectator.com.au...-stretched-emirate-LWQD5?OpenDocument&src=sph


----------



## ROE (2 December 2008)

Beej said:


> But Temjin at least you are trying to make sensible arguments (even if I don't agree with your premise or outlook), unlike ROE and Numbercruncher who for the last couple of pages have just been complete idiots.
> 
> Beej




it's bad out there..I cant afford to go out any more..this is fun and cheap entertainment


----------



## Indie (2 December 2008)

Temjin said:


> Yes, definitely CRUNCH the numbers to work out. For house prices to be solid investment even if it only "just" out-pace / track inflation while UNDER leverage, you need to have long term interest rate to be sustained BELOW inflation.





It certainly looks a very different picture going forward for the next few years. Negative real interest rates underpinned the credit boom and the RE boom. Even if mortgage rates are cut to 4% they will still be higher than inflation. That's bad news for anyone with substantial leverage. Demand for highly leveraged investments will fall as investors deleverage debt positions in order to preserve equity and protect purchasing power. The resulting diminishing demand for credit will put further downward pressure on asset prices until yields turn positive or inflation exceeds interest rates once again. 

It takes a while for the reality to set into the market because the generational credit boom has skewed investors expectations. Conversely, things are likely to overshoot on the downside once deflationary pressures set in and large numbers of investors sustain losses. Hence these cycles take years to complete and one simply can't expect the whole thing to be over and done with in one or two years. It may still be possible to make a good dollar under certain conditions investing in RE, but the odds are now stacked against you, particularly if you are highly leveraged - IMO. Then again, you have to spend your cash on something so if you find a house you really want, then I guess you can determine the value for yourself. I'm just speaking from a pure investment point of view with an eye on the bottom line.


----------



## Glen48 (2 December 2008)

USA has owes about $8-9 Trillion so when the USD dies won't USA have to put up I R's and how high will they go if the rest of the World in trying to get money in as well?
10 15% is not out of the question.???


----------



## Mofra (2 December 2008)

Glen48 said:


> USA has owes about $8-9 Trillion so when the USD dies won't USA have to put up I R's and how high will they go if the rest of the World in trying to get money in as well?
> 10 15% is not out of the question.???



RBA sets monetary policy primarily as a measure to keep inflation in check, not to influence currency speculation.

*queue property speculation response*


----------



## numbercruncher (2 December 2008)

100 points off for clients of the RBA ... how much will banks pass onto the money renting public?

House prices to boom !?


----------



## Beej (2 December 2008)

numbercruncher said:


> 100 points off for clients of the RBA ... how much will banks pass onto the money renting public?
> 
> House prices to boom !?




No not boom, but these lower interest rates are likely to put a floor under the market and allow it to bottom/stabalise from here for 2 main reasons:

1) Vanilla "mortgage" stress much reduced = less (if any) forced sales. Prices can only "crash" if sellers are desperate and must sell at any price.

2) Rent vs buy equation starts to look more and more tempting to FHBs sitting on the sidelines. As seen elsewhere on this thread FHBs as a proportion of buyers has been steadily ramping up for the past 3 months. These cuts will see that trend continue.

You can already see the frustration of cash savers here in other threads who have got used to high cash returns!  Soon many in this situation will start to look for somewhere else to invest their money. Saving on rent and the prospect of owning your own home always looks attractive to many, especially with the stock market still looking shakey. Cash flow positive from day 1 property investments are also kind of cool to some (even if many here scoff!).

Watch the price action in lower and mid priced suburbs of Sydney this 1/4 and next 1/4 so see what is likely to pan out across other markets nationally through next year IMO.

Cheers,

Beej


----------



## numbercruncher (2 December 2008)

Yes the prospect of Japanese style economy is looking rather real now


----------



## Mofra (2 December 2008)

numbercruncher said:


> 100 points off for clients of the RBA ... how much will banks pass onto the money renting public?
> 
> House prices to boom !?



CBA & NAB 100 points, Westpac 80 points so far.

Have to say I am pleased with result


----------



## ROE (2 December 2008)

Beej said:


> No not boom, but these lower interest rates are likely to put a floor under the market and allow it to bottom/stabalise from here for 2 main reasons:
> 
> 1) Vanilla "mortgage" stress much reduced = less (if any) forced sales. Prices can only "crash" if sellers are desperate and must sell at any price.
> 
> ...




Yeah stock is pretty dangerous don't buy it, it's only a peice of paper
and thing can go belly up real quick. 

Put your money any where but property 

funny isnt it 80% of property investors earns $80,000 or less so the rich must be very wrong putting it all in business and stock market  and still they are very rich... the world is a cruel place, and wondering what a property investor doing on a stock market forum if he doesn't buy stock...

kinda define logic


----------



## Beej (2 December 2008)

ROE said:


> funny isnt it 80% of property investors earns $80,000 or less so the rich must be very wrong putting it all in business and stock market  and still they are very rich... the world is a cruel place, and wondering what a property investor doing on a stock market forum if he doesn't buy stock...
> 
> kinda define logic




Sorry are you referring to me here? Couldn't be more wrong on all counts if you are!  Regardless, there are a lot of rich long term property investors anyway.

But you do actually raise an interesting point, which is that the majority of people (ie all those "ordinary" folk) DO in fact invest far larger amounts of money in property than shares, businesses etc. That's because the majority of people at least own a PPOR, and many more invest in R/E as well because they believe it is a stable long term vehicle to provide income in retirement, with lot's of help/encouragement from the tax system and the monetary policy makers along the way . 

Your rantings here will will not change these facts! And these are the facts that underpin the long term prospects of the property market in Australia. 

Personally, I think you are mad to not at least aspire to own your own home ASAP before embarking on further aggressive wealth building activities. You get such a solid financial base early in life from which to start! And even if you do choose to do it the other way around, one of the greatest lifestyle factors you can gain from wealth is the area/home you live in for your PPOR, so again you are mad to not own your own! But, to each their own.....

Beej


----------



## robots (2 December 2008)

hello,

hey hey brothers, getting tough to hang your hat on something these days brothers?

what happened to 10+% interest rates

oh yeah we so Japanese, we going to get geisha girls, 0.3% IR's and when that fails we will go like US, crack heads galore and 9mm's sold at Bunnies, hang on its going to take a few more years though! hahahahaha

this is fantastic, MASSIVE rent reduction for the money renting crew today with CBA cutting full 1% straight off the cuff,

utopia

thankyou
robots


----------



## gfresh (2 December 2008)

Who says savers are not happy with our.... 4.5% minus tax  cash returns 

It seems home owners/investors/speculators/whoever has the full weight of the RBA on their side, so a little hard to fight against that right now. They're practically throwing their money at potential owners to buy buy buy 

Think I will be breaking my lease next year ...


----------



## numbercruncher (2 December 2008)

4.5% minus tax fully guaranteed by the dodgy Australian Government in a deflationary enviroment is really truly awful hey  commsec only give 5.75% ....

There wil be no renters left if you all buy houses ?


Utopia


----------



## CamKawa (2 December 2008)

The thing that I find interesting is the way interest rate changes are reported. When they go up the media talk about them having a 6 - 9 month lag time to work their way in the economy, but when they come down its immediate!!! LOL

"INDUSTRY and consumer groups have welcomed the RBA's 100 point interest rate cut saying it would give the economy a Christmas boost"
source: http://www.news.com.au/heraldsun/story/0,21985,24740274-661,00.html


----------



## ROE (2 December 2008)

Beej said:


> Personally, I think you are mad to not at least aspire to own your own home ASAP before embarking on further aggressive wealth building activities. You get such a solid financial base early in life from which to start! And even if you do choose to do it the other way around, one of the greatest lifestyle factors you can gain from wealth is the area/home you live in for your PPOR, so again you are mad to not own your own! But, to each their own.....
> 
> Beej




how do you know I don't own properties?  If I have a bear view of properties it mean I don't own properties? If I have a bear view on a stock does it mean I never own it? such naive conclusion 

I own stuff at the right price not at any price and if you want to know I own my own PPOR by the time I'm 30 that because stock return pay for it all


----------



## robots (2 December 2008)

ROE said:


> No I didn't factor that in silly me  *no wonder I sold all my properties last year *
> oh well I'm price out forever now but I believe in god so hopefully he make house price come down again
> so I can buy it again cheaper...




hello,

you told us all ROE, 

thankyou
robots


----------



## ROE (2 December 2008)

robots said:


> hello,
> 
> you told us all ROE,
> 
> ...




That is right because I own stuffed at the right price not at any price 
but then again most people beleive property do double ever 7 years so
no need to off load in the bull market

with out that sort of people there is no boom and bust  and no stronger for longer


----------



## Beej (2 December 2008)

ROE said:


> how do you know I don't own properties?  If I have a bear view of properties it mean I don't own properties? If I have a bear view on a stock does it mean I never own it? such naive conclusion
> 
> I own stuff at the right price not at any price and if you want to know I own my own PPOR by the time I'm 30 that because stock return pay for it all




I meant "you" figureatively/generally - not referring to you personally.

Beej


----------



## Temjin (2 December 2008)

Beej said:


> But Temjin at least you are trying to make sensible arguments (even if I don't agree with your premise or outlook), unlike ROE and Numbercruncher who for the last couple of pages have just been complete idiots.
> 
> Beej




Well, can't blame them cos I'm sure we all agree this thread has simply too much emotion in it. I'm not denying it on my part either.  hehe

And likewise, you are too at least trying to make similar arguments unlike our Mr Robot who I do not think is someone you want to associate with. 



			
				Indie said:
			
		

> It takes a while for the reality to set into the market because the generational credit boom has skewed investors expectations.




You are exactly right. The market has not been allowed to go back to its mean because monetary policy has been manipulated. 

It's funny that a few economists are saying the global share market has always been in a bear market since 2001. The reasons why there has been a "bear market" rally was the rapid decrease in the global long term interest rate and the introduction of derivatives securitisation that distorted the perception of risk of the credit market. That is, most banks believed the risk of lending money to those who cannot afford payment is insignificant, and thus they went on a rampage of lending as much as possible to take advantage of the environment.

We all know what happened when the party was over. 



			
				Beej said:
			
		

> You can already see the frustration of cash savers here in other threads who have got used to high cash returns!  Soon many in this situation will start to look for somewhere else to invest their money. Saving on rent and the prospect of owning your own home always looks attractive to many, especially with the stock market still looking shakey. Cash flow positive from day 1 property investments are also kind of cool to some (even if many here scoff!).




It is shame isn't it for us cash savers?

But doesn't economic 101 teach us that REAL WEALTH is produced from saving + productive investments? Every economists in the world do not deny that. Be it from the Keynesian school or Austrian school, neoclassic, or whatever.  

Unfortunately, this very common sense stuff is not being practised quite often around the world because of personal greed. 

Properties are "speculative" investments. They do not generate REAL WEALTH for the economy as a whole, that is, property + land themselves do not generate "new wealth" like factories or mines do (as examples). These kind of speculative investments can only be sustained if there is an ever increasing available of cheap credits and people willing to maintain the debt. In essense, it's a ponzi scheme. The first person who got in wins, the last is the loser. 



			
				Beej said:
			
		

> No not boom, but these lower interest rates are likely to put a floor under the market and allow it to bottom/stabalise from here for 2 main reasons:




Note that is an assumption, just like many of us who made the same assumptions that the global credit crisis (which is turning into a global recession), plus destruction of assets through massive forced liquidations, will eventually cause all assets with speculative prices to fall. 

Shares have already got killed and might even fall back to the 2001/02 low. Commodities got completely murdered because of hedge funds liquidation of leveraged positions. Properties are slow to react because pricings are not as transparent (compared to the stock market) and there are limited liquidity. 

It's now a wait and see.


----------



## Mofra (2 December 2008)

Temjin said:


> Properties are "speculative" investments. They do not generate REAL WEALTH for the economy as a whole, that is, property + land themselves do not generate "new wealth" like factories or mines do (as examples). These kind of speculative investments can only be sustained if there is an ever increasing available of cheap credits and people willing to maintain the debt. In essense, it's a ponzi scheme. The first person who got in wins, the last is the loser.



Theoreically, you are absolutely correct.

In practice, property is like most other non-useful forms of investment (think art, wine etc). There is a prestige attached to certain areas as there is with Grange but not Spumante, as Brett Whitely will probably outperform a Rolf Harris. With a growing population, areas close to major employment centres with multiple forms of public transport are likely to outperform outer suburban McMansion areas in the long term. 

Of course, most property investers would admit that without a growing population, a rise in property prices in real terms is not sustainable.


----------



## robots (2 December 2008)

Temjin said:


> Well, can't blame them cos I'm sure we all agree this thread has simply too much emotion in it. I'm not denying it on my part either.  hehe
> 
> *And likewise, you are too at least trying to make similar arguments unlike our Mr Robot who I do not think is someone you want to associate with.*
> 
> ...




hello,

surely you can fit some more excuses in there professor?

keep the laughs coming man, gf getting stitch from all the humour tonite

just got letter from CBA, rate to rent money has dropped AGAIN, paradise already here man

MORE WAITING

thankyou
robots


----------



## Dowdy (2 December 2008)

> hello,
> 
> surely you can fit some more excuses in there professor?
> 
> ...




Wow, your not very crash hot on basic economics. 

The only thing keeping the housing market afloat is the government with it's cash injections but even that is short term. Sure there are certain areas where rental market is good for the investor but even the speculators are starting to stay away from the market. What do you think will happen to the market when the average joe family tries to sell their home and the speculators stay away? Its already happening


----------



## robots (2 December 2008)

Dowdy said:


> *Wow, your not very crash hot on basic economics. *
> 
> The only thing keeping the housing market afloat is the government with it's cash injections but even that is short term. Sure there are certain areas where rental market is good for the investor but even the speculators are starting to stay away from the market. What do you think will happen to the market when the average joe family tries to sell their home and the speculators stay away? Its already happening




hello,

i know, i wouldnt have a clue about basic economics and wouldnt have a clue what will happen in the future(for the twentieth time)

just a humble building worker

thankyou
robots


----------



## lioness (2 December 2008)

robots said:


> hello,
> 
> i know, i wouldnt have a clue about basic economics and wouldnt have a clue what will happen in the future(for the twentieth time)
> 
> ...




Can anyone tell me on here what happens when the variable rate hits 4.5% to property??

No-one on here is discussing the key which is loose monetary policy. Once banks begin lending again and they will(this is their bread and butter), inflation will explode and property will boom again short term only.

Long term it's stuffed.


----------



## Dowdy (2 December 2008)

Then why would you laugh at Temjin post when you admit that you dont know anything he's talking about.

Or you just like to contradict yourself


----------



## Mofra (2 December 2008)

lioness said:


> Can anyone tell me on here what happens when the variable rate hits 4.5% to property??
> 
> No-one on here is discussing the key which is loose monetary policy. Once banks begin lending again and they will(this is their bread and butter), inflation will explode and property will boom again short term only.



Possibly. That will benefit who? Ah yes, those already holding 

4.5% = positively geared property at purchase for those looking. I might revisit my decision to hold & not buy more at such attractive rates.


----------



## numbercruncher (2 December 2008)

Its having very little effect so far - just check the market like treble the amount of houses for sale, rentals coming out people ears ..... oversupply galore ....

except the odd expectation crisis were folks want to live beachfront for 150 bucks a week, its all massive oversupply 

Banks tightening lending standards cant be helping either, Gen-Y couldnt care less about the ponzi/pyramid scheme with only 5pc entering into home ownership ......

And many of those wanting in on the pyramid cant meet the deposit reqirement, Gov savings scheme will have them there in a few years I guess.

everyones cruising !


----------



## explod (2 December 2008)

robots said:


> hello,
> 
> i know, i wouldnt have a clue about basic economics and wouldnt have a clue what will happen in the future(for the twentieth time)
> 
> ...




Then why do take everyone on.   Many of us are not pleased with the way economics is being played out and some on this forum do know about economics.

In the last few months on a global scale we have had unprecedented deflation.  That word means that shares, bonds, trust, businesses and property have droped by half and in some cases by 3 times.   These falls are growing by the day.  Wall Street just in one night (last night) by 10% (one tenth

Interest rates are being dropped just to try and save basic business (and of course home owners etc) from total collapse.   It has not worked overseas and it will not work here.   Japan for the first time in perhaps 10 years have just seen the economic light in the last few days and might start to raise rates.   The underlying rates are going up because no one wants to lend money.   When these last few rate cuts play out by about March next year they will rise again just as fast as they have fallen.

Now the way I have put this is an oversimplification but should help you Robots.   Wish I had had someone to explain these things to me when I was a builders labourer in 1961.   They paid us 17pound ($34) a week tax paid back then and a brand new car cost $1,000

And the more savvy smart a...ss leave robots and I alone


----------



## 2BAD4U (2 December 2008)

numbercruncher said:


> Its having very little effect so far - just check the market like treble the amount of houses for sale, rentals coming out people ears *..... oversupply galore ....*




Can we have your supporting data.

1/3 of dwellings - no mortgage - so no effect on them
1/3 of dwellings - with mortgage - how many of these would be forced to sell at current rates?
The remaining 1/3 either rent, government provided or other.  With rents going up what choice do they have other than to pay the higher rents.

And, as more private rentals come on the market from all this _oversupply_ this takes the pressure off the government to provide public housing.  Property investors are doing tax payers a favour.

Forget real returns, inflation, blah, blah, blah, simple fact - if you get more in rent than you pay in interest then you make money. What does it matter what the property is worth if it is producing an income?

But houses WILL go up in value :burn:


----------



## numbercruncher (2 December 2008)

You dont need me to show you oversupply, your favorite RE site can do that !!


----------



## 2BAD4U (2 December 2008)

No it doesn't. With a vacancy rate of 2.6%, which is an increase of 0.1% over the last 12 months, I would hardly call this oversupply.  Most investors would work on a vacancy rate of 4.0%.


----------



## Dowdy (2 December 2008)

2BAD4U said:


> But houses WILL go up in value :burn:





"WILL go up in value" or you WANT them to go up

Nominal value or real value?


----------



## explod (2 December 2008)

2BAD4U said:


> No it doesn't. With a vacancy rate of 2.6%, which is an increase of 0.1% over the last 12 months, I would hardly call this oversupply.  Most investors would work on a vacancy rate of 4.0%.




"Most investors", may work on different figures before long.   Relying on official figures at a time of GREAT change may be folly.   And always relying of figures alone is folly.   Estate agents and salespeople are part of my family circle and I can assure you that figures on property that will not come due till after or the end of the 1st quarter next year may be dire.

Those with their heads to the ground know.  The pure numbercrunches (no pun here Number) will never listen


----------



## 2BAD4U (2 December 2008)

I can't believe the doom and gloom here.  Has the world never suffered recession before?  Has there never been a crisis of some sort?  You hear this sort of talk about property every single time - late 80's, mid 90's and now. Exact same thing back then "housing will collapse", "investors will lose everything", "people will be living in the streets".  Heard it all before.

Go back through history and look at some of the speeches of past US presidents regarding housing, banks, etc. Andrew Jackson 1829 - 37, Ab Lincoln 1861 - 65, Woodrow Wilson 1913 - 21.  All of them had the same familiar ring about them and they could have easily been talking about what was happening today.


----------



## Ruincity (2 December 2008)

So ok.. 

Let me get this straight because I am confused. 

US, UK, NZ and I understand many others countries prices are falling and have been for some time. 
In the same period lending rates have been doing the same (many FAR less than we are at the moment UK 3% US 1%).
The world is either heading into a recession or are already there. 
Income percentage to housing affordability in Australia is some of the highest in the world!
Perth housing prices are showing signs (3 consecutive quarters I understand) of dropping house prices. 

And we are somehow immune to falling house prices in the rest of australia??

What happens when/if all these people buying houses with this "cheap" money and first home buyers grants start losing their jobs......
What happens when/if all the currently leveraged people/property speculators owing LARGE sums of cash in cashed up area's start to lose their jobs/income... 

THIS is the major problem as far as I see it.. 

And this is where the REAL weakness lies IMO.

No rush for me and i'm cashed up and ready - just not convinced that what I would buy now won't be 20-40% cheaper in 6mnths - 1 years time. 
It appears I ain't the only one because buyers are standing on the side lines.. 

Do you go long on shares now and watch your investment drop 25-75% over the next years time - or wait until the/a uptrend?
Same way that I see the property market. 
Certainly no uptrend confirmed here in fact I think things are looking quite bearish at the moment.


----------



## Dowdy (2 December 2008)

2BAD4U said:


> I can't believe the doom and gloom here.





It might sound a bit hard to believe here so maybe you should look at the USA

http://www.youtube.com/watch?v=Z2baed9ShIk

http://www.youtube.com/watch?v=CnnOOo6tRs8


----------



## 2BAD4U (2 December 2008)

I didn't say things hadn't gone backwards. I don't deny that world economies are in recession. What happens when people lose their jobs? Same as every other recession.

As for housing prices falling another 20% - 40%, who knows but I personally don't believe this will happen.  Considering some properties have already fallen this much.  Just like shares, it's only a loss when you sell.  You said it yourself, buyers are on the sidelines just waiting.  Once they start entering the market (and some have started) prices will move again and then the herd will start following.

Mark you diary in 2016 with "Too bad I didn't listen to 2bad".


----------



## Indie (2 December 2008)

lioness said:


> Can anyone tell me on here what happens when the variable rate hits 4.5% to property??
> 
> No-one on here is discussing the key which is loose monetary policy. Once banks begin lending again and they will(this is their bread and butter), inflation will explode and property will boom again short term only.
> 
> Long term it's stuffed.





This is my take on things:

Further easing of monetary policy will create significant inflationary pressures because of Australia's reliance on foreign goods and capital. A weakening in the currency will push up the price of imports and energy placing the consumer under more pressure. The erosion of purchasing power and resulting fall in demand would be extremely negative for domestic asset prices, particularly RE. It would not create a new credit boom. 

So the RBA is between a rock and a hard place. What they give with one hand will be taken away by the other. They can't cut much further or the dollar gets destroyed and we all suffer a massive decline in living standards through skyrocketing import prices. But keeping rates where they are or pushing them up again will erode the wealth tied up in domestic assets by suppressing demand for credit. 

It's naive to believe there ever was a "miracle economy" is was just a debt mirage. So I think this is probably the end of the line for rate cuts, probably.


----------



## Beej (2 December 2008)

2BAD4U said:


> You said it yourself, buyers are on the sidelines just waiting.  Once they start entering the market (and some have started) prices will move again and then the herd will start following.




Correct!! That's the funny thing about these sorts of markets - everybody expects prices to fall, yet everybody is cashed up waiting on the sidelines for when they do! Only a lucky few will actually get anything decent at a low price before a floor is reached, volume dries right up and a recovery slowly begins.

Beej


----------



## Illuminated one (2 December 2008)

Hi guys, newb here, I'm 23 years old and want to invest in a property as well as the stock market, do you think i should wait for a further six months before doing anything? And will the interest go down further?

Cheers.


----------



## lioness (2 December 2008)

explod said:


> Then why do take everyone on.   Many of us are not pleased with the way economics is being played out and some on this forum do know about economics.
> 
> In the last few months on a global scale we have had unprecedented deflation.  That word means that shares, bonds, trust, businesses and property have droped by half and in some cases by 3 times.   These falls are growing by the day.  Wall Street just in one night (last night) by 10% (one tenth
> 
> ...




Explod, Are you saying the RBA will start raising rates by March next year?? If so why would they raise just after they have aggressively dropped them. Are you talking here or in Japan??????????


----------



## lioness (2 December 2008)

I cannot see them raising rates for another 1-2 years until the economy has had time to stimulate.

I agree the first sign of inflation will see them rise quickly again.

By the way Explod, I will lock my investment property in by June next year for 5% for 2 or 3 years and it will be cashflow positive. Others if they are smart will do the same and then if start rising, it won't make any difference to me.


----------



## wayneL (3 December 2008)

Just fulfilling a promise I made to The Tin Man some months back, that I'd supply details of Londinium price falls:

Thousands of homes worth £250,000 a year ago now up for sale for under £100,000


----------



## singlefished (3 December 2008)

Beej said:


> Correct!! That's the funny thing about these sorts of markets - everybody expects prices to fall, yet everybody is cashed up waiting on the sidelines for when they do! Only a lucky few will actually get anything decent at a low price before a floor is reached, volume dries right up and a recovery slowly begins.
> 
> Beej




Sorry Beej, have to interject....

What's you're definition of "everybody being cashed up?" Is it :-

a) saved a 10% deposit
b) saved a 20% deposit
c) don't need to talk to a bank as they have already saved 100%
d) have been pre-approved by a financial institution
e) already have a house and are looking to upgrade PPOR
f) already have a house and are looking to draw on the equity for IP

or

g) they are 100% guaranteed to remain healthy and in employment for the next "however long..."


I'm currently one of the individuals "on the sidelines" but to be frank (not my real name ), you have absolutely no idea about my own personal financial/employment situation nor the majority of folks out there.

Assumptions like these can be quite fatal for a naive investor (especially in this current financial climate) (not that I'm assuming you're naive ~ quite the opposite!) and I'm purely guessing here but you are quite possibly basing this assumption on your own financial situation and possibly the discussions you have within your own circle of friends and acquaintances????

Whatever the definition for cashed up is, the important point to note which you have highlighted several times is that *these people are on the sidelines....* and the simple truth is that there are currently more sellers than buyers in the market.

Now, that is a something worth considering (and the following is purely based on the assumption that the majority of potential purchasers out there don't come to this forum and this thread in particular), why are people too scared to enter the market and why are they staying on the sidelines.

I'm purely speculating here but they're probably more concerned with their own personal situation rather than the cheaper environment that the market is currently presenting. Thier own job security in the immediate future could be at the top of their list, closely followed by their current financial situation, followed by a whole host of other concerns.

I'd also be guessing here too, but I'd be quite sure that only a small majority of people out there are actually hanging out for cheaper prices ~ genuine PPOR homebuyers in general don't think like this, the only people who think like this are speculators and bottom pickers... (and property bulls trying to convince themselves that it wasn't a mistake not getting out of the market last year before the bubble burst)

The RBA certainly didn't see this whole financial crisis / global recession thingmy coming (by virtue of their unwinding of 6 years interest rate hikes in a short 3 month period) and you can be sure that nobody really knows how it's going to play out in the future and what effects it will have in our domestic economy.... and from this I'd be guessing that people will still be on the sidelines until the economy starts to show signs that the bottom has been reached, the worst has been past and the future is looking decidedly brighter.


----------



## numbercruncher (3 December 2008)

wayneL said:


> Just fulfilling a promise I made to The Tin Man some months back, that I'd supply details of Londinium price falls:
> 
> Thousands of homes worth £250,000 a year ago now up for sale for under £100,000





Oooh thats a rude interuption to the pyramid scheme hey !


Apparently it cant happen here because we have iron ore, a shortage of land and kangaroos - or something.


----------



## numbercruncher (3 December 2008)

I see China has joined the global house price crash - im so shocked  ...... wernt they spost to boom forever and take over the world and we would all be mandarin speaking within a generation ? You know kinda like the Japanese story but with that different ending ?

I guess 800m people living on 1.50 a day isnt the perpetual pipedream the permabulls made it out to be !

Another nail in the coffin !




> Dec. 2 (Bloomberg) -- House prices in Shanghai, Shenzhen and Guangzhou are plunging, and the global economy may grind almost to a halt next year because of it.
> 
> Construction of homes, offices and factories fell at least 16.6 percent in October after rising 32.5 percent a year earlier, according to Macquarie Securities Ltd. That's squeezing an economy already slowed by recessions in the U.S., Japan and Europe that have cut demand for exports. Building is the biggest driver of China's expansion, contributing a quarter of fixed- asset investment and employing 77 million people.
> 
> ...




http://www.bloomberg.com/apps/news?pid=20601109&sid=ay7HZbCLGLEA&refer=home


----------



## Aussiejeff (3 December 2008)

numbercruncher said:


> I see China has joined the global house price crash - im so shocked  ...... wernt they spost to boom forever and take over the world and we would all be mandarin speaking within a generation ? You know kinda like the Japanese story but with that different ending ?
> 
> I guess 800m people living on 1.50 a day isnt the perpetual pipedream the permabulls made it out to be !
> 
> Another nail in the coffin !




Hi bonecruncher 

I particularly like this bit...



> "Building is the biggest driver of China's expansion, contributing a quarter of fixed- asset investment and employing 77 million people.
> 
> The central bank cut its key interest rate by the most in 11 years last week and *the government said “forceful” measures were needed* to arrest a faster-than-expected economic decline.




_"Forceful"_ eh? Time for the West to get nervous? Or do they just mean flogging millions of slaves ... errr ... peasants to build, build, build ... anything? Who cares if it won't sell - JUST BUILD IT!!!

Unfortunately, we know where the build at all costs scenario will lead.... Unca Sam has a clue in that regard.


----------



## explod (3 December 2008)

lioness said:


> Explod, Are you saying the RBA will start raising rates by March next year?? If so why would they raise just after they have aggressively dropped them. Are you talking here or in Japan??????????





Its a long story but in short the RBA and the Government do not know what day is is from an honest savvy economists view.   They are simply following the crap that comes out of the USA.     What you need to focus on with money is   (1) supply and demand, and (2) the productivity behind it.

Unfortunately my visits to the computer are short at the moment as I have just gone through the hell of having my prostate removed.   But to those interested, it was nerve sparing and a total success.


----------



## CamKawa (3 December 2008)

explod said:


> Unfortunately my visits to the computer are short at the moment as I have just gone through the hell of having my prostate removed. But to those interested, it was nerve sparing and a total success.



Wishing you a speedy recovery explod.


----------



## Glen48 (3 December 2008)

ABC news they claim 1 in 5 Oz business are on the verge of going bankrupt, Holden dealer in Vic has gone under and all the cars to be sold no reserve..whats that going to do to other buyers and yards..our national debt is 658 Billion which I assume is banks and companies borrowings from overseas.
and rates down 1% so Stevens and co are worried.
Cash is king as deflation works your money is worth more


----------



## numbercruncher (3 December 2008)

explod said:


> Unfortunately my visits to the computer are short at the moment as I have just gone through the hell of having my prostate removed.   But to those interested, it was nerve sparing and a total success.





Speedy recovery Explod ! feel better soon 

You need a lap top and wireless connection to keep you entertained.


----------



## Mofra (3 December 2008)

explod said:


> Unfortunately my visits to the computer are short at the moment as I have just gone through the hell of having my prostate removed.   But to those interested, it was nerve sparing and a total success.



Best wishes & a speedy recovery Explod


----------



## wayneL (3 December 2008)

Mofra said:


> Best wishes & a speedy recovery Explod




Ditto mate, glad it went well.


----------



## Aussiejeff (3 December 2008)

Mofra said:


> Best wishes & a speedy recovery Explod




Echo..echo....echo.....  

Not too much sitting, ok?


Cheers,

aj


----------



## explod (3 December 2008)

Aussiejeff said:


> Echo..echo....echo.....
> 
> Not too much sitting, ok?
> 
> ...




Good point and thanks for the reminder AussieJeff.   Tendency to come and argue with you guys gets a bit strong sometimes.

Thanks everyone for the kind thoughts.   I am going to be fine.

regards explod


----------



## gfresh (3 December 2008)

Stay fighting fit explod! contributions are always welcome for a different perspective.


----------



## Temjin (3 December 2008)

explod said:


> Good point and thanks for the reminder AussieJeff. Tendency to come and argue with you guys gets a bit strong sometimes.
> 
> Thanks everyone for the kind thoughts. I am going to be fine.
> 
> regards explod




Take good care of ur health, explod.  It's a much higher priority than trying to argue on the internet.  Best wishes for a speedy recovery.


----------



## Glen48 (3 December 2008)

ABC radio to day told of Melbourne houses prices down 10% another Female buyer explained its a good time to buy rates going down, house prices going down.. she deserves to own a home with statements like that.


----------



## IFocus (3 December 2008)

Apparently its all OK Robots is right


THE economics of Australia's $3.3 trillion housing market is widely misunderstood, with sensationalist claims that a housing bubble caused the global credit crisis and that Australian house prices will fall by 30 per cent to 50 per cent.

http://www.theaustralian.news.com.au/story/0,25197,24742139-5013480,00.html


----------



## numbercruncher (3 December 2008)

IFocus said:


> Apparently its all OK Robots is right
> 
> 
> THE economics of Australia's $3.3 trillion housing market is widely misunderstood, with sensationalist claims that a housing bubble caused the global credit crisis and that Australian house prices will fall by 30 per cent to 50 per cent.
> ...





The author of that article, Christopher Joye, makes his living out of the property bubble via rismark international.


----------



## robots (3 December 2008)

explod said:


> Then why do take everyone on.   Many of us are not pleased with the way economics is being played out and some on this forum do know about economics.
> 
> In the last few months on a global scale we have had unprecedented deflation.  That word means that shares, bonds, trust, businesses and property have droped by half and in some cases by 3 times.   These falls are growing by the day.  Wall Street just in one night (last night) by 10% (one tenth
> 
> ...




hello,

yeah leave "us" alone, 

what a fantastic day, great report out from Rismark a fine institution (you would be all over it if something else was revealed)

hope everyone is well and goodluck 

thankyou
robots


----------



## Beej (3 December 2008)

numbercruncher said:


> The author of that article, Christopher Joye, makes his living out of the property bubble via rismark international.




Gee, he must have some pretty sound facts and arguments there then - you can always tell that if you guys "play the man" rather than "the ball" 

Eg:



> Recent analysis by the Reserve Bank of Australia has comprehensively demonstrated that housing affordability is not at an all-time low. According to one of the Reserve Bank's benchmarks, the representative household in June 2007 had more real disposable income left over after purchasing a home and servicing a 90per cent mortgage than at any other time since June 1982.
> 
> The bank also found that the representative household could afford to buy 33 per cent of all homes in June 2007, which, although less than the historical average of 45 per cent, was markedly better than the 13 per cent of homes available to it in June 1990.




and:



> Perhaps the best insight into mortgage stress is default rates. Only 0.4per cent of all home loans on Australian bank balance-sheets were delinquent in August 2008, a fraction of equivalent rates in the US (more than 2.5 per cent) and Britain (1.3 per cent). The Reserve Bank has noted that although August was the peak of its recent monetary policy cycle, Australian delinquency rates were still materially lower than levels experienced in the mid-1990s.




and some more good stuff:



> The Reserve Bank believes Australia's housing market is leading the US by three years, having entered into its downturn in 2004. There is also a consensus between the Reserve Bank and most economists that the doomsayers' predictions will be proven wrong. A striking counterfactual is the 1990-92 recession, when unemployment hit 10.9 per cent yet house prices rose by 2 per cent a year according to the Australian Bureau of Statistics.




But I guess this whole article and all the facts therein can just be ignored because this guy is somehow a part of the great property ramping conspiracy/cartel!

Cheers,

Beej


----------



## explod (3 December 2008)

robots said:


> hello,
> 
> yeah leave "us" alone,
> 
> ...





Well          I probably would not emphasise it too much ole pal, the ice is very thin at times


----------



## numbercruncher (3 December 2008)

More good news for the property permabulls - the QLD Government has introduced legislation making it illegal for banks to sell reposessed houses below " market value " !

Isnt it just amazing how much the Government is getting behind the bubble ?

 The lengths they are going to is phenomenal ! How is this goign to be policed though ?

if a property is sent to auction no reserve, the selling price is surely market value ?




> Premier Anna Bligh on Wednesday announced that laws would be fast-tracked through parliament this week to prevent financial institutions intentionally selling repossessed properties at below market value.




http://www.brisbanetimes.com.au/news/queen...8257105517.html


----------



## drsmith (3 December 2008)

Market value is what the highest bidder is prepared to pay on any given day so this sounds like nothing more than an exercise in political spin by the QLD government.


----------



## gfresh (3 December 2008)

All of the points in that Australian article have been dismissed previously in here..

The usual stuff over shortage of supply, which again is very difficult to quantify in real terms as people share, live with parents, move around, a lot more. That just as much a questionable "fact" as some of the more bearish beliefs. 

The fact the RBA's belief that the market peaked in 2004 is farcical.. maybe this is true for Sydney, but for the other states, no. 

British house prices have fallen only 6%  that is contrary to all other data I have read from over there.. Soon as they start saying "..but but .. the sharemarket has fallen more, yes, it has so there", you can tell they have a weak argument. That is not the point. 

The article also compares affordability too simply by saying "rates have dropped, therefore property is more affordable". Yes, in simple terms, but there is a lot more to it than that, the wealth of many in the middle to higher end has really been wiped by share market crashes, corporate collapses, bankruptcy, and other issues are rising also. Lower end next 2009 may also effect a lot more in other areas of the market too. This also effects "affordability" for those in those markets doesn't it. 

Debt levels are the problem for existing home owners, which is very hard to quantify until hard times are experienced by a family when existing debts need to be serviced with reduced, or a job loss. You can take on as much debt as you like, as long as you can meet the minimum repayments. The only problem is when you can't even meet those minimum payments as a result of job loss, illness, etc. 

Those default rates are also old data as well.. it's now doubled to 0.8% and could well be rising. If you look at certain areas (Helensvale, QLD say), it's in the order of several percent..



> Fitch Ratings said mortgage performance was expected to continue to deteriorate on the back of the Christmas spending season and the rapidly slowing economy.
> 
> ``On a national basis, Australian mortgages, by value, that missed one or more payments, increased to 2.13 per cent from 1.88 per cent,'' said Ben McCarthy, from Structured Finance, who authored the Fitch report.




If you've got 1 in 50 people missing a payment, I would think things aren't going that well out there. 

Hard to tell the bank's lending capabilities heading into 2009 to be honest as longer-term funding has to be rolled over from o/s, and in the case of a recession hitting, many businesses will be defaulting on their loans, individuals will be defaulting on their credit cards, etc, etc. This will impact on the amount that can be lent as risk management goes into overdrive. 

Already ANZ looking weak, requiring 90% LVR, refusing to pass on the full rate from yesterday, still exposed massively to Centro. Read today that the banks' hedging against US Centro has blown up due to heavy falls in Aussie dollar, furthering their exposure, We will hear more on ANZ soon I'm sure. 

Token bear articles: 

http://www.goldcoast.com.au/article/2008/12/03/28105_gold-coast-real-estate.html

http://www.goldcoast.com.au/article/2008/12/03/28135_gold-coast-real-estate.html - 20% of Goldcoast agents calling it quits, what a shame.



> GOLD Coast real estate agents have felt the fury of the financial crisis, with their numbers falling by a fifth, according to a senior industry figure.
> 
> Real Estate Institute of Queensland Gold Coast chairman Peter McGrath estimated 20 per cent of real estate agents had quit property.
> 
> ...


----------



## Beej (3 December 2008)

gfresh said:


> All of the points in that Australian article have been dismissed previously in here..




Yes well, I would tend to believe the analysis, data and views of the RBA with all their resources, expertise, and their ability to actually influence/manage economic matters through monetary policy, over a bunch of unknown screen names espousing gloomy and unproven views on a kooky internet forum anyway. But hey, that's just my opinion 

EDIT: And just to debunk one point directly - pockets of real estate slump are never hard to find - see western Sydney between 2004 and 2007, but strangely no-one is pointing at those area's anymore as the prices there are actually recovering now.... Currently it is SEQs turn - big deal, and the Gold Coast in particular, which has always been the original "land of the white shoe brigade" with a rich history of shonky real estate deals pushed on unsuspecting punters who later get burned - nothing new there whatsoever! Certainly no evidence of some sort of nation-wide crash or catastrophe...

Beej


----------



## gfresh (3 December 2008)

_Of course the RBA knows best, rising interest rates as the rest of the world was faultering, and failing to see the true extent of the crisis, when even amateurs on ASF were talking about how it would get much worse 12 months ago._


----------



## robots (3 December 2008)

Beej said:


> Yes well, I would tend to believe the analysis, data and views of the RBA with all their resources, expertise, and their ability to actually influence/manage economic matters through monetary policy, over a bunch of unknown screen names espousing gloomy and unproven views on a kooky internet forum anyway. But hey, that's just my opinion
> 
> Beej




hello,

hahaha, great writings Beej

a lot of professors around these days, you get a blog and you a guru, read a blog and you a guru on all matters

and life just keeps rolling on man, 

just worked out going to pay off one mortgage 3yrs quicker if keep up same payments, so have gone from 25yr to 21yr to 18yr

dont know what to do with all the money? this is unbelievable

thankyou
robots


----------



## Beej (3 December 2008)

gfresh said:


> _Of course the RBA knows best, rising interest rates as the rest of the world was faultering, and failing to see the true extent of the crisis, when even amateurs on ASF were talking about how it would get much worse 12 months ago._




Well maybe you guys should all lobby for posts on the RBA board then???  Or maybe you just got lucky? Anyone can get a call right every now and then if you say it for long enough?

Personally I'm not convinced the RBA was wrong last year anyway - conditions here were very different to most other western economies. It may yet turn out that we have a shorter and shallower downturn that the US, UK etc (Ie, a similar situation as for Canada), due the delay in the impact of the global situation hitting home here, plus the amount of fiscal and monetary stimulus available. If this turns out to be the case the RBA will be applauded.

I guess a key thing to understand with economics is there are no certainties - only probabilities.

But I am still confident the bears on this thread will all be proven wrong re the great Australian real estate price crash that isn't going to happen. Time will tell!

Beej


----------



## Glen48 (3 December 2008)

The RBA went wrong putting up rates in March 08.
Those sleeping at night should be able to hear the $$ ticking away as their property is depreciating.


----------



## robots (3 December 2008)

Glen48 said:


> The RBA went wrong putting up rates in March 08.
> Those sleeping at night should be able to hear the $$ ticking away as their property is depreciating.




hello,

all appreciating here in St Kilda Glen48, 14.7% Sept 08, $$$ in my eyes

i know i know, I have to wait it takes time 6mths, 1 yr

thankyou
robots


----------



## grace (3 December 2008)

Glen48 said:


> The RBA went wrong putting up rates in March 08.
> Those sleeping at night should be able to hear the $$ ticking away as their property is depreciating.




I live in the bush.  Auctions on rural property are now getting cancelled.  No inspections, noone at auction.  Buyers have gone.  It is so illiquid.  Lucky we are future buyers not sellers.


----------



## So_Cynical (3 December 2008)

numbercruncher said:


> The author of that article, Christopher Joye, makes his living out of the property bubble via rismark international.




http://www.rismark.com.au/

_Rismark International ("Rismark") is a global funds management business that has expertise in the execution of sophisticated real estate research and investment strategies. Rismark also has a long history of advising Australian and overseas governments on the development of innovative economic policies as they relate to housing and financial markets.

As a by-product of its quantitative research activities, Rismark has developed the technology and intellectual property underlying the market-leading RP Data-Rismark hedonic property price indices and related automated property valuation models._


----------



## explod (3 December 2008)

Beej said:


> Well maybe you guys should all lobby for posts on the RBA board then???  Or maybe you just got lucky? Anyone can get a call right every now and then if you say it for long enough?
> 
> 
> I guess a key thing to understand with economics is there are no certainties - only probabilities.
> ...




Most of the bears could not care how they are proven and are not setting out to prove.   If economics are studied properly as a science there are certainties.   The top economic academics that I have followed got it right because they do know.    The banking system only exists to make money for shareholders; and governments survive on popularity which is a very bad mix if you want proper and truthfull economic outcomes.

There are some contributors on these forrums who a retired bankers and university lecturers on economics and many other related backgrounds, but make thier contributions in a way that helps others learn by being part of normal discussion.   If an ex Prime Minister was know by real identity he would be too busy signing autographs to take part in the general conversation.

Your post is one of the more ignorant that I have seen in awhile, there have been others just as bad in the past, but those who have hung in there have become part of this very good team and learnt that all is not just chance.


----------



## numbercruncher (3 December 2008)

robots said:


> hello,
> 
> all appreciating here in St Kilda Glen48, 14.7% Sept 08, $$$ in my eyes
> 
> ...





You still havnt proved St Kilda went up 14.7% in September yet you repeatedly say it did @! 

Why are you doing this ?


----------



## Temjin (3 December 2008)

Beej said:


> Yes well, I would tend to believe the analysis, data and views of the RBA with all their resources, expertise, and their ability to actually influence/manage economic matters through monetary policy, over a bunch of unknown screen names espousing gloomy and unproven views on a kooky internet forum anyway. But hey, that's just my opinion




Funny though, the same bearish independent economists/analysts also uses the SAME data that RBA do (through ABS and other public sources) with their research. 

I would not put too much faith in RBA themselves anyway because they do have a vested interest in seeing the economy "not to fail". 

Likewise, I would tend to believe the analysis, data and views of those with unbiased opinions and interests and their ability to analysis the economy through decades of studies than over a bunch of overly optimistic and vested interest parties who have much to loss if property prices fall.

The fact remains that the "bullish" views are also unproven at this stage as the whole crisis is not over yet. We should all come back here in 3 years time and see what happens.  

And like I said again in many many posts ago (and got completely ignored), I don't expect to change the opinions of those with a bullish view here because it's practically impossible anyway. I use this an example. If I owned several IPs and I was bullish, why would I agree to anyone who think I was wrong and that I should start selling my properties? Impossible! 

At least those who are undecided can look back the entire thread and take a good look at the arguments presented from both sides, and preferably from sources where the party has no vested interests or whatsoever. (i.e. ignore government analysis or property interest groups)


----------



## grace (3 December 2008)

It seems the Property Law Act in Qld already says that mortgagees must take reasonable care to sell at market value.

The Qld Govt are now putting a fine of $20 000 on banks if they don't take reasonable care.



> Banks will be outlawed from conducting mortgage fire sales in Queensland in a move to protect struggling homeowners.
> 
> Premier Anna Bligh on Wednesday announced that laws would be fast-tracked through parliament this week to prevent financial institutions intentionally selling repossessed properties at below market value.
> 
> ...




This fine would be hard to impose, after all, a property is only worth what someone is willing to buy it for.


----------



## Ruincity (3 December 2008)

numbercruncher said:


> You still havnt proved St Kilda went up 14.7% in September yet you repeatedly say it did @!
> 
> Why are you doing this ?




I too was wondering where he had plucked this one from.. 

Found this:

http://209.85.173.132/search?q=cach...Kilda+14.7%+Sept+08&hl=en&ct=clnk&cd=10&gl=au

*Under 30 houses sold so results might be skewed a little. 

Some interesting data in there be interested to see the next results. 

I personally think that St Kilda has been undervalued in the past few years anyway.. 
The fact that it is full of scum bags and drug heads doesn't help..

Great area regardless IMO.


----------



## Temjin (3 December 2008)

Temjin said:


> Funny though, the same bearish independent economists/analysts also uses the SAME data that RBA do (through ABS and other public sources) with their research.
> 
> I would not put too much faith in RBA themselves anyway because they do have a vested interest in seeing the economy "not to fail".




And to add onto this, it's funny how much people hated RBA back then for rising interest rates when their "resources, expertise and expert analysis" tell them that inflation is a threat to the economy.

Now when they start reducing them again, people start praising. Simply amazed with the vested interests of everyone and which side they tend to stick with when it's benefiting them. (and how much they don't side with when it doesn't!) 


From dailyreckoning.com.au 



> If the RBA over-cooked things to the tight side in raising rates through 2007, you get the feeling they are making the same mistake on the loose side, and that it will lead to an unwelcome and massive rise in inflation in 2009, probably after the middle of the year. Central banks, like markets, tend to overshoot first and ask questions later.


----------



## Temjin (3 December 2008)

grace said:


> This fine would be hard to impose, after all, a property is only worth what someone is willing to buy it for.




It's a stupid law, and I agree the fine would be extremely difficult to enforce.

What is market value? What if everyone decided that the market value of a property is below what the government thinks it's good for the economy and its voters? Start fining everyone trying to buy properties at a low price? Crazy!


----------



## 2BAD4U (3 December 2008)

explod said:


> If economics are studied properly as a science there are certainties.




That may be true, but the problem is most economists can never agree. Even when you study economics you are taught different views and ways to interpret data.  So even the teachings of economics leads to disagreement.



Temjin said:


> I would not put too much faith in RBA themselves anyway because they do have a vested interest in seeing the economy "not to fail.




Vested interest, well derrrr. It's their job.  In fact it is specified as one of their goals via the Reserve Bank Act, 1959.



Temjin said:


> And to add onto this, it's funny how much people hated RBA back then for rising interest rates when their "resources, expertise and expert analysis" tell them that inflation is a threat to the economy.




Not me. If they hadn't raised interest rates we would be in a far worse situation than we are now.  How many more people would have jumped on the housing boom train and over committed themselves if rates hadn't been raised.  Let's not forget inflation hit 5.0%.


----------



## Glen48 (3 December 2008)

We never had a housing boom or any other sort of boom, this is a credit bubble nothing else, which explains why wages have been low yet everything  else connected with money grew all on borrowed money, every time some one spend $180.00 only $100.00 was their own hard earned the rest was some one  super or bankcard loan.
Like all loans they have to be paid back and if some one else is going to pay for your debt it will not fix the problem. 
Meaning every thing connected to money has to deflate.It won't happen over night but it will happen.


----------



## lakemac (3 December 2008)

I am going to throw a share cat amoungst the property pigeons...

For those of you who are trying to make up their minds between investing in property vs shares have a look at this calculation I did here...
https://www.aussiestockforums.com/forums/showthread.php?t=4452&page=3

And thank you guys for the post from Bloomberg about property prices starting to drop in China. The start of the end phase has begun.

Get ready for the forclosures in China then buy into the market...


----------



## 2BAD4U (3 December 2008)

Oh the poor down trodden worker, never had a pay increase, never had a tax cut, never changed jobs or got a promotion, never got a handout from the government.  Bring on the revolution.

Doesn't matter how much people earn, they will always want 10% more and it will always be the same argument that wages aren't keeping pace with inflation.  But you are right, economics is based around equilibrium and prices will move to maintain that equilibrium.


----------



## Indie (3 December 2008)

grace said:


> It seems the Property Law Act in Qld already says that mortgagees must take reasonable care to sell at market value.




First peak credit, now peak stupidity.


----------



## lakemac (3 December 2008)

Equilibrium of sorts.

More like an unstable equilibrium.
Prices (or supply and demand if you must) are only in equilibrium for a single transaction - when the buyer and seller agree on a price.

At all other times the equilibrium is unstable; always searching for a new price level based on more recent information.

What is worse is the classic economic supply demand curve for say the price of money gets distorted by the central banks when they artificially change interest rates and create more fake money. The equilibrium is anything but, it is a total distortion.

I have a series of power point slides for anyone interested in seeing how classical economic curves get wacked out of shape. Economics 202.


----------



## lakemac (3 December 2008)

Indie said:


> First peak credit, now peak stupidity.



ROTFLMAO...
Lubricate that with some peak oil and add in a dash of climate panic and you have the perfect peaky whipped egg white for a pavlova.

I am salivating already


----------



## robots (4 December 2008)

2BAD4U said:


> *Oh the poor down trodden worker, never had a pay increase, never had a tax cut, never changed jobs or got a promotion, never got a handout from the government.  Bring on the revolution.*
> 
> Doesn't matter how much people earn, they will always want 10% more and it will always be the same argument that wages aren't keeping pace with inflation.  But you are right, economics is based around equilibrium and prices will move to maintain that equilibrium.




hello,

spot on 2bad crew, 

get a better job, work 2, all of a sudden its not 7x salary its 5x salary

thats what most do in life,

how is that stat going? we still at 7x salary?

I have a spare highlighter if you want me to post it to you Numbercruncher, you can practice on some old notes (ie. highlight the entire town or suburb)

dont forget to tell the family you love them this morning and enjoy the ride team

thankyou
robots


----------



## numbercruncher (4 December 2008)

2BAD4U said:


> Oh the poor down trodden worker, never had a pay increase, never had a tax cut, never changed jobs or got a promotion, never got a handout from the government.  Bring on the revolution.
> 
> Doesn't matter how much people earn, they will always want 10% more and it will always be the same argument that wages aren't keeping pace with inflation.  But you are right, economics is based around equilibrium and prices will move to maintain that equilibrium.





We now have deflation, hopefully everyone gets a pay cut to keep pace !


----------



## Beej (4 December 2008)

Temjin said:


> And to add onto this, it's funny how much people hated RBA back then for rising interest rates when their "resources, expertise and expert analysis" tell them that inflation is a threat to the economy.
> 
> Now when they start reducing them again, people start praising. Simply amazed with the vested interests of everyone and which side they tend to stick with when it's benefiting them. (and how much they don't side with when it doesn't!)





Nice straw man!

Beej


----------



## aleckara (4 December 2008)

http://www.theaustralian.news.com.au/story/0,25197,24742139-7583,00.html

According to this house prices haven't fallen too much at all despite all the negative comments. Seems like the policy makers here have a lot more tools to keep the bubble going. Shouldn't governments encourage prices to go down giving greater wealth to everyone? The definition of price is just that - the cost or suffering required to get something. Seems like they want to bring suffering.
I don't know who's right in this debate and frankly the idea of just going into debt at the top of the boom and living with that burden dragging me down for the rest of my life scares me.

All I can say is I wish I was born 20 years earlier. My grandparents were telling me when you didn't need to speak English and you could still pay off a big block house in a few years.


----------



## pistol72 (4 December 2008)

And like I said again in many many posts ago (and got completely ignored), I don't expect to change the opinions of those with a bullish view here because it's practically impossible anyway. I use this an example. If I owned several IPs and I was bullish, why would I agree to anyone who think I was wrong and that I should start selling my properties? Impossible! 

spot on temjin,
rose coloured glasses! will brainwash ourselves into believing the outcome we want!
P


----------



## numbercruncher (4 December 2008)

aleckara said:


> http://www.theaustralian.news.com.au/story/0,25197,24742139-7583,00.html
> 
> According to this house prices haven't fallen too much at all despite all the negative comments. Seems like the policy makers here have a lot more tools to keep the bubble going. Shouldn't governments encourage prices to go down giving greater wealth to everyone? The definition of price is just that - the cost or suffering required to get something. Seems like they want to bring suffering.
> I don't know who's right in this debate and frankly the idea of just going into debt at the top of the boom and living with that burden dragging me down for the rest of my life scares me.
> ...






Forget even 20 years ago ! this bubble is of the last decade as the world was flooded with money from central banker idiots and then lent to consumers completely ignoring traditional lending criteria ....

I bought my first house in 01 for 175k and it was a nice house, there was loads of shacks under 100k at the time and loads of blocks for 50k.

So its only this centuary that things went into bubble lala land. 20 years ago they had it even cushier I understand ?

This generation is getting shafted if they are silly enough to pay current asking prices though ! (imho)


----------



## Beej (4 December 2008)

numbercruncher said:


> Forget even 20 years ago ! this bubble is of the last decade as the world was flooded with money from central banker idiots and then lent to consumers completely ignoring traditional lending criteria ....
> 
> I bought my first house in 01 for 175k and it was a nice house, there was loads of shacks under 100k at the time and loads of blocks for 50k.
> 
> ...




You obviously don't live in Sydney.....it's ALWAYS been really expensive here - even 20 years ago.

So here we go with all the Gen-Y whinging posts again "oh we are so hard done by! Wish I was born 20 years ago!" - NEW FLASH, it's NEVER been easy to get ahead, own your own house etc! Those who have done well have made prudent decisions and used debt wisely (there is nothing wrong with borrowing money to buy a house, contrary to conventional wisdom here!!).

Personally, I DON'T wish I was born say 200 years ago, even though I could have got land FOR FREE in Australia back then! 

Beej


----------



## Pommiegranite (4 December 2008)

Beej said:


> You obviously don't live in Sydney.....it's ALWAYS been really expensive here - even 20 years ago.
> 
> So here we go with all the Gen-Y whinging posts again "oh we are so hard done by! Wish I was born 20 years ago!" - NEW FLASH, it's NEVER been easy to get ahead, own your own house etc! Those who have done well have made prudent decisions and used debt wisely (there is nothing wrong with borrowing money to buy a house, contrary to conventional wisdom here!!).
> 
> ...




Beej, is it easier to get on the property ladder today than it was 20 years ago? 'Yes', 'No', or 'The same' answers only please.


----------



## Beej (4 December 2008)

Pommiegranite said:


> Beej, is it easier to get on the property ladder today than it was 20 years ago? 'Yes', 'No', or 'The same' answers only please.




I say just as easy (or just as hard!).

But your question is loaded and not clear enough. Ie:

Is it as easy to buy the SAME physical property that someone else might have bought 20 years ago? No.

Is it as easy to buy the "equivalent" property as one bought 20 years ago at the same relative price point in the 20 years further evolved market? Yes.

You might need to think carefully about the difference between my 2 questions.

Beej


----------



## wayneL (4 December 2008)

Beej said:


> I say just as easy (or just as hard!).
> 
> But your question is loaded and not clear enough. Ie:
> 
> ...




ROTFLMAO

Good questions, but you might need to think more carefully about the answers.


----------



## aleckara (4 December 2008)

numbercruncher said:


> Forget even 20 years ago ! this bubble is of the last decade as the world was flooded with money from central banker idiots and then lent to consumers completely ignoring traditional lending criteria ....
> 
> I bought my first house in 01 for 175k and it was a nice house, there was loads of shacks under 100k at the time and loads of blocks for 50k.
> 
> ...




My example of my grandparents - they were non-English immigrants working in very poor jobs who did not receive more than 3 years in schooling (primary level). They only had to work 10 years before retiring to pay off a house close to the city (in Sydney). They sold it to move to a greater block of land further out.

These days to pay off a house in the same amount of time you need to be qualified, or you need to work a lot more hours than they did. Lets put it this way - I will work the same amount of time as them to pay off a house with my wage alone however I had to study for that wage so in effect I'm working harder. Other people may not have studied yes but they had to be more entrepreneurial or whatever to achieve the same thing. The point is you need to be smarter or work harder or both to get the same thing as they did (i.e the effects of inflation).

Sydney will always be higher than everywhere else now. Retirement savings will need to come from somewhere and the government certainly doesn't want to pay it. It will fall to people being able to cash in on house prices leaving young people to foot the bill imho.

I don't know if its whinging as such Beej. If it doesn't make sense I won't go into it; no need for complaining. If my initial impression of the situation is wrong and I see numbers stating it is then great; I'm in a better situation than I can see with the facts I've been presented. My issue is that we are in an environment of mixed signals particularly here in Sydney and the average young person sees the price of houses vs everything else and something doesnt add up.


----------



## Adam A (4 December 2008)

I think its easier today

I mean 20years ago it was tough to get a loan

You needed a job! and at least a 15 to 20% deposit and a savings record to prove how you got that deposit (no hand outs from mum and dad,inheritance,or lottery wins allowed)

You also had to have face to face meetings with the bank manager


----------



## wayneL (4 December 2008)

Adam A said:


> I think its easier today
> 
> I mean 20years ago it was tough to get a loan
> 
> ...




Good point.

Here in the UK, those days have returned. It is impossible to get a loan under the same terms as a year ago. Lending is down 150% or something (hyperbole because I can't remember the exact figure).

I would be very surprised if those days don't also return to Oz.


----------



## Mofra (4 December 2008)

lakemac said:


> I have a series of power point slides for anyone interested in seeing how classical economic curves get wacked out of shape. Economics 202.



lakemac,

Are you able to post some here, or are they on another thread? Sounds like they would add something to the debate.

Cheers


----------



## Beej (4 December 2008)

wayneL said:


> ROTFLMAO
> 
> Good questions, but you might need to think more carefully about the answers.




It's OK, I wouldn't expect everyone to get it. (Especially someone who isn't even around to see what's actually happening in the market over here!).

How are things back in the "mother country" anyway? Maybe things will regress enough that they will pack you up onto a slow boat and send you back to Australia, where after 7 or 14 years you will given a free plot of land?? 

Beej


----------



## hotbmw (4 December 2008)

it was easier a decade or 2 ago to pay off the loan. this is irrefutable.

houses cost about 9.5 times your annual wage now

it was about 3 times your annual wage back then.


----------



## wayneL (4 December 2008)

Beej said:


> It's OK, I wouldn't expect everyone to get it.
> 
> How are things back in the "mother country" anyway? Maybe things will regress enough that they will pack you up onto a slow boat and send you back to Australia where after 7 or 14 years you will given a free plot of land??
> 
> Beej



If Britain votes the Liebour Party back in in 2010, that is a distinct possibility. Thankfully, that possibility seems remote.

I got it, I just disagree, but defer to the point made by Adam and ease of getting ludicrous levels of finance. I believe that is in the process of changing however.


----------



## Adam A (4 December 2008)

These days are here allready wayne 

Ive got a few people i know in the home loan industry,they report that tightning up of the lending criteria is allready happening,seams their worried about first home buyers using all gov hand outs for deposits and not having any of their own equity(skin) in the game

Their also worried about two incomes being used to service loans,especially if one of them is only part time!


----------



## ROE (4 December 2008)

hotbmw said:


> it was easier a decade or 2 ago to pay off the loan. this is irrefutable.
> 
> houses cost about 9.5 times your annual wage now
> 
> it was about 3 times your annual wage back then.




I dont think this is true...around 6-7 times but still higher than the norm


----------



## ROE (4 December 2008)

Pro Property will like this 

http://www.news.com.au/business/story/0,27753,24747848-31037,00.html

but still too expensive for me  so I dont touch it


----------



## Beej (4 December 2008)

hotbmw said:


> it was easier a decade or 2 ago to pay off the loan. this is irrefutable.
> 
> houses cost about 9.5 times your annual wage now
> 
> it was about 3 times your annual wage back then.




You are so wrong on all 3 counts:

1) National median price is currently more like 7x average full time annual earnings. Obviously this varies from region to region.

2) 20 years ago it was around 5x (varies a lot depending on the actual year because there was a MASSIVE boom in 88/89 that eclipses this current one). NO WAY were houses 3 times average wages back then! That stat is one of the great urban myths of the housing affordability debate.

3) 20 years ago (and up until about 10 years ago) interest rates were on average DOUBLE what they are now (and averaged over the past 10 years) - so in fact you could easily argue it is cheaper now to service the typical loan.


Beej


----------



## hotbmw (4 December 2008)

property is just too expensive now.

whats the average wage in sydney for 20 to 40 year olds lets say?

in newcastle it couldnt be more than 50k.

to live in a nice area in a decent home at its peak a year or so ago u were paying over 400k.

so maybe 8 times is the norm here.

anyway whatever the number is, the number in the 2 decades ago was 3


----------



## hotbmw (4 December 2008)

sorry beej, u r more accurate, in 1988 the ratio was 4.8 times.

in 2006 at its peak it was over double this


----------



## Beej (4 December 2008)

hotbmw said:


> sorry beej, u r more accurate, in 1988 the ratio was 4.8 times.
> 
> in 2006 at its peak it was over double this




That's OK. And thanks for researching it and informing the forum of the facts, as there are a lot of myths around about this issue!

And yes 2006 was the peak, but it has softened since then, without any sort of major crash. That is typical of how the housing market adjusts over time (just like early 90s after the 88/89 boom).

Cheers,

Beej


----------



## aleckara (4 December 2008)

Beej said:


> You are so wrong on all 3 counts:
> 
> 3) 20 years ago (and up until about 10 years ago) interest rates were on average DOUBLE what they are now (and averaged over the past 10 years) - so in fact you could easily argue it is cheaper now to service the typical loan.
> 
> ...




Why do people think this? It isn't interest that matters nearly as much as the principal. If interest rates were higher then there is a saving grace for buyers - it is easier to save for a house since interest income is higher and when you do the principal is less. It encourages saving in the economy rather than debt. IMHO it is much better to have higher interest rates and lower prices than the other way around for the buyer. If interest rates completely subdue house price growth this is a good thing. We aren't getting wealthier by letting house prices rise, we are just inflating the value of all assets.

Now with the higher principal we are probably paying the same per week after interest rate reductions. However that interest is still high overall (because higher principal equals higher absolute interest payments). The difference is that we still have more principal to pay off so things are worse for the new buyer.

Just because I can buy a laptop on credit doesn't make it more affordable, just makes it more accessible in the short term only. In the long term the price is higher and the debt still needs to be serviced so net decline in wealth to the new buyer over the old one. We should really measure affordability excluding interest rates. We don't measure affordability this way for anything else out there.

Sorry if the post is too long. Needed to get that out - that argument of 22% interest has been used on me too long now.


----------



## hotbmw (4 December 2008)

i still think there is several years of slow downward adjustment for property.....

its still a bit too expensive for it to be interesting to invest.

2009 will be a bad year for all


----------



## Ageo (4 December 2008)

I think what the property bulls dont understand is that if growth continues like it has in the past then what happens in 50-100yrs? will house prices be 30 times more the average wage? sometimes i like to believe we live in lala land


----------



## Beej (4 December 2008)

Ageo said:


> I think what the property bulls dont understand is that if growth continues like it has in the past then what happens in 50-100yrs? will house prices be 30 times more the average wage? sometimes i like to believe we live in lala land




That's also a bogus argument. New property is being created all the time - the median price will long term only grow essentially in line with wages (or more accurately, in line with average disposable income less housing costs). Over long periods of time, as established houses become too out of reach, more affordable housing will end up getting built (maybe more high density, maybe cheaper construction/materials, maybe cheaper location), bringing the MEDIAN back in line, but that doesn't stop the value of an existing asset increasing at a faster rate than the median - it just becomes more "exclusive".


Beej


----------



## Ageo (4 December 2008)

Beej said:


> That's also a bogus argument. New property is being created all the time - the median price will long term only grow essentially in line with wages (or more accurately, in line with average disposable income less housing costs).
> 
> Beej





So what your saying Beej is that property growth cannot be sustainable as it has been in the past?


----------



## gfresh (4 December 2008)

The main issue is probably not affordability, but what the rest of the economy is doing, and how many other commitments everybody else has, and how many jobs are lost. Of course this could be better than expected as well. Economic indicators are probably more useful at the moment to decide this rather than arbitary affordability measures... 

Latest building approvals out today. FHG brought in start of October, no signs of anything changing in that first month whatsoever for QLD. Next 3 months should be interesting with respect to this..


----------



## hotbmw (4 December 2008)

but beej, there cannot be decent growth in property prices in major cities over the next 2 to 3 yrs.  there will be pockets of opportunities of course but with bad economic news on the horizon, an increase in job loses in 2009 and wages to not increase dramatically in the near future, its just not sustainable for 5 to 10% growth p.a. over the next few years. there needs to be a few years of either stagnation or a few years of slight negative growth each year.

dont u agree?

or do u see the next 2 to 3 years of continued growth in most major cities?

im a believer of slight negative growth for the next 2 years at least.


----------



## Beej (4 December 2008)

Ageo said:


> So what your saying Beej is that property growth cannot be sustainable as it has been in the past?




There's no question that the last 10-15 years has seen a period of un-repeatable growth yes, demographic shifts (1 -> 2 incomes per household), shift from high inflation/high interest rate economy to low inflation/low interest rate one etc. These factors are one-offs.

However, that doesn't stop property continuing to increase in price into the future (long term), the question is by how much? Certainly less than in the last 10 years in my view, but also no great crash coming in my view 



> dont u agree?
> 
> or do u see the next 2 to 3 years of continued growth in most major cities?
> 
> im a believer of slight negative growth for the next 2 years at least.




Yes I agree essentially with your outlook (I've stated a similar view a few times in this thread). What I am arguing against is the "great house price crash" scenario.

Remember, even in the "flat to mildly negative growth for the next 2-3 years" outlook, the numbers for owning your own PPOR vs renting still stack up extremely well. And for investment, if you get a cash-flow positive from day one thing going, it looks pretty good as well. Property is for the long term remember!

Cheers,

Beej


----------



## gfresh (4 December 2008)

Dwelling approvals for everybody's favourite state NSW :evilburn:

Those figures are amazing, lowest approvals in 25 years. If you are in the bullish camp, that's one heck of supply falling off a cliff, which is good for future prospects.

Accompanying article: http://business.theage.com.au/business/building-approvals-slump-20081204-6r46.html



> New home building approvals tumbled in October to their lowest level since March 2001 as the Government's stimulus package and rate cuts failed to ease fears about the future of the economy.


----------



## hotbmw (4 December 2008)

beej, im looking at this from the point of view where do i want my $ invested in the next 3 to 4 years.
im half in cash now and half in property which is on the market to sell.

when its 100% cash in 3 to 4 months i want my $ in shares.

the outlook in shares for the next 3 to 4 yrs is better than property in my opinion. there will be a spike up for a great return at 1 point and then maybe 10% p.a.

in 2 years or so i will buy an investment property again closer to the bottom and then expect a 5% capital growth p.a., ill lock in a 5 year low interest rate and sell it the next time i feel it is just way overpriced 10-20 yrs from now.


----------



## Aussiejeff (4 December 2008)

gfresh said:


> Dwelling approvals for everybody's favourite state NSW :evilburn:
> 
> Those figures are amazing, lowest approvals in 25 years. If you are in the bullish camp, that's one heck of supply falling off a cliff, which is good for future prospects.




Why is everyone here obsessed with New Homes Approvals as a measure of RE performance? 

Many appear to have forgotten entirely about all those "existing houses" for sale that are starting to flood the market.

I believe they aren't selling in big enough numbers, folks. Not via auctions, nor private sales nor whatever means possible. AFAIK the sales rates for existing homes have plummeted and when combined with the falling supply of new homes may even help generate a combined excess supply of housing in the coming months. 

Anyone got the stats to show how many existing homes are for sale month on month, state by state etc?

I'm happy to be proved wrong.


----------



## Beej (4 December 2008)

Aussiejeff said:


> Why is everyone here obsessed with New Homes Approvals as a measure of RE performance?
> 
> Many appear to have forgotten entirely about all those "existing houses" for sale that are starting to flood the market.
> 
> ...




You are forgetting that most homes for sale already have people living in them = no extra/excess supply there at all!! Just the inability of people to move/upgrade if the market is slow. Soon a lot will just give up and wait the market out for a couple of years,

Beej


----------



## onway8 (4 December 2008)

CREDIT BUBBLE BURSTS, EVERYTHING BURSTS !!! RESOURCE BOOM BURSTED, ENERGY BOOM BURSTED, WHAT ELSE DO WE PRODUCE IN AUS?  THERE IS ONLY 1 WAY FOR THE HOUSING MARKET - TO GO DOWN SOUTH, IN A NASTY WAY!

Have a look, This credit bubble causes global slump in our trading partners, US, China & the rest of the Asian countries, the interest rates smashed down, the A$ smashed down, all commodities, oil, wheat prices, stock markets, banks, investment banks, even childcare centres etc. are all failing and crashing down hard.   Everything in the western world is build on credits, now credit bubble bursts, everything bursts, Australian housing is not going to be an exception.  Next year there will be a whole lot of resources companies closing down, there will be a whole lot of projects stopped due to lack of fund from investment banks and these investment banks have now gone under water and even survival is a question (have a look at B&B).  Jobless rates will rocket thru the roof.  All Finish now.

Today’s news says even states are having difficulty raising funds now….

0837 [Dow Jones] Australian Treasurer Wayne Swan concedes government may need to assist states struggling to raise funds for infrastructure projects amid global financial turmoil; "the states have been in communication with the Commonwealth government...about the difficulty they're having in raising funds in international financial markets." Says range of ideas put to government, but "we've not reached a conclusion on the direction we may take." Adds, not keen on idea of so-called infrastructure bank proposed by Queensland state Treasurer Andrew Fraser. Fact that AAA-rated states having trouble raising funds indicates seriousness of global financial crisis - in part heightened by government's bank guarantees, which siphoned off cash from real money funds that'd normally look to bonds as safehaven investment in volatile times. If federal government has to take on debt burden on behalf of states that'll further weaken its fiscal position, with budget already likely to slip into deficit in coming period. (RAP)


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## gfresh (4 December 2008)

Aussiejeff said:


> Why is everyone here obsessed with New Homes Approvals as a measure of RE performance?




Of course they are not everything, but I think they are useful for a number of reasons. Economists also see them as quite a valuable indicator, it's not just ASF. 

a) Indicate new housing activity which is a general indicator of how well the market is going in general. If the housing market is booming, then everybody also wants to build new houses to profit, there is the belief that the good times will continue, etc. You can clearly see the years of economic slowdown in the dips on the charts, which match other events, sharemarket falls, individual States boom periods (QLD+WA), etc. 

b) As housing construction contributes directly to a large percentage to both GDP, and one of our other largest industry, the banking and finance industry it's a very valuble indicator on the Australian economy in general is traveling, or is likely to be traveling.  

c) Dwelling approvals were falling well before the talk of falling prices, a slow market, etc. It's a valuable leading indicator of where the rest of the market is heading. 

d) As above, in the UK and the US, building approvals starting falling heavily several months before prices also started falling heavily on existing property. 

Would be great to have accurate sales data, number listed, days listed, on existing property but of course the only groups that provide, or release that information is the realestate industry, which unfortunately has a heavy vested interest.


----------



## Aussiejeff (4 December 2008)

Beej said:


> You are forgetting that most homes for sale already have people living in them = no extra/excess supply there at all!! Just the inability of people to move/upgrade if the market is slow. Soon a lot will just give up and wait the market out for a couple of years,
> 
> Beej




Huh? I beg to differ Beej. The fact is that generally if you have a market populated by more SELLERS than BUYERS, (stocks, houses, commodities - whatever) then over time the pressure is there to lower the selling price rather than for prices to go up.

Whether someone is sitting in a house, in a car, on a boat or on a gold brick that they are wanting to sell is neither here nor there!

Cheers,

aj


----------



## Beej (4 December 2008)

Aussiejeff said:


> Huh? I beg to differ Beej. The fact is that generally if you have a market populated by more SELLERS than BUYERS, (stocks, houses, commodities - whatever) then over time the pressure is there to lower the selling price rather than for prices to go up.
> 
> Whether someone is sitting in a house, in a car, on a boat or on a gold brick that they are wanting to sell is neither here nor there!
> 
> ...




Well I thought you are arguing that somehow a glut of existing houses for sale would somehow make up for a housing supply short-fall brought about by a lack of new building? That's what it read like anyway.

Regardless, of course there are more sellers than buyers, when what you have currently is clearly a buyers market in many area's. But there are many more POTENTIAL buyers sitting on the side-lines. So in terms of the over-all housing picture less buyers + slowing new building means more and more renters competing for a proportionally smaller set of available homes = rising rents. Which is exactly what we are seeing.

Cheers,

Beej


----------



## Aussiejeff (4 December 2008)

gfresh said:


> Of course they are not everything, but I think they are useful for a number of reasons. Economists also see them as quite a valuable indicator, it's not just ASF.
> 
> a) Indicate new housing activity which is a general indicator of how well the market is going in general. If the housing market is booming, then everybody also wants to build new houses to profit, there is the belief that the good times will continue, etc. You can clearly see the years of economic slowdown in the dips on the charts, which match other events, sharemarket falls, individual States boom periods (QLD+WA), etc.
> 
> ...




Hi gfresh. I don't have a problem with the indicator per-se. 

My main beef is that the effect of a significant oversupply of existing homes on the market seems to be discounted almost entirely when arguing whether house prices (not RENTS) might go up or down. 

I still maintain that more factors are also at play and if the likely oversupply of existing homes for sale gets big enough, it HAS to eventually put pressure downwards on average home prices. Isn't that what we are talking about in this thread? Not RENTS!

You only have to look at the RE sections in newspapers or on the net - theres a darn sight more EXISTING properties for sale than new land or homes! 

Maybe the GuvMint should better regulate the RE industry so that more accurate sales figures can be ensured. Or maybe the GuvMint is happy for the RE industry to hype it up to the max? Suits their purposes I suppose.


----------



## ROE (4 December 2008)

hotbmw said:


> beej, im looking at this from the point of view where do i want my $ invested in the next 3 to 4 years.
> im half in cash now and half in property which is on the market to sell.
> 
> when its 100% cash in 3 to 4 months i want my $ in shares.
> ...




There is no money in shares man keep it all in properties   ..when you buy shares, don't talk you want other people to buy other stuff so there is less competition and more for your bargain


----------



## explod (4 December 2008)

Hi hotbmw

The best thing to change my investment approach was to learn about trends.   There are plenty of books on the subject.   

For example, if we find that the property chart is sideways for awhile then say goes down 5% it is time to get out.   When it hits the bottom, and we do not know that for some time, probably takes 12 months from hitting the low and then sideways we watch for a rise.   When we get a rise of 10% we can begin to speculate and think about going back in.

The same goes for shares, paintings, gold, silver, cows, goats and sheep.   

My best book was called "Trend Following" about 2003, cant' remember the author.  I lent it to my accountant last year and must get it back.  Anyway there are some very good principles and fundamentals with many options on evaluating trends.    Should be able to get a second hand copy online now.  Not sure if ASF book section can help but worth considering before you get too clouded with equipment and complicated instructions.


----------



## 2BAD4U (4 December 2008)

explod said:


> For example, if we find that the property chart is sideways for awhile then say goes down 5% it is time to get out.   When it hits the bottom, and we do not know that for some time, probably takes 12 months from hitting the low and then sideways we watch for a rise.   When we get a rise of 10% we can begin to speculate and think about going back in.



Sorry but you don't trade property the same way you do shares. With this strategy the CGT would kill you.  You would be better off sitting on the POTENTIAL loss and having rent coming in offsetting any REAL loss.


----------



## 2BAD4U (4 December 2008)

hotbmw said:


> but beej, there cannot be decent growth in property prices in major cities over the next 2 to 3 yrs.  there will be pockets of opportunities of course but with bad economic news on the horizon, an increase in job loses in 2009 and wages to not increase dramatically in the near future, its just not sustainable for 5 to 10% growth p.a. over the next few years. there needs to be a few years of either stagnation or a few years of slight negative growth each year.
> 
> dont u agree?
> 
> ...




I don't deny property prices will (have) come back but the title of this thread is "House prices to keep falling for years" and people on here paint the picture that its the end for property investors.  This is what I have a problem with.


----------



## explod (4 December 2008)

2BAD4U said:


> Sorry but you don't trade property the same way you do shares. With this strategy the CGT would kill you.  You would be better off sitting on the POTENTIAL loss and having rent coming in offsetting any REAL loss.




Was not talking about trading at all.  I am talking about trends.   Without looking at a chart we know that property has in the least levelled out and that the share market trend is down.

When one is just beginning it is good to learn to look and contemplate the world around one.

Sorry to appear so wrong to you Toobadfour


----------



## 2BAD4U (4 December 2008)

That's quite alright. You are forgiven 

Agree that if you are just starting out you need to look at the market as a whole.  I believe also that we are at a point where many would be starting to consider entering the market.

I was thinking back to when I purchased my first house and I really didn't give a stuff about the Australian economy, let alone the world economy.  All I cared about at that time was could I afford it, how much was it and what was the interest rate.  That was it.

I think many people on this forum forget that they a probably a bit more savvy about money and the economy than what the average person is and perhaps we are all over thinking the situation a bit too much when there are a lot of people out there who simply don't care for most of what is written here.


----------



## numbercruncher (4 December 2008)

Its not just Melbourne house prices getting smoked, its the entire state !



> VICTORIA is being hit harder by the global economic downturn than any other state in Australia, figures show, and the state's budget surplus has been cut in half.




http://www.theage.com.au/national/surplus-hit-by-house-sale-slump-20081203-6qo8.html

Robi's apartment is immune though, up 18pc in September I heard !


----------



## robots (4 December 2008)

hello,

my cafe latte had two sugars instead of the usual one today, 

its gonna smoke the whole state, blah blah blah

can you pm your address and I will send that highlighter to you Numbercruncher

thankyou
robots


----------



## explod (4 December 2008)

2BAD4U said:


> I think many people on this forum forget that they a probably a bit more savvy about money and the economy than what the average person is and perhaps we are all over thinking the situation a bit too much when there are a lot of people out there who simply don't care for most of what is written here.




Accepted.  We who share these discussions CARE and as the content is open to others we do ourselves credit if we can try to address all levels.

cheers    explod


----------



## lioness (4 December 2008)

lioness said:


> Explod, Are you saying the RBA will start raising rates by March next year?? If so why would they raise just after they have aggressively dropped them. Are you talking here or in Japan??????????




Explod, you ignored my question. Is it too hard for you so you just write some dribble to cover up your lack of knowledge??


----------



## numbercruncher (4 December 2008)

lioness said:


> Explod, you ignored my question. Is it too hard for you so you just write some dribble to cover up your lack of knowledge??





Thats a bit harsh isnt it ?

Next youll be abusing him for not knowing a year ago that the RBA would be slashing at 1pc a pop ....

bugga me


----------



## Nyden (4 December 2008)

lioness said:


> Explod, you ignored my question. Is it too hard for you so you just write some dribble to cover up your lack of knowledge??




What the hell? Leave the man alone lioness - he's on the mend from surgery, honestly ... The last thing he should be focusing on is justifying his opinions to a complete stranger on an Internet forum.


----------



## explod (4 December 2008)

lioness said:


> Explod, you ignored my question. Is it too hard for you so you just write some dribble to cover up your lack of knowledge??




Sorry about that old Pal, only a few days out of hospital from a cancer operation so miss a few things yet.

The real answer is that I dont' know, the market itself will determine the answer to that.    In my OPINION it will be realised the dropping of interest rates (pouring more fule on the fire) will not make things better, in fact worse.    Some will use the relief to hedge by saving against it, others who cant pay it back will just borrow more.    

The deflation taking place now is so huge that it will overshoot on the downside (ONLY IN MY OPINION MIND) and no bank, if they could because many are going to the wall, will want to lend to anybody at any price (Interest)   These events are now happenning at breathtaking speed so surely it does not take a rhodes scholar to see we are at the end of the line and interest rates in a few months will begin to go the other way.   I have many other thoughts but a bit tired as I write.


----------



## lioness (4 December 2008)

explod said:


> Sorry about that old Pal, only a few days out of hospital from a cancer operation so miss a few things yet.
> 
> The real answer is that I dont' know, the market itself will determine the answer to that.    In my OPINION it will be realised the dropping of interest rates (pouring more fule on the fire) will not make things better, in fact worse.    Some will use the relief to hedge by saving against it, others who cant pay it back will just borrow more.
> 
> The deflation taking place now is so huge that it will overshoot on the downside (ONLY IN MY OPINION MIND) and no bank, if they could because many are going to the wall, will want to lend to anybody at any price (Interest)   These events are now happenning at breathtaking speed so surely it does not take a rhodes scholar to see we are at the end of the line and interest rates in a few months will begin to go the other way.   I have many other thoughts but a bit tired as I write.




I disagree with you explod, they cannot drop rates so agressively and then 3 months later start raising rates???????? Rates are not an instrument to flip around as they have a lag time, they must be given time to work. The fact 3-5 fixed rates are dropping means they expect rates to stay down a few more years yet. Go rest now but come back with your thoughts on this.


----------



## explod (4 December 2008)

lioness said:


> I disagree with you explod, they cannot drop rates so agressively and then 3 months later start raising rates???????? Rates are not an instrument to flip around as they have a lag time, they must be given time to work. The fact 3-5 fixed rates are dropping means they expect rates to stay down a few more years yet. Go rest now but come back with your thoughts on this.




Crap, the banks are privately owned and not an instrument of government.   They have to go with supply and demand but they will paly along with government because it all allows money to flow back and forth on which they pick up a take on all movements.   Read the history of the Rothschilds.

Go away and do a bit of basic learning

Could not sleep thinking about the poor education we have given many of you the last 30 or 40 years years.


----------



## BigAl (4 December 2008)

robots said:


> my cafe latte had two sugars instead of the usual one today



Must be the extra sugar the cafe is putting into your latte to mask the poorer quality coffee you're getting.  Businesses must be cutting costs to offset their massive losses in real estate in St Kilda.

St Kilda: Glum one day, down 20% the next.


----------



## gfresh (4 December 2008)

lioness said:


> I disagree with you explod, they cannot drop rates so agressively and then 3 months later start raising rates???????? Rates are not an instrument to flip around as they have a lag time, they must be given time to work. The fact 3-5 fixed rates are dropping means they expect rates to stay down a few more years yet. Go rest now but come back with your thoughts on this.




Depends whether you are talking the RBA cash rate, or the banks rates they pass on. The fact the banks are offering 3-5 fixed rates at attractive rates is because they can at the moment because short-term and some medium-term spreads have come down *for the time being*. The government's deposit guarantee has probably been the single most important thing that has allowed banks to pass on near the full rate cuts at the present moment in time. Without that, things would have been extremely messy already out there for us lucky Aussies. 

There is no guarantee that they still will be able to, as they access a lot of longer-term funding from overseas, which is very volatile as anybody who reads the overseas news sources should know. To just assume that the banks can keep them at this level for the next few years is hope rather than any exact knowledge. 

Now I'm not saying that they cannot, but to claim that it's not possible is ridiculous considering what the world financial markets have been through in just 12 months.. I think anybody even senior in the finance industry would suggest with 100% certainty rates will stay low for the next 6/12/18 months. 

Do you work for a bank? Do you know their internal decision making processes in upper management? I know I don't, and I know that information is not freely available either for various reasons. 

If you are saying you know that credit conditions worldwide are going to get better soon, or has stabilised permanently you would be ahead of most out there who are not brave enough to predict such things presently. 

Could be many shocked mortgage owners out there if the unthinkable did happen next year, and the banks did have to raise rates to 7% when they were expecting sub 5% or whatever else they believe. Don't ever assume anything in life, especially when things are part of a global interconnected system. It's caught many off-guard already.


----------



## chops_a_must (4 December 2008)

Aussiejeff said:


> hello,
> 
> robots your joints rocking because the foundations are being white-anted.
> 
> ...






wayneL said:


> Im turning japanese
> I think Im turning japanese
> I really think so
> Turning japanese
> ...






Indie said:


> First peak credit, now peak stupidity.



Posts I've scrolled through and re-posted for kudos! 

No surprises to see some of the omissions. 


lioness said:


> I disagree with you explod, they cannot drop rates so agressively and then 3 months later start raising rates???????? Rates are not an instrument to flip around as they have a lag time, they must be given time to work. The fact 3-5 fixed rates are dropping means they expect rates to stay down a few more years yet. Go rest now but come back with your thoughts on this.



You mean like flipping rates down after hiking them up?

How on Earth did you get the job you did?


----------



## Julia (4 December 2008)

lioness said:


> I disagree with you explod, they cannot drop rates so agressively and then 3 months later start raising rates????????



Can't they?  Says whom?  

Perhaps had not the RB raised rates so insistently the economy would not have been so stimulated as to require such reverse action at present.
Why can the reverse not apply yet again?



> Rates are not an instrument to flip around as they have a lag time, they must be given time to work.



One would think so.   Doesn't appear to be the case though, does it, given how rapidly rates are being slashed.  No waiting to see the results at all.




> The fact 3-5 fixed rates are dropping means they expect rates to stay down a few more years yet.



I doubt it necessarily means any such thing.   If some miraculous recovery were to occur, they'd be back to upping rates again in a heartbeat.



> Go rest now but come back with your thoughts on this.



Rather a peremptory command there, Lioness.   Explod is to be congratulated on his courtesy to you in the face of this somewhat arrogant tone.


----------



## wayneL (4 December 2008)

An update from the Old Dart:

Property prices: Average house lost £31,500 of value in past year
House prices have fallen by 16.1 per cent in the past year, meaning the typical home lost almost £31,500 from its value, new figures show.


----------



## numbercruncher (5 December 2008)

wayneL said:


> An update from the Old Dart:
> 
> Property prices: Average house lost £31,500 of value in past year
> House prices have fallen by 16.1 per cent in the past year, meaning the typical home lost almost £31,500 from its value, new figures show.




And for all the heathen's out there, that is over 70 grand in Banana bucks !

Alot alot of money after you pay your taxes and try save this .....


----------



## lioness (5 December 2008)

You guys are all missing the point here I am making.

How can you have deflation which is winning at the moment and high interest rates???

Think about the money supply issues being raised here and then you have your answer.


----------



## explod (5 December 2008)

lioness said:


> You guys are all missing the point here I am making.
> 
> How can you have deflation which is winning at the moment and high interest rates???
> 
> Think about the money supply issues being raised here and then you have your answer.




Agree, the point you are missing is like the ebb and flow of the tide, usually it is gradual and steady, now we have a hugh tempest the tide withdrawing at an amazing rate (deflation) but at such an astonishing rate it will have to return just as visciously the other way.   As the big part of the deflation has happenned in a short time the forces of the market in my view will see inflation like we have never seen suddenly hit.

The difficulty we are all having is not so mcu predictions but the sheer magnitude and speed that it is playing out.   A good time to hold cash in my view till we see where the new GO is.


----------



## noirua (5 December 2008)

:topicOne of the most consistent forums these days and I hope you don't mind me reminding you, for the last time, about your opportunity to vote for Aussie Stock Forums at http://www.thebull.com.au/the_stockies/forums.html


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## Vizion (5 December 2008)

:topic 41% to Aussie stock forum in the voting... must be the only thing going up :xmaswave


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## explod (5 December 2008)

There is a lot of philosophical stuff which at times moves off topic on this and several other threads that I visit.    Would like to start a thread on a topic but can never wade my way into it.   Can someone give me a clue as to how to start a thread.

cheers explod


----------



## Aussiejeff (5 December 2008)

explod said:


> There is a lot of philosophical stuff which at times moves off topic on this and several other threads that I visit.    Would like to start a thread on a topic but can never wade my way into it.   Can someone give me a clue as to how to start a thread.
> 
> cheers explod




Attend sewing classes?

:hide:


----------



## explod (5 December 2008)

Aussiejeff said:


> Attend sewing classes?
> 
> :hide:




Can allways rely on you Aussie.   I did start a thread called Doom and Gloom 12 months or so ago, nobody liked it and  I am still patching the holes from all the flack.

So that bit of thread will come in very handy.

Houses, well, when they get old they pull em down and start again.   Or was that house prices.

Gotta find that thread


----------



## inenigma (8 December 2008)

explod said:


> There is a lot of philosophical stuff which at times moves off topic on this and several other threads that I visit.    Would like to start a thread on a topic but can never wade my way into it.   Can someone give me a clue as to how to start a thread.
> 
> cheers explod




Any of the following work for me, except for two which I don't do...


Drink more beer
Smoke more dope
Take more drugs
Read Philosphy
None of the above


----------



## Temjin (9 December 2008)

http://www.chinapost.com.tw/business/americas/2008/11/29/185434/Brazils-housing.htm



> Brazil’s housing boom starts going bust
> SAO PAULO, Brazil -- Just weeks ago, Brazil’s housing market was one of the world’s most dynamic. But now, the global credit crisis has set up housekeeping, and government efforts to stimulate buying are being trumped by consumers’ fears about the future. Through September, Brazil’s housing sector was on fire.
> 
> January-September sales of new houses and condos were up 25 percent from the same nine months in 2007, ignited by a rising economy, decades of pent-up demand, job growth, an increase in affordable mortgage loans and legal changes that improved banks’ powers to repossess property. The sales slowdown, which isn’t reflected yet in official statistics, has hit with sudden force. The nation’s largest homebuilder, Cyrela Brazil Realty, laid off 300 workers last month and lowered its sales estimate for the year by 25 percent. Shares of Cyrela and two dozen other publicly held homebuilder stocks have plummeted in recent weeks.
> ...




They say they have a massive 8 million unit housing deficit. They say their economy are the best amoung the emerging countries because of their resources and is decouped from the rest of the world. They say their houses have doubled in the last 5 years and expected to continue to do so. And they say Brazil is an unique country and should be immune from it.

And now....

Of course, Australia is still unique in this regards.


----------



## numbercruncher (9 December 2008)

Its different here, we have Kangaroos @!


----------



## dan-o (9 December 2008)

Theres an interesting article in this weeks BRW from Bernard Salt, demographer at KPMG, talking about how the baby boomers are about to start retiring and this is set to put downward pressure on house prices...


----------



## wayneL (9 December 2008)

dan-o said:


> Theres an interesting article in this weeks BRW from Bernard Salt, demographer at KPMG, talking about how the baby boomers are about to start retiring and this is set to put downward pressure on house prices...




Yes, the demographics bomb. A factor that hasn't been mentioned or considered for a while here. Bulls will like to dismiss it as a factor, but it certainly has potential to have an effect, undoubtedly.

Especially now as share portfolios have crashed and burned, and have little prospect of booming again in the medium term.


----------



## basilio (9 December 2008)

Certainly agree with Wayne on impact of baby boomer retirement. In fact I can only see a lot of red ink.

1) With share markets and all other investments butchered, the value of super funds, pension funds will be hurt and therefore any pensions reduced

2) With boomers retiring there will corresponding decreases in flows into super funds and increasing amounts of outgoings. 

3) If Baby boomers have any significant outstanding debts ie house upgrades, loans against collapsing share portfolios, there will be serious problems with solvency. And that would lead to some forced selling.

And finally the impact of retrenchment itself will be a big blow.


----------



## numbercruncher (9 December 2008)

I see the RE shonks are joining the dole que, geting rather long that line now huh ?



> BRISBANE real estate agents are packing up their for-sale signs and leaving the industry in droves, as tough market conditions put paid to the flash cars and golfing lifestyles of 2007.
> 
> Reports of agencies losing more than half their staff and veteran agents forced to retire early were backed by the Real Estate Institute of Queensland (REIQ), which painted a grim picture of an industry where only the most experienced and skilled agents would continue to make money.




http://www.brisbanetimes.com.au/articles/2008/12/08/1228584685056.html


What field would ex-realestate shonks generally get into ?


----------



## Glen48 (9 December 2008)

Open a business and call it Fincorp or time share must be about due for another run?
Pine trees Lima's phew get the wallet out.


----------



## gfresh (9 December 2008)

numbercruncher said:


> I see the RE shonks are joining the dole que, geting rather long that line now huh ?
> 
> What field would ex-realestate shonks generally get into ?




awww.. my heart bleeds, yes really it does. Used car salesman? Life Insurance? Retail Sales? Financial planner? Wealth Management? Oh, damn.. really? 



> "I've already seen a lot of agents leave but I think there'll be a lot more who won't come back to work after Christmas - they're just not making ends meet," Mr Secco said.




So of course the industry is expecting things to go better into 2009 it seems...


----------



## MrBurns (9 December 2008)

It's happened before and it's happening now, I've known salesman earning $500K PA during the boom, that's right *salesmen* not the owner of the business, they have their own PA's that they pay from their own pocket.

Now hard times are hitting they will disappear and the *strong in for the long run* agents will remain as the base in the industry.

Dont feel sorry for the high flyers where else can you earn that sort of money without needing to invest in stock, using just your gleaming smile and a bow tie.


----------



## Aussiejeff (10 December 2008)

MrBurns said:


> It's happened before and it's happening now, I've known salesman earning $500K PA during the boom, that's right salesmen not the owner of the business, they have their own PA's that they pay from their own pocket.
> 
> Now hard times are hitting they will disappear and the strong in for the long run agents will remain as the base in the industry.
> 
> Dont feel sorry for the high flyers where else can you earn that sort of money without needing to invest in stock, *using just your gleaming smile and a bow tie*.




Why, Mr Burns!

Judging from your avatar, you went v.close to describing your goodself! 

Me? Why, I errr... just sell Marshmallows! 

Want some?


----------



## ROE (10 December 2008)

numbercruncher said:


> Its different here, we have Kangaroos @!




yeah it definitely different so it can be used in multiple countries....just state your differences 

http://www.canberratimes.com.au/new...-prices-hit-the-wall/1381107.aspx?storypage=0


----------



## Glen48 (10 December 2008)

Wonder how many agents brainwashed themselves and move up a few levels in the property market not realising there is no property boom but a credit boom?
Now sitting at home watching their house price go down.


----------



## gfresh (10 December 2008)

QLD State Government rapidly heading towards a massive deficit due to massive loss in stamp duty, pretty much screwed: 

http://www.brisbanetimes.com.au/articles/2008/12/09/1228584818896.html

Very sad how QLD (not the only one mind you) so much relies on homes being bought and sold to be even to be able to provide and maintain vital infrastructure. Now realestate boom is over it's falling apart quite quickly. 

It's not a good way for this country to be.


----------



## MrBurns (10 December 2008)

gfresh said:


> QLD State Government rapidly heading towards a massive deficit due to massive loss in stamp duty, pretty much screwed:
> 
> http://www.brisbanetimes.com.au/articles/2008/12/09/1228584818896.html
> 
> ...




They also rely on poker machine revenue, that will go as well when things go real bad. I guess they'll just trim the fat ?

No way .....they'll raise taxes and cut services.

I believe Rudd is away AGAIN, saw him on the news waving from another platform atop a plane. Whats that got to do with anything ?, dunno just annoys me.


----------



## It's Snake Pliskin (10 December 2008)

dan-o said:


> Theres an interesting article in this weeks BRW from Bernard Salt, demographer at KPMG, talking about how the baby boomers are about to start retiring and this is set to put downward pressure on house prices...



Demographics is increasingly becoming the predominate factor determining any investment decision I make for the long term. But it is debateable and could change.


----------



## Indie (10 December 2008)

It's Snake Pliskin said:


> Demographics is increasingly becoming the predominate factor determining any investment decision I make for the long term. But it is debateable and could change.




The first wave of boomers are retiring now and are changing from net borrowers and spenders to net savers. Their peak earning and borrowing years are behind them. Tax revenues will also need to increase to accommodate this group.


----------



## It's Snake Pliskin (10 December 2008)

Indie said:


> The first wave of boomers are retiring now and are changing from net borrowers and spenders to net savers. Their peak earning and borrowing years are behind them. Tax revenues will also need to increase to accommodate this group.




Exactly. Robert Kiyosaki wrote a book on the topic years ago. 

Sadly some boomers will have to keep working though as they have lost a lot of their retirement funds.


----------



## Julia (10 December 2008)

It's Snake Pliskin said:


> Exactly. Robert Kiyosaki wrote a book on the topic years ago.
> 
> Sadly some boomers will have to keep working though as they have lost a lot of their retirement funds.



It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.

There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.


----------



## Indie (11 December 2008)

Julia said:


> It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.
> 
> There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.





I'm sure they didn't all blow their doe. But it doesn't change that they are moving into a lifestyle of frugality rather than one where they borrow and spend. Particularly borrow. Very few retirees have a retirement income that matches their working income. Fewer still are prepared to take on new debt.
This is very negative for the economy since we are consumer driven.  

It's no coincidence that the stock and property bubbles are bursting just as this key demographic are starting to exit their peak earning and borrowing years.


----------



## It's Snake Pliskin (11 December 2008)

Julia said:


> It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.
> 
> There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.




Yes it did occur to me Julia as I used the word SOME. Congratulations on your achievement.


----------



## numbercruncher (11 December 2008)

60 percent of Quensland retirees rely on the Govs old age pension.


----------



## Naked shorts (11 December 2008)

MrBurns said:


> They also rely on poker machine revenue, that will go as well when things go real bad. I guess they'll just trim the fat ?




Well for now with everyone getting handouts from Rudd, they will have plenty of revenues from this source.





Julia said:


> It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.



Yeah so what? isnt that the old "10% of people in the market actually know what they are doing" rule?

The fact of the matter is, most baby boomers have/had jobs and dont have time to watch the stock market. All they know what to do is buy more when prices go down because that's what Warren Buffet does and he is one of richest men in the world


----------



## lioness (11 December 2008)

Julia said:


> It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.
> 
> There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.




What a crock Julia. I work in finance and I personally know many financial planners and less than 2% moved to cash. They are all crying over their statements every night. I know as I speak to many of them.


----------



## Glen48 (11 December 2008)

I see consumer confidence is up 7.5% the every one must think the $10.4B will go to them????
I wonder if the true housing figures will be posted or will the Feds etc worry about creating a panic???


----------



## prawn_86 (11 December 2008)

Glen48 said:


> I see consumer confidence is up 7.5% the every one must think the $10.4B will go to them????
> I wonder if the true housing figures will be posted or will the Feds etc worry about creating a panic???




Up 7.5% for the month but down 18% for the yr.

Take that however you want....


----------



## sinner (11 December 2008)

Took the scenic route from Sydney to Singleton yesterday.

Not an exaggeration: every second rural block we saw on Putty Rd was for sale!


----------



## numbercruncher (11 December 2008)

sinner said:


> Took the scenic route from Sydney to Singleton yesterday.
> 
> Not an exaggeration: every second rural block we saw on Putty Rd was for sale!





But they told us there was a monumental shortage and RE would boom forever providing us with a lifestyle of the rich and famous !!

What happened??


----------



## Glen48 (11 December 2008)

Buy acreage now would be a good investment once the depression starts in earnest the acreage can be turned in to trailer park and store all the White Trailer trash there. Would require a trip to USA to study up on how to do it and what type of tenants go for that sort of thing.
Then look to buying Caravans to put in peoples back yard to help with their mortgage payment until their "investment" turns around and they can recoup 10 yrs of minus nothing  growth plus rates, repairs, tenant damage and bank fee.


----------



## MrBurns (11 December 2008)

You won't see any bargains yet as everyone is trying to get out at yesterdays prices, they arent prepared to take the really low prices or new values yet, that will take a year to really kick in.


----------



## Julia (11 December 2008)

lioness said:


> What a crock Julia. I work in finance and I personally know many financial planners and less than 2% moved to cash. They are all crying over their statements every night. I know as I speak to many of them.



The baby boomers I'm talking about are sufficiently financially literate in their own right not to need any so called financial planners.

These "professionals" have been responsible for much of the misery being experienced by the people silly enough to imagine they actually had advice worth giving.

Lioness, you have perfectly enhanced my point.  Thank you.


----------



## Julia (11 December 2008)

Indie said:


> I'm sure they didn't all blow their doe. But it doesn't change that they are moving into a lifestyle of frugality rather than one where they borrow and spend. Particularly borrow. Very few retirees have a retirement income that matches their working income. Fewer still are prepared to take on new debt.
> This is very negative for the economy since we are consumer driven.



Do you think most retirees actually need a retirement income that matches their working income?   I don't know any people retired or about to retire who would even consider borrowing in retirement.
I guess your suggestion that this is negative for the economy is a whole other subject.   Imo individuals have far too much debt now.  How are they going to service this when they lose their jobs?   
Every day we're seeing companies unable to refinance their debt.  It may well happen that individuals will face the same situation as the current debacle progresses.



It's Snake Pliskin said:


> Yes it did occur to me Julia as I used the word SOME. Congratulations on your achievement.



Yes, you did indeed say SOME, Snake.  Sorry.  I should have worded my response more carefully. 
  I wasn't necessarily just describing my own situation.  I know plenty of people who took some responsibility for their own outcomes instead of blindly trusting the sort of people described by "Lioness" as Financial Planners.  What price their advice now as people mourn their losses?

And before the few competent FP's who actually grace this forum become offended, I'm not slating all planners.  Several years ago I took advice from a FP myself which really changed my life and I will be for ever grateful.
Maybe just avoid the ones such as those "Lioness" works with.


----------



## agathos (12 December 2008)

Hi everyone,

I am from Western Australia, Perth.
I am a migrant from Singapore and I have been here for 22 months and I am here for good, contributing actively, paying tax and am on the look out for a great property buy!!!!

I was tempted to buy when I first came in February 2007. 

In fact, back in 2006, when I first made a maiden trip to perth to survey the land (my wife and I had surveyed Queensland + Melbourne), everyone urge us to buy a landed property as "you save yourselves the rental money, which is dead money anyway".

Those noises were so loud. Bear in mind these opinions are from very good friends of mine. It was very hard to resist.

But I know that what goes up so fast, must come down too.
So, I waited and stayed on the periphery. 
At times, it was hard. The dumb ones are the blinded ones - they can't give you good advice, and the friends also pressure you.

But the longer I wait, the more I see signs of property crumbling.
At first it was , full steam ahead. Then after a while, in 2007, people start to say , "Property heading south". "Boom Over". "68 days on average to sell a home", "Property poised for 5% drop in 2008". and more.

Then came Subprime and a new cereal called Credit CRUNCH!
Then Lehman  Brothers, AIG, Fannie mae, Freddie Mac.

Still OZ economist talk about decoupling. China will save us.
Then after Olympic Glitter, China also puncture!
Ran out of steam. Economic growth below 8% for 2009
Rio cut back. BHP refuse to buy BHP. 
15,000 global job cuts.

Now, in my opinion, 3 ke factors will shape the real estate price. I will disclose my 3rd opinion in the next post, but I personally believe that:

1) The UMEMPLOYMENT rate , if it rises will affect a lot of people. Young and old who use to carry lolly pop sign in the mine and get AUD$150,000 will suddenly be left with a mortgage they can't afford and a sheila that might dissapear (not uncommon  - read articles on Toxic Wife Syndrome). 

As it is, today (11 Dec 2008) unemployment figures - quite a few thousand jobs lost are actually from WesterN australia AND Tasmania.

I have a friend who is a consultant to mining companies. It seems he has to go China & help look for buyers for iron ore, etc.

I have another friend who use to be in the Shipping industry. 20% of the world's cargo ships and tankers are dry docked somewhere, because the cost of running them are exhorbitant. so might as well dry dock them.

Proof of economy back sliding - if some of you remember the baltic Ship Charter or someting to that effect- the freight rates drop by 87% in the last few months. Shipping demand is just drying up!!!!


2) FUNDING factor or Credit Availability. 
Banks will still find it hard to get funds.
In fact, it has become such a fear factor now that if you put $$$ in the US bond, it seems the interest rate is ZERO. No, I am not kidding. U check it out.

So, with this 2 factors, and if UMEMPLOYMENT goes up rapidly, 10 Billion Economy stimulus is like spending 30 million to fire a few rounds of bullets in Iraq. hardly does anything to tame the enemy. (all these are my opinion).

Some may say I am an opportunist - but then again. Those who have bought their homes long ago. A lot of them who are keen to sell have woken up and are willing to accpt realistic price just to keep their ball rolling.

real life example - I have  afriend in Swan valley, his home is worth 1.2 million.
he quicly sell it for 1 million, keep it in the bank for a few months, then bought another property that was advertised for 1 million for 800,000 AUD$.

See, they ARE realistic sellers out there. 
These are REAL sellers. 
The ones who ask for yesterday's prices - wait long long , mate!

I hope to post the 3rd mysterious factor, which in my opinion will shape the unemployment rate. The economist already know it. U probably know it too.

But let's give it some time for the plot to develop so that I won't spoil the fun of robbing the media of their front page news cover!

Have a great day.


----------



## wayneL (12 December 2008)

agathos said:


> Hi everyone,
> 
> I am from Western Australia, Perth.
> I am a migrant from Singapore...




Welcome aboard agothos. It's always nice to have another realist on the forum; looking forward to your input.

Cheers


----------



## It's Snake Pliskin (12 December 2008)

Hello Mr agathos,


> I am from Western Australia, Perth.
> I am a migrant from Singapore and I have been here for 22 months and I am here for good, contributing actively, paying tax and am on the look out for a great property buy!!!!



Nice to see a paying migrant and not a sucking parasite welfare sponge. Good stuff man. 


> "you save yourselves the rental money, which is dead money anyway".



Not really it could be considered a fee for living which limits opportunity costs for quicker wealth building options.(not options as in trading options)


> But I know that what goes up so fast, must come down too.
> So, I waited and stayed on the periphery.
> At times, it was hard. The dumb ones are the blinded ones - they can't give you good advice, and the friends also pressure you.



Yep, "buy now you'll miss out" heard it all before.


> But the longer I wait, the more I see signs of property crumbling.
> At first it was , full steam ahead. Then after a while, in 2007, people start to say , "Property heading south". "Boom Over". "68 days on average to sell a home", "Property poised for 5% drop in 2008". and more.



All things end. 


> Then came Subprime and a new cereal called Credit CRUNCH!
> Then Lehman  Brothers, AIG, Fannie mae, Freddie Mac.



Nice humour!
And have a great day yourself.


----------



## georgey (12 December 2008)

Hi all, this may have been raised before but what are yr thoughts about the future
of interest rates and whether one on a 8.3% fixed mortgage for 3 more years should pay the 5k cost
to refix at a rate 2% lower for 6 months. It would be a no brainer to do so IF one could be
sure that rates would stay down or lower further over the next 3-5 years.
But there is talk about how all the financial stimulus can eventually create inflation which
usually indicates higher interest rates also. 
Would not be nice to pay the cost to change and be caught high and dry if rates decided to
soar - I remember +20% in the eighties. I am in NZ by the way.
Thanks
Georgey


----------



## Aussiejeff (12 December 2008)

georgey said:


> Hi all, this may have been raised before but what are yr thoughts about the future
> of interest rates and whether one on a 8.3% fixed mortgage for 3 more years should pay the 5k cost
> to refix at a rate 2% lower for 6 months. It would be a no brainer to do so IF one could be
> sure that rates would stay down or lower further over the next 3-5 years.
> ...




It depends entirely on how much you have got owing - and to some extent the possible degree of loss of value of the property over coming months / years if RE values in general continue to decline (presumably RE in NZ will follow the same trajectory as Oz?) 

If you owe $500,000 then the logic to switch will obviously be far greater than if you only have $100,000 owing, since the relative interest payment on the higher debt will be far greater on the 8.3% rate than 6.3% rate. 

Apart from the above, there is also potential strategic benefit in being in a shorter fixed term loan given current financial market volatility. Global conditions are in upheaval and COULD change at the drop of a hat. Many countries are approaching 0% in official rates and there is only one way to go after that. Consequently, at some undefined point in the future (short, medium or long term?) interest rates could easily climb as fast as they have fallen. There is no binding Law Of Rates that says they can't! 

Personally though, I'd be tempted to take the opportunity to go to a full variable ATM and only fix when the financial climate looks like a rise is inevitable. IMO there is further IR downside for now.

It's all up to you. Good luck with your decision.

aj


----------



## Aussiejeff (12 December 2008)

100% On Topic....

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

*Time bomb for home buyers*
The Age, Natalie Craig
December 12, 2008

*ABOUT 300,000 Australian households could face "negative equity" next year — owing more money to lenders than their house is worth — if prices fall by 10 per cent as predicted.*

Modelling by RMIT's Housing and Urban Research Institute suggests that about 4 per cent of Australia's 8.5 million households could next year see the value of their property fall below what they owe on it.

"We could face a situation like the UK," said research head Professor Gavin Wood. "Rapid price falls there have meant a rapid increase in foreclosures … people who have already leveraged up to very high levels of debt now own nothing."

*The median Melbourne house price fell 3.3 per cent to $435,000 in the three months to September, and economists from AMP, Morgan Stanley and Australian Property Monitors and are predicting price declines of at least 10 per cent in the next year.*

British house prices have fallen about 15 per cent this year, and about a quarter of a million householders owe more than their home is worth.

In the United States, prices have fallen about 20 per cent since their peak in 2006, and about 12 million home owners are thought to be in negative equity.

Professor Wood said monitoring of the borrowing practices of about 20,000 Australians since 2001 showed that a large proportion were now at risk of negative equity. *A 10 per cent drop could push 300,000 households into negative equity, while a 15 per cent drop would affect 400,000.

That tallies with the latest data on mortgage stress from Fujitsu, which found about 363,000 were in "severe stress".*

The western suburbs of Sydney and Melbourne's outer north have been identified as some of the areas most at risk of falling into negative equity.

Professor Wood said it was not just newer home buyers who had little equity, but also those who had taken advantage of more flexible redraw or "line-of-credit" facilities provided as part of their home loan.

"It's not just first home purchasers who have been taking out very high loans — it's also people who are already home owners, still youngish, but who have decided to tap into their housing wealth."

Contrary to marketing that suggested people extended their mortgages to fund luxury purchases such as holidays or a new car, many were drawing on their equity to cope with personal changes such as pregnancy, separation or job loss.

Professor Wood said many people were using the equity in their homes as a kind of "personal welfare", and could soon be forced to find other means of support.

"The sort of people we've identified at risk are younger people, families rather than singles, and also those who are recently separated or divorced.

"These are people who have been reliant on tapping their housing wealth to meet urgent spending needs. Those people are going to have to turn to more expensive forms of debt, or who could be forced to sell their homes."

Nicole Rich of the Consumer Action Law Centre said impending house price falls meant lenders should be discouraged from offering products that allowed people to "use their home like an ATM".

"It's not that they just make redraw available, they promote it," Ms Rich said. "Some people are going to take advantage of the maximum 90 per cent redraw when they're in difficulty.

"So by its nature it's a product that appeals to people that are struggling a bit."

*While the Commonwealth Bank has removed its 100 per cent home loan, NAB will still lend 100 per cent of the purchase price of a property, less about 3 per cent mortgage insurance, to desirable borrowers*.

Other borrowers with "equity loans" can draw on up to 90 per cent of the value of their home.

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

I can't believe in the current economic climate that these Oz bank majors are still willing (or allowed) to potentially torch the finances of so many vulnerable Australians by offering tantalising "90-100% of purchase price" loans to "desirable" borrowers.

Are "desirable" borrowers the ones who will default the fastest so the bank can foreclose early and get mortgage over the now-trashed borrower's "asset" at a dirt cheap firesale price?


----------



## Lancelot (12 December 2008)

numbercruncher said:


> But they told us there was a monumental shortage and RE would boom forever providing us with a lifestyle of the rich and famous !!
> 
> What happened??




Who wants to live rural?  To far from facilities and work.

Also no houses on these blocks by the sound of it, just empty land and kangaroos.


----------



## Beej (12 December 2008)

Aussiejeff said:


> 100% On Topic....
> 
> ----------------------
> 
> ...




The above does not make sense; someone being in a negative equity position has no bearing whatsoever on whether they might be in "mortgage stress" or not? Mortgage stress is about HOW MUCH someone owes, what their income is and what the costs of servicing their loan is. The value of the underlying asset has no bearing on this equation at all......

So really just a bunch of further alarmist fluff there mostly. All based on conjecture about further price falls that have not yet happened. "Experts" predicted AU/US $ parity a few months ago too - how wrong they were! Plenty of other examples. Some things are not worth worrying too much about until/if they actually happen, and even then let's worry about the right thing!

Oh and PS - 300,000 households = 3.5% of total households.....wow, disaster...and most of them probably don't care anyway as they only recently bought their home and are still enjoying it along with low interest rates. And we are not even anywhere near these numbers yet anyway. With Sydney pretty much bouncing around the bottom I don't see it happening either.

Cheers,

Beej


----------



## numbercruncher (12 December 2008)

> With Sydney pretty much bouncing around the bottom I don't see it happening either.





And thats why your called a Permabull 


Plenty of people played that same strategy all the way down with stocks this year


----------



## Beej (12 December 2008)

numbercruncher said:


> And thats why your called a Permabull
> 
> 
> Plenty of people played that same strategy all the way down with stocks this year




Repeat after me.... "Property is NOT the same as shares!" 

Beej


----------



## Naked shorts (12 December 2008)

Beej said:


> Repeat after me.... "Property is NOT the same as shares!"
> 
> Beej




Yeah! it takes 18months for a crisis in the stock market to affect the property market


----------



## aleckara (12 December 2008)

Beej said:


> The value of the underlying asset has no bearing on this equation at all......
> 
> So really just a bunch of further alarmist fluff there mostly. All based on conjecture about further price falls that have not yet happened. "Experts" predicted AU/US $ parity a few months ago too - how wrong they were! Plenty of other examples. Some things are not worth worrying too much about until/if they actually happen, and even then let's worry about the right thing!
> 
> ...




Will they enjoy their home when they realised they paid too much for it? When they are still paying off a loan and they can see that they asset has gone down they will cut back. It will dent sentiment, causing possibly more price falls.

Btw 3.5% for an illiquid market is very high. We are not talking shares here; the liquidity isn't there to support the bailout of even 2% of people I would think if there are no buyers. House prices trends are more known to the average Australian. If everyone knows the trend is down no one will buy. The fact that people can wait to buy a house now just shows how much of a shortage there is - these people still have roofs over their head right now.


----------



## Beej (12 December 2008)

aleckara said:


> Will they enjoy their home when they realised they paid too much for it? When they are still paying off a loan and they can see that they asset has gone down they will cut back. It will dent sentiment, causing possibly more price falls.




Well yes why wouldn't they? If you rent do you get upset each year at all the money you have spent on rent with no possible return from that money at all, ever again???

People with houses will just say, "oh well, at least I'm not paying rent" (and at low interest rates their mortgage is probably about the same as the rent they would otherwise be paying). Plus they know that in the long term their house WILL still increase in value, so their mortgage is not dead money in the way rent is as the mortgage is at least giving the prospect of some security and financial return on the long run.



> Btw 3.5% for an illiquid market is very high. We are not talking shares here; the liquidity isn't there to support the bailout of even 2% of people I would think if there are no buyers. House prices trends are more known to the average Australian. If everyone knows the trend is down no one will buy. The fact that people can wait to buy a house now just shows how much of a shortage there is - these people still have roofs over their head right now.




What makes you think all these people, who can quite comfortably keep paying their mortgage as it is costing 2/3 now of what it was only a few months ago, would suddenly all want to sell their house and start renting again? It's just NOT going to happen. Most "average" people when it comes to their PPOR couldn't really give a stuff about the value of their house in the short term, unless they are planning to sell and upgrade soon. All they care about is the cost of their interest payments and the price of petrol!

As for people waiting to buy, good on them - no one is forcing anyone to buy a house! If you are happy to pay rent then keep on renting! Will only force rents higher over time and benefit investors the longer that goes on for.......Having said that, waiting longer may work out to be a wise choice for some, and perhaps more so in some areas of Australia over others. But I'm betting in a couple of years most people with a negative view will have waited too long, and will suddenly realise they missed the opportunity - again 

Cheers,

Beej


----------



## Lancelot (12 December 2008)

aleckara said:


> The fact that people can wait to buy a house now just shows how much of a shortage there is - these people still have roofs over their head right now.




If parents started turfing their leaching children out from under their skirts into the realworld you would soon see how much of a shortage there is.


----------



## Lancelot (12 December 2008)

Beej said:


> Oh and PS - 300,000 households = 3.5% of total households.....wow, disaster...and most of them probably don't care anyway as they only recently bought their home and are still enjoying it along with low interest rates. And we are not even anywhere near these numbers yet anyway. With Sydney pretty much bouncing around the bottom I don't see it happening either.
> 
> Cheers,
> 
> Beej




Here is a default graph, US compared to Australia

See the difference anyone?


----------



## numbercruncher (12 December 2008)

Lancelot said:


> If parents started turfing their leaching children out from under their skirts into the realworld you would soon see how much of a shortage there is.





Once all the temporary visa holders and students go home you will see just how much oversupply there really is ...


----------



## Beej (12 December 2008)

numbercruncher said:


> Once all the temporary visa holders and students go home you will see just how much oversupply there really is ...




Got the numbers to back that one up numbercruncher??


----------



## prawn_86 (12 December 2008)

numbercruncher said:


> Once all the temporary visa holders and students go home you will see just how much oversupply there really is ...




And all the Gen Y go overseas to avoid their HECS debt


----------



## numbercruncher (12 December 2008)

prawn_86 said:


> And all the Gen Y go overseas to avoid their HECS debt





OH ... and our severley aging population go into care facilities or pass away in ever increasing numbers ...


----------



## Lancelot (12 December 2008)

prawn_86 said:


> And all the Gen Y go overseas to avoid their HECS debt





Why would they go OS, a lot more expensive to go OS now, AUD has dropped dontcha know


----------



## Lancelot (12 December 2008)

numbercruncher said:


> Once all the temporary visa holders and students go home you will see just how much oversupply there really is ...




Would it not be cheaper for those overseas students to continue on with their ed. now that the AUD has dropped


----------



## Aussiejeff (12 December 2008)

Lancelot said:


> Here is a default graph, US compared to Australia
> 
> See the difference anyone?




I see de fault with the timelines. I'd like to see the graph timelines extended to include the current data following the worst of the financial crisis to date? Some of those graphs end at beginning of 2008. The mortgage delinquencies graph for Oz finishes at end 2007!  


aj


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## prawn_86 (12 December 2008)

Lancelot said:


> Why would they go OS, a lot more expensive to go OS now, AUD has dropped dontcha know




You dont get paid in AUD if your working/living overseas, so therefore the only time the AUD is relevant is relocation costs


----------



## numbercruncher (12 December 2008)

Lancelot said:


> Why would they go OS, a lot more expensive to go OS now, AUD has dropped dontcha know





Beach front Bali $7 a night (incl brekky) - Surfing - free @!


----------



## Lancelot (12 December 2008)

prawn_86 said:


> You dont get paid in AUD if your working/living overseas, so therefore the only time the AUD is relevant is relocation costs




Where are all these overseas jobs? I thought Ozies were coming home from US London etc due to financial crisis, job losses?


----------



## prawn_86 (12 December 2008)

Lancelot said:


> Where are all these overseas jobs? I thought Ozies were coming home from US London etc due to financial crisis, job losses?




Well if there's no jobs there, and rising unemployemnt here i guess that means Gen Y will have to stay at uni meaning very little income, meaning they wont be buying property any time soon, meaning less buyers, meaning property price slump/crash/fall/pull-back (call it what you like)


----------



## chops_a_must (12 December 2008)

Lancelot said:


> If parents started turfing their leaching children out from under their skirts into the realworld you would soon see how much of a shortage there is.




Lol.

I love this prevailing sentiment that seems to be emerging here of late.

"How dare our children ever have been born!!!"


And I think you'll find there will be a heap more children moving back in with their family over the next few years. So much for them being leaches in the last few years...


----------



## prawn_86 (12 December 2008)

chops_a_must said:


> Lol.
> 
> I love this prevailing sentiment that seems to be emerging here of late.
> 
> "How dare our children ever have been born!!!"




Yeh reminds me of a song lyric aimed at parents:



> If we're fukced up, your to blame


----------



## 2BAD4U (12 December 2008)

prawn_86 said:


> Well if there's no jobs there, and rising unemployemnt here i guess that means Gen Y will have to stay at uni meaning very little income, meaning they wont be buying property any time soon, meaning less buyers, meaning property price slump/crash/fall/pull-back (call it what you like)




You must have a wide screen on your computer, that would have to be one of the longest bows I've seen drawn yet.


----------



## 2BAD4U (12 December 2008)

aleckara said:


> Will they enjoy their home when they realised they paid too much for it? When they are still paying off a loan and they can see that they asset has gone down they will cut back. It will dent sentiment, causing possibly more price falls.



Ummmm, let's try the other way around.  Property prices fall, they have negative equity so why would they sell?  They wouldn't, they will stay put creating a reduction in supply and prices start to go up again as demand goes up.

And this hot off the press, the number of homeloands ROSE 1.3% in October.  That can't be right isn't there massive supply and no one buying? Changed my glasses, yep it's right *number of homeloands ROSE 1.3% in October.*

HERE


----------



## Lancelot (12 December 2008)

chops_a_must said:


> Lol.
> 
> I love this prevailing sentiment that seems to be emerging here of late.
> 
> ...




Sniff

I'm sorry, they are all precious little angels that work hard, can stand on their own 2 feet,  pay their own way, have great respect for their elders, expect nothing from them and never get into trouble

http://www.sbs.com.au/thenest/

http://www.whitsundaytimes.com.au/story/2008/12/11/night-of-violence-in-airlie/


----------



## chops_a_must (12 December 2008)

2BAD4U said:


> You must have a wide screen on your computer, that would have to be one of the longest bows I've seen drawn yet.




Not really...

I think there have been studies done that have shown people continue education longer in times of hardship.

I think some Unis have reported receiving record levels of interest for next year, as opposed to the last few years where year 12's have gone straight up north etc.


----------



## chops_a_must (12 December 2008)

Lancelot said:


> Sniff
> 
> I'm sorry, they are all precious little angels that work hard, can stand on their own 2 feet,  pay their own way, have great respect for their elders, expect nothing from them and never get into trouble
> 
> ...




Lol.

That's a new one... It used to always be, "I wish I was still young."

Now it's, "I was never young... ever!!!"


----------



## 2BAD4U (12 December 2008)

How much impact would a few uni students have on the housing market if they study a bit longer? 1/10th of stuff all.


----------



## chops_a_must (12 December 2008)

2BAD4U said:


> How much impact would a few uni students have on the housing market if they study a bit longer? 1/10th of stuff all.




I'd say a whole heap.

Many have been walking out straight into big salaries, and big mortgages or big rents after graduation.

After all, it's traditionally uni grads that are the home owners.


----------



## 2BAD4U (12 December 2008)

chops_a_must said:


> After all, it's traditionally uni grads that are the home owners.



WTF????? How did you come up with that?


----------



## sinner (12 December 2008)

Beej said:


> The above does not make sense; someone being in a negative equity position has no bearing whatsoever on whether they might be in "mortgage stress" or not? Mortgage stress is about HOW MUCH someone owes, what their income is and what the costs of servicing their loan is. The value of the underlying asset has no bearing on this equation at all......




What a totally naive statement. I thought you were supposed to be a realestate type smart guy or something Beej? 

Before you say sub-prime is different to underwater houses, it'd be worth noting that counterparty risk (unwillingness or inability to repay) and asset price risk are indeed two of the four criteria used to determine a mortgage as sub-prime or vulnerabe to systemic risk. Let us ignore the other two criteria (liquidity risk and credit risk).



> So really just a bunch of further alarmist fluff there mostly. All based on conjecture about further price falls that have not yet happened. "Experts" predicted AU/US $ parity a few months ago too - how wrong they were! Plenty of other examples. Some things are not worth worrying too much about until/if they actually happen, and even then let's worry about the right thing!




Rediculous!



> Oh and PS - 300,000 households = 3.5% of total households.....wow, disaster...and most of them probably don't care anyway as they only recently bought their home and are still enjoying it along with low interest rates. And we are not even anywhere near these numbers yet anyway. With Sydney pretty much bouncing around the bottom I don't see it happening either.
> 
> Cheers,
> 
> Beej




For those who say "only 3%" heh sounds very much like the "only 6%" (subprime % of total US mortgages) US property bulls were claiming would mean no problems with sub-prime! We saw the impact of that...and the US commercial realestate bubble is well on its way to popping but totally off everyones radar!


----------



## chops_a_must (12 December 2008)

2BAD4U said:


> WTF????? How did you come up with that?



Because they make more perhaps?


----------



## 2BAD4U (12 December 2008)

chops_a_must said:


> Because they make more perhaps?




So labourers, truck drivers, check out chicks, people working two jobs, don't count? So when they are working two jobs or long hours it's for the love and not to service a mortgage?  Approximately 20% of the population are uni grads.


----------



## Julia (12 December 2008)

chops_a_must said:


> After all, it's traditionally uni grads that are the home owners.




Really?   I'd like to see the stats on that.
Lots of tradies and others without any tertiary education owning homes.


----------



## chops_a_must (12 December 2008)

Julia said:


> Really?   I'd like to see the stats on that.
> Lots of tradies and others without any tertiary education owning homes.




Of course there are. But as a percentage of them as a group, I would have thought it was just common sense.


----------



## nunthewiser (12 December 2008)

LOL


----------



## Beej (12 December 2008)

sinner said:


> What a totally naive statement. I thought you were supposed to be a realestate type smart guy or something Beej?
> 
> Before you say sub-prime is different to underwater houses, it'd be worth noting that counterparty risk (unwillingness or inability to repay) and asset price risk are indeed two of the four criteria used to determine a mortgage as sub-prime or vulnerabe to systemic risk. Let us ignore the other two criteria (liquidity risk and credit risk).




Not really sure what you are on about sinner?? Mortgage stress is traditionally defined something like this: 



> "Quite simply, mortgage stress means you're struggling to manage your level of debt and meet your mortgage repayments.
> 
> Traditionally, you were said to be in mortgage stress if you spent more than 30 per cent of your taxable income on your home loan repayments.




Don't see any mention there about underlying asset value, negative equity, "sub-prime" or anything else related to what you have just been going on about.....

I think my original assertion still stands and you have an incorrect definition of what is meant by the term "mortgage stress". Ie, the number people who might, or might not, find themselves temporarily in a negative equity scenario has no bearing whatsoever on the level of mortgage stress those same people may or may not be under!

EDIT: Oh and just found this: "Mortgage stress down with rate cuts: HIA"

http://www.businessday.com.au/business/mortgage-stress-down-with-rate-cuts-hia-20081212-6x9t.html

Cheers,

Beej


----------



## Lancelot (12 December 2008)

chops_a_must said:


> Lol.
> 
> That's a new one... It used to always be, "I wish I was still young."
> 
> Now it's, "I was never young... ever!!!"





If being young means having no respect, getting into drunken fights and the inability to stand on my own two feet and man up to my actions then, yes, I was never young.

Me and my mates moved out and supported ourselves at 16, some of us even got married.

None of us stayed at home sponging allowing bucketloads of disposable income for continual holidays and pissups, while parents supported us, purchased food, paid the bills,  and cleaned up our mess

But, Its different now


----------



## chops_a_must (12 December 2008)

Lancelot said:


> Me and my mates moved out and supported ourselves at 16, some of us even got married.
> 
> But, Its different now




It certainly is.

You can't get married at 16 for one.


----------



## Lancelot (12 December 2008)

chops_a_must said:


> I'd say a whole heap.
> 
> Many have been walking out straight into big salaries, and big mortgages or big rents after graduation.
> 
> .




Times are changing again just like in the 90's

Now they'll become taxi drivers and checkout chicks


----------



## prawn_86 (12 December 2008)

Lancelot said:


> None of us stayed at home sponging allowing bucketloads of disposable income for continual holidays and pissups, while parents supported us, purchased food, paid the bills,  and cleaned up our mess




When you put it like that it makes me wish i still lived at home! 

Really its the parents fault, why would you move out in that situation. The parents obviously dont care, or dont have the balls to kick their kids out, so no-one to blame but themselves. Each to their own, etc etc


----------



## numbercruncher (12 December 2008)

> Originally Posted by Lancelot
> None of us stayed at home sponging allowing bucketloads of disposable income for continual holidays and pissups, while parents supported us, purchased food, paid the bills, and cleaned up our mess





Damn im moving home too ....

So this is the norm huh ?

And I guess its also the only reason your property investments arnt going to the moon ?


----------



## Lancelot (12 December 2008)

numbercruncher said:


> Damn im moving home too ....
> 
> So this is the norm huh ?
> 
> And I guess its also the only reason your property investments arnt going to the moon ?




latest figures in my areas havent shown this yet, nothing like it


----------



## sinner (12 December 2008)

Ah yes, things are so different now compared to back in the good old days...

"I see no hope for the future of our people if they are dependent on
frivolous youth of today, for certainly all youth are reckless beyond
words... When I was young, we were taught to be discreet and
respectful of elders, but the present youth are exceedingly wise
[disrespectful] and impatient of restraint" (Hesiod, 8th century BC).

"What is happening to our young people? They disrespect their elders, they disobey their parents. They ignore the law. They riot in the streets inflamed with wild notions. Their morals are decaying. What is to become of them?"

Old people been spouting the same crap for millenia.


----------



## Glen48 (12 December 2008)

Now when you are 50ish and got a divorce paying CSA you move back with your parents its called progress.


----------



## Lancelot (12 December 2008)

sinner said:


> Ah yes, things are so different now compared to back in the good old days...
> 
> "I see no hope for the future of our people if they are dependent on
> frivolous youth of today, for certainly all youth are reckless beyond
> ...




Might have been a bit less violence involved with that disrespect in the past

What do you think?


----------



## chops_a_must (12 December 2008)

Lancelot said:


> Might have been a bit less violence involved with that disrespect in the past
> 
> What do you think?




Caesar wants a word.


Seriously... where do these people blow in from? Christ almighty!


----------



## theasxgorilla (12 December 2008)

Lancelot said:


> But, Its different now




Yep, it's better now.  And soon enough the youngens will be in charge doing it their way which means it will get even better again.  So long dinosaurs.


----------



## Lancelot (12 December 2008)

chops_a_must said:


> Seriously... where do these people blow in from? Christ almighty!




The same place you would have blown in from 3700+ posts ago


----------



## Lancelot (12 December 2008)

theasxgorilla said:


> Yep, it's better now.  And soon enough the youngens will be in charge doing it their way which means it will get even better again.  So long dinosaurs.




Mid 30's, is that a dinosaur now?


----------



## chops_a_must (12 December 2008)

Geez... old people these days.

Back in my day they weren't in their mid 30s.


----------



## Lancelot (12 December 2008)

chops_a_must said:


> Geez... old people these days.
> 
> Back in my day they weren't in their mid 30s.




They were when I was 5


----------



## chops_a_must (12 December 2008)

Mmm... Mugabe... must have been all those young people who drove him to where he is today...


----------



## numbercruncher (13 December 2008)

Seems the Government has you property speculators in their crosshairs ....




> Cheaper housing target of radical tax overhaul
> Jacob Saulwick
> December 11, 2008
> 
> ...




http://www.smh.com.au/news/national/cheape...ge#contentSwap1


----------



## So_Cynical (13 December 2008)

One of the 6 guys that got sacked at work today was telling me how he 
will prob have to sell up and move back to the country, and live with his 
parents or in laws...he's a young guy with a wife and small child of 2 and 
a mortgage the same age.

I told him it was prob a bad time to sell (Western Sydney) and he just looked 
at me blankly and shrugged...like no choice....interest rates and FHB crap is 
irrelevant if u haven't got a job.


----------



## numbercruncher (13 December 2008)

So_Cynical said:


> One of the 6 guys that got sacked at work today was telling me how he
> will prob have to sell up and move back to the country, and live with his
> parents or in laws...he's a young guy with a wife and small child of 2 and
> a mortgage the same age.
> ...





In the good old days of the very start of this century - you could just scrape by on the dole and pay the mortgage while looking for a new job , not these days, straight down the gurgler for most ....

Its a phenomenal amount of people that live hand to mouth ..... only 20pc of Australians have 20k of savings or more ....


----------



## Beej (13 December 2008)

numbercruncher said:


> Its a phenomenal amount of people that live hand to mouth ..... only 20pc of Australians have 20k of savings or more ....




Bogus stat - what about their superannuation savings?? 

Beej


----------



## troppojoe (13 December 2008)

2BAD4U said:


> Ummmm, let's try the other way around.  Property prices fall, they have negative equity so why would they sell?  They wouldn't, they will stay put creating a reduction in supply and prices start to go up again as demand goes up.
> 
> And this hot off the press, the number of homeloands ROSE 1.3% in October.  That can't be right isn't there massive supply and no one buying? Changed my glasses, yep it's right *number of homeloands ROSE 1.3% in October.*
> 
> HERE





No mention of NEW homeloans, the increase could be for people refinancing, cutting their losses on fixed rate and moving into the lower variable loans.
JIMOO


----------



## numbercruncher (13 December 2008)

That 1.3% means nothing, its a MOM figure and like you said probably is mostly refinances and maybe a couple of silly FHBs getting turned into debt slaves - YOY homeloan figures have been absolutely smashed.


----------



## Aussiejeff (13 December 2008)

Beej said:


> Bogus stat - what about their superannuation savings??
> 
> Beej




What superannuation savings?

At the start of '08, six of my mates were eagerly looking forward to and talking about retiring this year or the next. 

None of them is now contemplating that vanished opportunity, because ALL their super funds "savings" have been screwed over. Every last one of 'em, mate (all around 30-50% DOWN). They have years of unwanted slog ahead of them now while they wait and hope like hell their crushed nest eggs can be patched up somehow.

My widowed mother-in-law (in a low care dementia unit) has seen her "nest egg" reduce from $230,000 to $160,000 in the space of a few months. Great. 

Let's hope the Super scene has improved markedly before it is your turn to bail.

Maybe the stats are not so bogus after all.....


chiz,


aj


----------



## Glen48 (13 December 2008)

I heard thing are so bad on Manhattan Island there is a class action being setup by the owners to sue the Indians for they beads and trinkets they paid for the place in the first place.


----------



## robots (13 December 2008)

Glen48 said:


> I heard thing are so bad on Manhattan Island there is a class action being setup by the owners to sue the Indians for they beads and trinkets they paid for the place in the first place.




hello,

wouldnt surprise me Glen48 in that land of gunslingers and crackheads,

got anything on Aussie land yet?

thankyou
robots


----------



## numbercruncher (13 December 2008)

robots said:


> hello,
> 
> wouldnt surprise me Glen48 in that land of gunslingers and crackheads,
> 
> ...





Hows the shoot em ups and Ice heads going in Melbourne Robi ?

Kids with knifes going psycho, underbellys , Cops blowing the "bad" guys away .....

More violence than new york mate, no wonder youre RE is crashing through the floor, the pesky buggers are all flooding to Quensland to escape the hardcore violence and drugs.

I guess youre getting all the Immigrants that just sold their cheap shacks overseas though ?


----------



## robots (13 December 2008)

numbercruncher said:


> Hows the shoot em ups and Ice heads going in Melbourne Robi ?
> 
> Kids with knifes going psycho, underbellys , Cops blowing the "bad" guys away .....
> 
> ...




hello,

st kilda up 14.7% Sept08 Q, what a crash Number

thankyou
robots


----------



## Beej (13 December 2008)

Aussiejeff said:


> What superannuation savings?
> 
> ....
> 
> Maybe the stats are not so bogus after all.....




Tell sad stories all you like - most peoples super have taken a big hit (my own included), all the more reason why you should be aiming to own your own home well before planned retirement. And all the more reason you would have been better off investing in R/E 3-4 years ago when all these great debates first started on this forum vs having invested the same amount in the stock market.

BUT, to say "what super savings?" is a crock and you know it. There is still something in the order of ONE TRILLION $ invested through Australia's superannuation accounts. That's quite a lot of national savings that are routinely ignored in the national savings rates statistics.

Beej


----------



## xoa (13 December 2008)

Median price in my suburb of Sandgate (Brisbane) has fallen an incredible 23% over the past quarter. "For sale" signs popping up everywhere as speculators rush to sell. Rents are getting very cheap too - 1 bedroom units can be had for less than $200pw. Permabulls are blaming the weather, as though it's never rained before.

Sadly I'm moving to Townsville next month, I'll be interested to see what happens there.


----------



## Beej (13 December 2008)

xoa said:


> Median price in my suburb of Sandgate (Brisbane) has fallen an incredible 23% over the past quarter. "For sale" signs popping up everywhere as speculators rush to sell. Rents are getting very cheap too - 1 bedroom units can be had for less than $200pw. Permabulls are blaming the weather, as though it's never rained before.
> 
> Sadly I'm moving to Townsville next month, I'll be interested to see what happens there.




What's the year/year median price change xao? Quarterly stats, as demonstrated clearly many times throughout this thread, can swing wildly, especially if there are low sales volumes in a given area. You need a decent sample size to get a proper read on where median prices are at. For every suburb like yours there are also suburbs in Brisbane where the median has gone UP 30/40% in the last quarter - but does that lead us to conclude prices as a whole have increased by that much? Of course not.

Beej


----------



## numbercruncher (13 December 2008)

robots said:


> hello,
> 
> st kilda up 14.7% Sept08 Q, what a crash Number
> 
> ...





We have a link for that statistic or was that on the Radio ? Maybe it was in the local highschool news letter ? the principle is a Investor liquidating his portfolio and thought hed talk it up maybe ?


----------



## robots (13 December 2008)

hello,

it was from a blogger, so it has to be right, right

thankyou
robots


----------



## prawn_86 (13 December 2008)

robots said:


> hello,
> 
> st kilda up 14.7% Sept08 Q, what a crash Number
> 
> ...




Thats old news by now robots, we're nearly through the next quarter


----------



## numbercruncher (13 December 2008)

xoa said:


> Median price in my suburb of *Sandgate* (Brisbane) has fallen an incredible 23% over the past quarter. "For sale" signs popping up everywhere as speculators rush to sell. Rents are getting very cheap too - 1 bedroom units can be had for less than $200pw. Permabulls are blaming the weather, as though it's never rained before.
> 
> Sadly I'm moving to Townsville next month, I'll be interested to see what happens there.





haha and once the rainy season passes theyll blame the week long drought ..... then hopefully they go bankrupt and we deport them back to mexico.


----------



## robots (13 December 2008)

prawn_86 said:


> Thats old news by now robots, we're nearly through the next quarter




hello,

thats right Prawn, almost thru next quarter and then the next and the next and the next,

I will hang my hat on this and cop it sweet if things change on the next

thankyou
robots


----------



## 2BAD4U (13 December 2008)

xoa said:


> Median price in my suburb of Sandgate (Brisbane) has fallen an incredible 23% over the past quarter. "For sale" signs popping up everywhere as *speculators *rush to sell. Rents are getting very cheap too - 1 bedroom units can be had for less than $200pw. Permabulls are blaming the weather, as though it's never rained before.
> 
> Sadly I'm moving to Townsville next month, I'll be interested to see what happens there.




I love how people on here keep referring to property investors as "speculators".  You don't call people who buy and hold shares as speculators.  It may surprise many people but there are still some out there who are holding on to shares despite 50%+ fall in price because they have a buy and hold strategy and look long term.  So if the same happens in housing, what's the difference??  If someone is 30 years away from retirement, why panic and sell an investment property/ies now? Would someone who paid $8 for BHP 7 years ago be complaining now?? Maybe, but they haven't lost anything.  Property is long term.


----------



## numbercruncher (13 December 2008)

> Property is long term





Shame the over extended speculators/flippers didnt work that out earlier hey ?


----------



## So_Cynical (13 December 2008)

robots said:


> hello,
> 
> st kilda up 14.7% Sept08 Q, what a crash Number
> 
> ...




Your looking more desperate every time u drag out that old stat.


----------



## numbercruncher (13 December 2008)

LOL St kilda median is down 14pc on the Sept quarter - why are we even entertaining him, his sig should be banned as its false.


http://www.realestateview.com.au/propertydata/vic/st+kilda+east/index.html


----------



## robots (13 December 2008)

hello,

you keep typing in the wrong suburb Numbercruncher, 

St Kilda not St Kilda East, you cant be a good mod if you bend the truth like this all the time,

thankyou
robots


----------



## GumbyLearner (13 December 2008)

Go the Saints 

http://www.domain.com.au/public/suburbprofile.aspx?mode=buy&suburb=St Kilda&postcode=3182


----------



## Aussiejeff (13 December 2008)

I predict house prices to be flat next week.

I base this on my wry observation that the rival ASF "House prices to keep falling for years" and "House prices to keep rising for years" threads are both extremely popular and coincidentally neck and neck atm.

 

Good evening all.


----------



## numbercruncher (13 December 2008)

lol - Evening AJ !


I think your on the money ....


----------



## Aussiejeff (14 December 2008)

Hehe...

Oops! Caught the thread napping there for a mo'. Slipping behind the rising flotsam...

Giddyup there, lil' doggie!

:horse:


----------



## gfresh (14 December 2008)

13,000 customers eh..

http://www.theage.com.au/national/on-the-brink-of-collapse-20081213-6xzw.html?page=1

Older article: 
http://www.businessday.com.au/business/the-imperfect-storm-20081029-5at4.html

_Leveraging into the stock market via your home is a fantastic idea..._ 

http://business.theage.com.au/busin...cents-to-the-bottom-20081212-6xm1.html?page=2



> "Hi Michael: We are Storm Financial customers and after reading your articles are very worried. Without much correspondence from our Brisbane office we have been kept in the dark and are concerned about losing our house. If you were in our shoes what would be the best course of action? We would appreciate some advice.
> 
> "We have been margin called by Colonial and hence have a $57,000 shortfall. We now have a $300,000 mortgage against our house with ANZ, which we had previously owned. Any sort of guidance would be helpful as we are lost to know what to do.
> 
> Regards,


----------



## chops_a_must (14 December 2008)

Beej said:


> Bogus stat - what about their superannuation savings??
> 
> Beej



Are these even counted as Savings in official stats? If they are, our savings rates are so much worse than reported it isn't funny, as they really aren't accessible at all.


And Gfresh... lol. Idiots get what they deserve sometimes. Sucked in.


----------



## Beej (14 December 2008)

chops_a_must said:


> Are these even counted as Savings in official stats? If they are, our savings rates are so much worse than reported it isn't funny, as they really aren't accessible at all.
> 
> 
> And Gfresh... lol. Idiots get what they deserve sometimes. Sucked in.




No super is not counted in so called "national savings" stats - the reason I think is most countries do not have a super scheme anywhere near as comprehensive, universal or generous in terms of it's tax treatment as ours, so super is left out of ours to enable "apples to apples" comparisons. But it sort of defeats the point leaving it out given the arguments made by most about our national savings rate.

In terms of accessibility etc, super is in fact the "best" form of saving, for the very fact it is NOT accessible until retirement, and in the meantime the money is invested in the economy somewhere. Economically why else do you think savings matter? They only matter in terms of having money available for productive investment, and in terms of individuals having the ability to save for retirement.

Beej


----------



## chops_a_must (14 December 2008)

Beej said:


> Economically why else do you think savings matter? They only matter in terms of having money available for productive investment, and in terms of individuals having the ability to save for retirement.
> 
> Beej



No, I disagree, savings are vital for other essential things. Which is exactly why super should not be treated as savings. Because savings would indicate an ability to use cash or liquid assets to service ongoing requirements. Super is not this.


Also, very interesting article on 9 Perth tonight about a property investor going belly up after quitting his job to manage his investments full time 5 years ago... and likely needing to sell his own home as a result. But no ability at all to offload properties.


----------



## CamKawa (14 December 2008)

Ok so who's going to jump on the bus? SE Queensland is going gangbusters according to this bloke.
http://www.hotspotting.com.au/index.php?act=viewProd&productId=52


----------



## numbercruncher (14 December 2008)

CamKawa said:


> Ok so who's going to jump on the bus? SE Queensland is going gangbusters according to this bloke.
> http://www.hotspotting.com.au/index.php?act=viewProd&productId=52





LOL

course he would, he wants $500 a head to join his silly little tour.


----------



## CamKawa (14 December 2008)

numbercruncher said:


> LOL
> 
> course he would, he wants $500 a head to join his silly little tour.



Or it's $825 for a double. I was thinking Beej and robots could go halves.


----------



## agathos (14 December 2008)

Hi everyone out there,

Nice reading everyone's thoughts, some more jubilant, others like me verging on the cautious and careful!

There is a good article from Intelligence Investor:

http://www.intelligentinvestor.com.au/articles/262/2009-Year-of-the-value-trap-.cfm?articleID=832020

Just a 1 line update from the Perth housing market, particularly with regards to the AUD$550,000 to AUD$1.2 million segment.

Those who are owning homes in the AUD$1 million bracket are selling in droves in areas like Alfred Cove, Applecross, etc. 

But those are in the AUD$500,000 to AUD$650,000 bracket seems to be pulling back in non mortgage belt owner occupier areas like Bateman & Bullcreek. These are owners who probably know they won't get top dollar and am making a conscious decision to wait. Those who ARE selling, some are still asking top dollar prices. 

I remember attending one of Shane Oliver's evening forum (if I am not mistaken) in Perth where he uses a Dr. Jean-Paul Rodrigue of Holfstra University, where he outlines the stock market move as:


Take off
First sell off 
Bear Trap
Media Attention 
Public Enthusiasm
*GREED*Delusion
New Paradigm
DENIAL 
*Return to Normal *
Fear 
CAPITULATION

While this thread is about housing/real estate, would anyone like to venture a guess where we are in the stock market boom/.bust ladder according to this theory???? (assuming some of the phases being described have actually happened right here in Australia?). 

And if one of our contributors is correct, that is, property market usually lags stock market by 6-12 months (or some say, 18 months), we might still have a few months to go for the downward real estate choo-choo train! 

In the short term, I think the porperty might even have a dead cat small rebound (It's just my personal view). Finishing the note on a positive note, brick and mortar still holds great potential for wealth creation. 

Have a great week everyone.


----------



## Beej (14 December 2008)

CamKawa said:


> Or it's $825 for a double. I was thinking Beej and robots could go halves.




No thanks - I've already said many times I don't buy property in the original "land of the great white shoe brigade" 

Beej


----------



## chops_a_must (14 December 2008)

agathos said:


> But those are in the AUD$500,000 to AUD$650,000 bracket seems to be pulling back in non mortgage belt owner occupier areas like Bateman & Bullcreek. These are owners who probably know they won't get top dollar and am making a conscious decision to wait. Those who ARE selling, some are still asking top dollar prices.



I think you'll find that's because it's a well established area, where a lot of owners have been there since the late 70s and 80s, looking towards retirement, so they have little need to, or wish to sell.

You look on the same latitude further west of the freeway, it is a completely different story. Seemingly enormous volumes through Murdoch, Winthrop, North Lake, Etc. as a larger percentage of these are rentals for Murdoch uni, and higher specuvestor territory.

Doesn't mean the value in Bullcreek and Bateman has changed, just means less are prepared to sell there. But you'd be stupid to buy the equivalent there obviously, as you are closer to Freo, the train station, and would have better occupancy west in Winthrop et al.


----------



## agathos (15 December 2008)

What's your take, Chops_a_must on the properties west of Winthrop?

Does it mean these areas (west of Winthrop) are undergoing higher selling volumes in today's economical environment, due to higher specuvestors involvement?

Does that mean the* properties west of Winthrop *will appreciate faster? 

I see Willagee, (which is about 4.7 kilometer from Fremantle) which was booming out of proportion before the bust, reverting back to realistic prices at the moment (You can get something for high 400 K-ish for a 700 plus sqm with a rennovated home, when previously 5 months ago, everyone tries to sell an old unit for high 500K ish). 

Winthrop seems to have dropped in prices too. Friend bought a 2 storey unit early 2007 for 990,000 when the going price was 1.2 million. (That was 12 months ago). 

U seem to have a negative view on Bateman, any views u can share with me? I would love to hear them out to gain a different perspective. 

Appreciate your views.


----------



## chops_a_must (15 December 2008)

Nothing wrong with Bateman.

And Winthrop is included in my west of Bullcreek/ Bateman micro analysis.

Willagee was redeveloped extensively over the last 10 years, so it is much more difficult to analyse.

My thoughts would be, why buy in Bullcreek and Bateman when you may be able to get the equivalent for less in Winthrop and Kardinya?

If I had unlimited money, I would be looking at developable land in Beaconsfield and certain parts of Hamilton Hill, even Spearwood, as that will eventually be the next areas to go well. Great location, just a lot of riff raff, but with huge potential.

But we also don't know what is going to happen with the Roe extension. Which means a lot of these southern suburbs are going to have strange price moves I would say, and may not be that great depending...

Generally, the closer to Freo, the better the potential IMO. It also comes with much better public transport service.


And yes, just from observation, Winthrop, Kardinya, North Lake... anything in this area is having massive supply dumped on the market, because they are generally specuvestments.


----------



## So_Cynical (15 December 2008)

My mum is putting her house (Busselton 80 meters from ocean) on 
the market next week 850K.

be interesting to see how she goes....i reckon Perth will hold up for a 
while as all those sacked miners will have nice redundencys and hopefully 
some savings and high equity in there homes...thinking they didn't spend 
it all on European holidays and over priced 4WD's.


----------



## chops_a_must (15 December 2008)

Perth isn't holding up mate.

It's tanking seriously badly. Setting downside records.


----------



## agathos (15 December 2008)

Thanks, chops_a_must for your sharing.
I totally agree on Beaconsfield and Hami Hill as good prospects for investment due to it's PROXIMITY to Freo. 

However, I am buying the unit for pesonal dwelling, as compared to investment purposes (of course, any appreciation in later years would be a good topping to the cake).

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

As for the Busselton property scene, along *Geographe Bay *which is situated at Layman Road, during my travel to the country side as part of my regular southwestern runs, I have seen 6 properties, back to back on sale. These are purely next street to the water front properties and a local told me that they are selling because everyone was attracted by the water front prospects previously, but now that they have erected these properties, they now can't stand the smell of the seasonal algae that populates the waters along Geographe Bay at certain points of the year!!!!!!!

Another version of the local story - another local told me that these 6 properties are all developed by the same company and they need to off load them for a profit. I can't see that happening right now though! 

Busselton is a scenic spot and has loads of tourism potential. Troy Buswell is doing all he can to prop up the plans to repair the Busselton Jetty as it is a CENTRAL icon to local tourism activities. 

All the best to your mom's sale. Keep us posted. 

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


----------



## chops_a_must (15 December 2008)

Wouldn't bother with a unit that isn't far away from one of the centres Agathos... Just my


----------



## numbercruncher (15 December 2008)

chops_a_must said:


> Perth isn't holding up mate.
> 
> It's tanking seriously badly. Setting downside records.






I have family members invovlved in a sizeable land development in Perth and they recently told me prices where about 20pc off there peak - prices 20pc down for developers is still big $$ as the Beejs and Robis of this world have talked it up for for so long. Their land parcels wont be ready for market for over a year anyways.

Perth imho still has plenty of room to tumble as the mining Industry continues its implosion. But my developer relatives disagree with my assesment


----------



## numbercruncher (15 December 2008)

chops_a_must said:


> Perth isn't holding up mate.
> 
> It's tanking seriously badly. Setting downside records.






I have family members invovlved in a sizeable land development in Perth and they recently told me prices where about 20pc off there peak - prices 20pc down for developers is still big $$ as the Beejs and Robis of this world have talked it up for for so long. Their land parcels wont be ready for market for over a year anyways.

Perth imho still has plenty of room to tumble as the mining Industry continues its implosion. But my developer relatives disagree with my assesment


----------



## juddy (15 December 2008)

Interesting comments on WA and QLD property markets from today's Australian. 


*Boom states now face the toughest problems*
http://www.theaustralian.news.com.au/business/story/0,28124,24798770-643,00.html


----------



## Beej (15 December 2008)

numbercruncher said:


> I have family members involved in a sizeable land development in Perth and they recently told me prices where about 20pc off there peak - prices 20pc down for developers is still big $$ as the Beejs and Robis of this world have talked it up for for so long. Their land parcels wont be ready for market for over a year anyways.
> 
> Perth imho still has plenty of room to tumble as the mining Industry continues its implosion. But my developer relatives disagree with my assesment





Can you please stop mis-representing my views? I've NEVER "talked up" Perth property thanks - if that's where all you bears live then I can understand your negativity towards the market. BUT if you are using the trends in such a relatively small market that is currently out of whack with it's typical values relative to the major capital cities, then I can understand why your views are so negative and also so wrong about the broader national market outlook. I mean FFS there was a month there a year or so ago when the median house in Perth cost more than in Sydney!!

As for 20% off the peak - let's wait and see that reflected in the city median stats and I might believe you. And regardless, how much did Perth property appreciate over a relatively short time though 2007?? About 20% wasn't it?? (http://reiwa.com/res/res-salesgraph-display.cfm).

The major markets, Ie Sydney, Melbourne and Brisbane, have not appreciated anywhere near as much as Perth in that last period, so therefore it is completely wrong to try and gauge the national market based purely on what might or might not be happening out west.... I can see now that is where you are coming from NC and that is why you will be proven wrong with most of the alarmist rubbish you spout here.

Beej


----------



## numbercruncher (15 December 2008)

Sorry Beej - we just use Beej and Robi as generic terms for permabulls, nothing personal.




> As for 20% off the peak - let's wait and see that reflected in the city median stats and I might believe you. And regardless, how much did Perth property appreciate over a relatively short time though 2007?? About 20% wasn't it??





They are Land developers, no buildings - I dont think land shows in the common stats ? Just houses and units ?

Yes Perth went mental. Unsustainably so ....


----------



## numbercruncher (15 December 2008)

Robi becareful there will be fights for your job soon !




> VICTORIAN builders are reporting that clients are pulling out of new home projects as the global credit squeeze bites, a survey shows.
> 
> *The Masters Builders Association *has identified that more than *half* their clients - 52 per cent - have *pulled out *of projects in the last three months citing financing problems as the biggest issue.
> 
> Builders also said they were experiencing increased cost of servicing debt (21 per cent) and reduced access to credit (17 per cent).




http://www.news.com.au/heraldsun/story/0,21985,24801080-661,00.html


----------



## Aussiejeff (15 December 2008)

numbercruncher said:


> Robi becareful there will be fights for your job soon !
> 
> 
> 
> ...




hello,

robots says all a bad dream for you numbers

you will wake one day to the pleasure of RE nirvana in St Kilda

your sorry leg all a dream too

thankyou
ozziebots


----------



## robots (15 December 2008)

numbercruncher said:


> Robi becareful there will be fights for your job soon !
> 
> 
> 
> ...




hello,

no, i started building work in 1992 and there wasn't an issue, 

wont be any issues for people who "actually" work in life

thankyou
robots


----------



## gav (16 December 2008)

By early Jan I shall have enough for a deposit   The area I'm looking there are quite a few nice places advertised at under $300K.  I wont be buying soon though, unless of course the price is right.  Then hope to lock in interest rates for as long as I can as soon as it gets lower than 5% 

Government boost fails to attract buyers
http://www.news.com.au/business/money/story/0,28323,24800841-5013951,00.html

INTEREST rate cuts and the increase to the first-home buyers grant appear to have failed to restore confidence to the property market with auction clearance rates dropping sharply over the month.

The slide was most pronounced in Melbourne, which recorded its worst monthly clearance rate since January 2006, The Australian reported.

The November clearance rate in Melbourne was down five percentage points on the previous month, and was 22 points lower than the figure recorded for November last year.

Australian Property Monitors senior economist Liam O'Hara said the market remained "lacklustre".

"The market never really looked like it was going to improve. There were some seasonal factors that led to a small spike in weekly rates during the month but these were due to seasonal factors," he said. "It's very lacklustre and people are still quite fearful (of taking on) debt."

Brisbane recorded its worst monthly figures since January 2005. The clearance rate of 23 per cent was six points lower than the figure recorded for October and 33 points lower than November 2007.

In Adelaide, the clearance rate crashed a further 11 points from October to 37 per cent - 33 points lower than November last year, and the city's worst result since the turn of the century.

Mr O'Hara said the market needed to see significant improvements before mid-2009 - when the Rudd Government's first-home buyers grant is due to be reduced - if there was to be any hope of a revival next year.

"That's really where the point of no-return is," he said.


----------



## gfresh (16 December 2008)

gav said:


> "That's really where the point of no-return is," he said.




:xmaswave Point of no return eh? Sounds kind of dramatic, but I like it... The realestate industry talk of a turnaround in early 09 is more simply hope than too much solid evidence. 

End of 1st quarter will be setting the tone I think for the remainder of 2009 :bricks1: Already dinner party conversation is on whether people think they may keep their job next year. Much different to 3 months ago, and the 3 months before that what people's concerns were. 6 months ago it was "some American thing", and effected us here "only for those who gambled on the sharemarket".


----------



## wayneL (16 December 2008)

Pommie banks wake up and smell the coffee:

http://www.telegraph.co.uk/finance/...rclays-chief-executive-John-Varley-warns.html



> House prices to crash 30 per cent, Barclays chief executive John Varley warns
> House prices will crash a further 15 per cent next year, the boss of high street bank Barclays has admitted.
> 
> By Myra Butterworth, Personal Finance Correspondent
> ...


----------



## ROE (16 December 2008)

CamKawa said:


> Or it's $825 for a double. I was thinking Beej and robots could go halves.




and use that equity in your house to pay for the ticket
Living like a RE gurus, living off equity and capitalise interest 

you cant call yourself a RE investor until you do those things


----------



## gfresh (16 December 2008)

The banks having a go now.. ANZ tipping up to a 5% fall in 2009:

http://www.afr.com/home/viewer.aspx...ion=property&title=Dismal+outlook+for+housing



> AMZ maintains a positive long-term outlook for Australian house prices based on significant rate cuts, generous grants, an undersupply of housing and tight rental markets.
> 
> However, it has adjusted its 2009 forecast, predicting flat to negative prices, with falls of up to 5 per cent possible.
> 
> ...


----------



## CamKawa (16 December 2008)

gfresh said:


> The banks having a go now.. ANZ tipping up to a 5% fall in 2009:
> 
> http://www.afr.com/home/viewer.aspx...ion=property&title=Dismal+outlook+for+housing



LOL. A bit of a backflip from earlier in the year.


----------



## ROE (16 December 2008)

Think we are still different? let put some money on it 
http://www.news.com.au/business/story/0,27753,24807552-31037,00.html


----------



## CamKawa (16 December 2008)

*It's supply stupid!*

lol lol lol

Source: http://media.hubonline.com.au/agent...sentation The mother of all housing booms.pdf


----------



## sinner (16 December 2008)

Pretty funny about the supply argument, all those who seem to be making it will happily gloss over the fact that London had a pretty hefty supply shortage too which didn't seem to protect them one bit!


----------



## 2BAD4U (16 December 2008)

Perhaps this explains why Australia IS different apart from kangaroo's and koala's numbercruncher 

Story Here


----------



## Beej (16 December 2008)

sinner said:


> Pretty funny about the supply argument, all those who seem to be making it will happily gloss over the fact that London had a pretty hefty supply shortage too which didn't seem to protect them one bit!




Yes - just as it is pretty funny that those who believe we are in big falls gloss over the fact that the GLOBAL credit crisis occurred and effected everywhere at the same time, and yet strangely house prices in Australia have fallen hardly at all over the 12-18 month period during which the UK and US are off 15% and 20% respectively (in terms of average falls anyway).

So let me ask the property bears this - if the supply/demand argument is bogus, why HAVEN'T Oz prices fallen in line long ago with the UK and US?? 

Beej


----------



## chops_a_must (16 December 2008)

Beej said:


> Yes - just as it is pretty funny that those who believe we are in big falls gloss over the fact that the GLOBAL credit crisis occurred and effected everywhere at the same time




It really didn't hey.

You got a broad based commodities chart there champ?


----------



## prawn_86 (16 December 2008)

I thought prices here had fallen by about 20%


----------



## gfresh (16 December 2008)

Beej said:


> So let me ask the property bears this - if the supply/demand argument is bogus, why HAVEN'T Oz prices fallen in line long ago with the UK and US??




Simple - economic conditions are not as bad presently as the UK or US, in terms of unemployment, lending criteria and other factors driving businesses, and home owners to the wall. 

In fact, these things are starting to happen in smaller numbers, and the signs are not too encouraging for next year. 

Whether the rest of the world pulls through in late 2009, and helps Australia come out of this before the worst of it hits is the million dollar question. Maybe we will. 

More signs of the times... increased holiday vacancies, reduced rates to attract wealthier holidaymakers. 

http://www.news.com.au/business/money/story/0,28323,24807152-5017313,00.html


----------



## Aussiejeff (16 December 2008)

prawn_86 said:


> I thought prices here had fallen by about 20%




hello,

man, you have never heard of St Kilda, nirvana on earth? up 140% in Sep Quarter 08

ask Robots for advice

thankyou
ozziebots


----------



## Beej (16 December 2008)

chops_a_must said:


> It really didn't hey.
> 
> You got a broad based commodities chart there champ?




Oh so house prices fell in the US and UK due to falling commodity prices did they? I mean we keep getting told that we are the same here as the US and UK and our market should be driven by the exact same globalised fundamentals right?? 

PS: Got any historical correlation between commodity price falls and AU house price falls?? Commodities have come up and gone down massively at least a dozen times since I have been following such things 



prawn_86 said:


> I thought prices here had fallen by about 20%




Ummm - I think NOT! You have been listening to guys on here too much! National and regional median prices haven't fallen much in oz at all! Maybe about 3-5% over the past 2 quarters depending on the city, and still UP year/over year for most cities. I think it may "feel" like more if you read stuff like this thread because people have been going ON about "predicted" falls for so looooooooooong now and not much has happened....

Cheers,

Beej


----------



## Beej (16 December 2008)

gfresh said:


> Simple - economic conditions are not as bad presently as the UK or US, in terms of unemployment, lending criteria and other factors driving businesses, and home owners to the wall.
> 
> In fact, these things are starting to happen in smaller numbers, and the signs are not too encouraging for next year.
> 
> Whether the rest of the world pulls through in late 2009, and helps Australia come out of this before the worst of it hits is the million dollar question. Maybe we will.




Ah so in fact you at least agree that there is something a little different about AU after all? I agree that ultimately what happens here will hinge dramatically on 2009 and whether the rest of the world can pull itself out of the hole before we have fallen all the way in...... Nothing here is certain! It may well turn out that now and the next 6-12 months will prove to be THE time to buy (at least a PPOR if you don't already own one). The problem is no-one will know for certain until the opportunity has passed..... 

I still think on the balance of probabilities that we are currently in a very similar situation in the housing market (and the economy) to early/mid 1990 - which means perhaps 12 months before it has bottomed and starts to slowly turn up again.

Cheers,

Beej


----------



## chops_a_must (16 December 2008)

Beej said:


> Oh so house prices fell in the US and UK due to falling commodity prices did they? I mean we keep getting told that we are the same here as the US and UK and our market should be driven by the exact same globalised fundamentals right??
> 
> PS: Got any historical correlation between commodity price falls and AU house price falls?? Commodities have come up and gone down massively at least a dozen times since I have been following such things



Right... So I'm arguing for a difference in our economies based on commodities, yet you are trying to re-correlate commodities with the US and UK. 

Seriously, your comprehension is pathetic.

Think you will find WA and other states, particularly QLD and SA, have a housing correlation with commodities.


----------



## awg (16 December 2008)

Beej said:


> Ah so in fact you at least agree that there is something a little different about AU after all? I agree that ultimately what happens here will hinge dramatically on 2009 and whether the rest of the world can pull itself out of the hole before we have fallen all the way in...... Nothing here is certain! It may well turn out that now and the next 6-12 months will prove to be THE time to buy (at least a PPOR if you don't already own one). The problem is no-one will know for certain until the opportunity has passed.....
> 
> I still think on the balance of probabilities that we are currently in a very similar situation in the housing market (and the economy) to early/mid 1990 - which means perhaps 12 months before it has bottomed and starts to slowly turn up again.
> 
> ...






sorry I cant quote the stats, but IMO the cheapest time to buy housing is when the Unemployment stats are highest.

which is a way off yet.

would be interesting to see the correlation


----------



## singlefished (17 December 2008)

awg said:


> sorry I cant quote the stats, but IMO the cheapest time to buy housing is when the Unemployment stats are highest.
> 
> which is a way off yet.
> 
> would be interesting to see the correlation




I think you've raised a valid point and would also like to see the correlation.

Now.... bear with me, you'll have to use your imagination with this

Found these 2 links, one with house prices, one with unemployment rates

www.appliedeconomics.com.au/pubs/pdf/06_AER_house_prices_australia.pdf

http://www.aph.gov.au/budget%20dummy/budget%202007-08%20mirror/2007-08/bp1/html/bp1_bst4-01.htm

Figure 1 in the house price pdf indices price movements between 1970 & 2003

Chart 12 in the labour force link indices unemployment between 1979 & 2007

Now, my "graphics skills" are not as good as my "beer skulling skills" so I cannot overlay/stretch/etc the 2 graphs to provide a direct correlation. Besides, I don't think MSPaint would be up to the task....

But, you can flick between the 2 pages and note the highs on either do somewhat correlate to the lows on the other.

House Prices clearly rise a lot more than they fall and unemployment (unless on a massive scale) will not likely be the driver of prices falling another 20% as some analysts are predicting.

You can see where these 20% to 40% drop predictions come from though if you were to project the long term average prices. I can't see it being that bad though....


----------



## agathos (17 December 2008)

Hi everyone,

It's agathos here. 
Seems like in this thread, most of us are expecting prices to soften at least a bit, but there are a few amongst posters in this forum who does seem to believe otherwise. 

It does offer a different perspective and adds flavor to this ONGOING discussion.But I do remember something about mortality studies in biology.
Mortality has to do with the number of dead bodies over a long period of time. For example, how many people, over , say a 30 year period, will die from Coronary Heart Disease.

The point I am making is this - house prices has to be viewed in the longitudinal perspective.

We cannot simply IGNORE the fact that while in the short term, burst of irrationale market uptrends can occur, in the longer term ,  adjustments, fluctuations and stuff that do happen in between do average out home prices. 

At the end of the day, like biology & clinical research, you and I - OUR aim NOT to be that coronary heart disease victim. We aim to emerge a VICTOR, rather than a VICTIM.

Ideology, opinions, thinking, statistics, research, etc are all good and well.
But at the end of the day, don't we all aim to emerge the *WINNER in *this real estate game. 

And I am fully persuaded that what guides me to WAIT for 20 months (and consciosly deciding to squat at some rental property first) HAS BEEN and WILL be the right decision.

I am dreaming of  a home, 
Most of us here would probably be dreaming of one (or more) too! 
And that dream will be a reality for me, and for 1000s of other OZs who have been waiting patiently!

Here's a toast to a win-win situation.
A situation where in the short term, those who aspire to enter the first home buying market will get a GOOD deal
And in the longer term, brick and mortar will continue her sterling growth to the benefit of all!

Now. that's what I call AUTHENTIC wealth growth. 
Not some Maddock or Storm cheater with their PONZI scheme!

Cheers, mates. 
We SHALL get our homes soon. Be patient.

AgATHOS.


----------



## noirua (17 December 2008)

"US House Building Slump continues":
The construction of new US homes fell at its fastest rate for almost 25 years in November as the housing downturn showed no sign of easing.

New home starts fell to a seasonally adjusted rate of 625,000 from October's revised figure of 771,000.

New home building in both October and November has been at its lowest levels since records began in 1959.

The monthly fall in new house building, a drop of 18.9%, was much bigger than had been expected by most economists.


----------



## xoa (17 December 2008)

Beej said:


> Yes - just as it is pretty funny that those who believe we are in big falls gloss over the fact that the GLOBAL credit crisis occurred and effected everywhere at the same time, and yet strangely house prices in Australia have fallen hardly at all over the 12-18 month period during which the UK and US are off 15% and 20% respectively (in terms of average falls anyway).
> 
> So let me ask the property bears this - if the supply/demand argument is bogus, why HAVEN'T Oz prices fallen in line long ago with the UK and US??
> 
> Beej




The deflation of housing bubbles caused the credit crisis, not vice versa.

The US bubble peaked about 30 months ago, the UK's 12 months ago, and ours about 6 months ago. China's and Dubai's bubble peaked about 3 months ago. The global property bubble didn't inflate in unison, and it isn't deflating in unison.


----------



## Beej (17 December 2008)

xoa said:


> The deflation of housing bubbles caused the credit crisis, not vice versa.
> 
> The US bubble peaked about 30 months ago, the UK's 12 months ago, and ours about 6 months ago. China's and Dubai's bubble peaked about 3 months ago. The global property bubble didn't inflate in unison, and it isn't deflating in unison.




That's not correct - the US house prices ran up AFTER ours did in AU. If you take the mining state cities out (Perth/SEQ), AU house prices stopped increasing in real terms all the way back in 2004 - 4 years ago! This is clearly seen if you look at the Sydney prices (which is about 1/4 of the entire national housing market after all!). 

The "we peaked after the US" argument is one of the many false and/or misleading stats often repeated in these and similar threads/forums.

In other words, it wasn't the final burst of cheap/easy credit of the 2004-2007 period that drove AU house prices up between 1996 and 2004 - it was something more fundamental, and sustainable than that: 

1) Significant real wage growth (in the order of 50% over that period), 
2) Trend to 2 dual family incomes, 
3) Lower taxation = high disposal income before housing costs, 
4) Low inflation/low interest rate environment locked in vs previous 70s/80s high inflation/high interest rate period.

Cheers,

Beej


----------



## chops_a_must (17 December 2008)

Melbourne wants a word...


----------



## gfresh (17 December 2008)

Found this a while ago, but forgot where I had read it   Interesting chart of unemployment vs house prices. Seems to be a quite direct correlation. 

Few other things in there for those interested, although many aren't fans of Shane Oliver: http://www.ampcapital.com.au/K2DOCS...stralia's-Achilles-heel_12-11-2008.pdf?DIRECT


----------



## sinner (17 December 2008)

That chart is pretty scary to me (thanks gfresh), it highlights how far we have diverged from the trend and my guess is that is where we are heading again so the fall will be a hard one.


----------



## agathos (18 December 2008)

Thanks GFRESH!
Nice article by Shane Oliver. 
I am newbie here - why do people don't like about Shane Oliver?

Any mate care to ellaborate?
Cheers............David Kam.


----------



## aleckara (18 December 2008)

Beej said:


> 1) Significant real wage growth (in the order of 50% over that period),
> 2) Trend to 2 dual family incomes,
> 3) Lower taxation = high disposal income before housing costs,
> 4) Low inflation/low interest rate environment locked in vs previous 70s/80s high inflation/high interest rate period.
> ...




1) I'm not so sure about wage growth in the last 10 years of the housing boom. Wages aren't growing nearly as much as they used to 30 years ago when unions were predominant. I agree that certain sectors wages have been growing well but they make up a small percentage of the economy. Need to check the data.
2) This just means more work for the same house. Work = hours worked of course. To get the same thing two people need to work instead of one. The social effects that this housing boom will have on future families is just starting to be seen in younger people (starting families later).
3) Lower taxation - ok. But that drives up inflation since we have had a constrained economy for so long. So people weren't really benefiting from the money. This house price inflation did drive up house prices, but with no net benefit to society.
4) I don't really agree with the inflation measure they use. They don't take into account asset price inflation and commodity inflation, and use subsititute goods when the normal goods become too expensive. Interest rates were unbearably low causing us to take on more debt for the same thing (as house prices went up). This is a one off increase in prices that takes a few years to finish. I think this factor is done.


----------



## explod (18 December 2008)

agathos said:


> I am newbie here - why do people don't like about Shane Oliver?
> 
> Any mate care to ellaborate?
> Cheers............David Kam.




Because he is always wrong.   If you go back to all his predictions he only calls dead certainties after the event.   And to pump up banking business he has been upbeat on all forcasts of the last couple of years and has been wrong.

Could it be that working for the money industry they want you to keep moving it in and out so they can keep picking up their fees.

One of his great mantra's  "its going to pick up in the next quarter" and in 18 months I think he only got two right.

And it is Doctor Shane Oliver Phd., if you please.


----------



## numbercruncher (18 December 2008)

Confirmation of widespread price falls in sunny Qld ....



> A DECISION to drop annual land valuations in southeast Queensland has descended into a bitter dispute between the property industry and the Government.
> 
> The property industry claimed the decision to shelve the annual October 1 valuations would deny owners a reduced land tax bill and leave them out of pocket.
> 
> ...




http://www.news.com.au/couriermail/story/0,23739,24788592-5011140,00.html


----------



## Mofra (18 December 2008)

prawn_86 said:


> I thought prices here had fallen by about 20%



Given the bears comments so far, you'd think it's 80%. Surprised there are so many people still living above ground.


----------



## robots (18 December 2008)

hello,

well howdy, how's it going

get down to sunny St Kilda man. 14.7% increase for Sept08 Quarter Numbercruncher, let them know in Queensland man

what a day, people out everywhere celebrating the good times

thankyou
robots


----------



## gfresh (18 December 2008)

18 degrees and thunderstorms...I can't wait to be down there in a few days  I'll be sure to check out those special rays of sunshine that surrounds exclusively where you live robi :


----------



## ROE (18 December 2008)

numbercruncher said:


> Confirmation of widespread price falls in sunny Qld ....
> 
> 
> 
> http://www.news.com.au/couriermail/story/0,23739,24788592-5011140,00.html





Government loves people with property  I know it too well ...
any chance they get they milk them on land tax, stamp duties and anything they can think off.

Real Estate investors are very very rich, so why not tax them a little more
and if they dont like it they can sell up, it generate a little cha ching sign $$$ in the govie computers as they collect an extra stamp duties transaction...Such awesome tax law everyone should love 

but property double every 7 years so these guys can afford it


----------



## Indie (18 December 2008)

ROE said:


> but property double every 7 years so these guys can afford it




Unless you live in St.Kilda, in that case it goes up around 15% per quarter.


----------



## Aussiejeff (19 December 2008)

Indie said:


> Unless you live in St.Kilda, in that case it goes up around 15% per quarter.




Aye lad.

Saint KilledYa - where the Big Wheel turns ....


----------



## Glen48 (19 December 2008)

Did  a job today at a Conveyance centre in QLD asked how business was going they told me busy I asked who's buying ...First Home owners ..I guess when its Tax payers money it doesn't matter and we need a new ponzi scheme after Storm


----------



## agathos (19 December 2008)

Hi everyone,

With today's announcements about the state of the Western Australia budget and the ONGOING downturn of resources, we got to think about how all this is going to have an IMPACT on key parameters like:

a) *Consumer Spending
b) Unemployment rates, with the resource sector retrenching staff all over the shop. Go into a doctor's surgery, a Chinese Restaurant or a Woolsworth, and you will inevitably hear of someone whose boyfriend, husband is retrenched by the resource DOWNTURN. It's not good news. 
c) Home Buying/Selling. *. 

Keep an eye. Meanwhile, Westpac Banking seems to be doing a little run today. I bought for AUD$15.90 3 days ago, today it rose to as high as $17.37 I believe. 

Have a great weekend everyone........David Kam.


----------



## CamKawa (20 December 2008)

What I want to know is where have all the immigrants gone?

State house sales slump 25%


----------



## Aussiejeff (20 December 2008)

CamKawa said:


> What I want to know is where have all the immigrants gone?
> 
> State house sales slump 25%




I find the last part of that article most enlightening. 

In particular, the 2008 figure they compare to the median price in Dec 2007 is SEP (the month St Kilda shot up *+14.7%* according to RE Guru robots) - which gives a way-too-optimistic slant on what the 2008 median price is. 

My guess would be that with the recent Oct-Nov RE sales carnage thrown in, that median figure would NOW more likely be down to about $410,000 in Dec 2008 (or *-15.5%* compared to Dec 2007).

This is more in line with the overall -25% slump in sales (still optimistic IMO) and makes much more sense than the concentration by some on auction clearance rates which are a complete mis-representation of the real state of "real" estate since auctions represent only a tad over 50% of the sales market.

Much worse to come in 2009.


SHAPE OF THE MARKET (IN VICTORIA)

                                2007         2008

Clearance rate            82.5%        63%
Sales                       56,189       42,465
Auctions                  29,909       26,600
Median price           $485,000   $435,000* (or -10.3% compared to 2007)

SOURCE: REIV (*Compares December 2007 with September 2008)


Chiz,


aj


----------



## noirua (20 December 2008)

The house price crunch infection looks to be spreading across Europe and seems to have sunk the building sector in Spain. Spain depends on UK and German tourists and the 25% plunge in the £ against the € keeps the Brits at home and the Germans are being sunk by their engineering collapse.

The UK reports a further 2.3% house price decline in November, indicating that houses are now falling at a 25% Annual rate. Some see areas of London, particularly apartments, falling up to 50% in value.

The ice cold wind appears to be heading across all of Europe as unemployment rises steeply.

Can Australia escape the trend?


----------



## CFDtrader2009 (20 December 2008)

We could be seeing the next round of sub prime related write when these loans default. Interesting view, lets hope its not as bad as they make it out ot be. A must watch.

*Huge Crash Coming*
http://au.youtube.com/watch?v=shYJ_KkbzWg


----------



## xoa (20 December 2008)

A $50k median price fall is great news for ordinary Melbourne residents. But it will only get better in coming years. Housing is becoming much more affordable in every capital city. And so it should, because a roof over your head is a basic human right, and shouldn't be monopolised by slum lords and speculators.


----------



## robots (20 December 2008)

hello,

yeah lets hand it over to the bludgers of society, a free ride on the planet

anybody have any up to date results for St Kilda, my research keeps showing +14.7% for Sept08 quarter

thankyou
robots


----------



## xoa (20 December 2008)

robots said:


> hello,
> 
> yeah lets hand it over to the bludgers of society, a free ride on the planet




You mean bludgers like council workers, factory hands, mechanics, nurses, firefighters? People who produce valuable goods and services, rather than speculating with borrowed money? 

I'm glad these folks have a chance now. Don't blame them, they didn't create the bubble.


----------



## noirua (20 December 2008)

CFDtrader2009 said:


> We could be seeing the next round of sub prime related write when these loans default. Interesting view, lets hope its not as bad as they make it out ot be. A must watch.
> 
> *Huge Crash Coming*
> http://au.youtube.com/watch?v=shYJ_KkbzWg



If that's how it's going to be then the recession becomes a depression and may not bottom until 2012-2013. Recovery by 2017-2018. Enough said I think.


----------



## robots (20 December 2008)

xoa said:


> You mean bludgers like council workers, factory hands, mechanics, nurses, firefighters? People who produce valuable goods and services, rather than speculating with borrowed money?
> 
> I'm glad these folks have a chance now. Don't blame them, they didn't create the bubble.




hello,

here in melbourne everyone of those professions could buy a house easy in numerous suburbs across the city

hypocrites, on one hand you singing the virtue's of renting and investing and how its oh so good, the road to riches

then, oh prices have come down so I can buy a place in years to come and have a chance, a chance at what? 

we stay true to the cause, we dont sell out

thankyou
robots


----------



## xoa (20 December 2008)

robots said:


> hello,
> 
> here in melbourne everyone of those professions could buy a house easy in numerous suburbs across the city




Yeah, they could've all lived in Melton, or "rack and stacked" in one of your St Kilda slums.

Fortunately, they have more choices now. Falling prices and rents mean a world of opportunity is being opened for ordinary workers and families.


----------



## juddy (20 December 2008)

robots said:


> hello,
> 
> here in melbourne everyone of those professions could buy a house easy in numerous suburbs across the city
> 
> ...




That's not being hypocritical, it is timing the market. I'd be afraid to see your share portfolio in the last year, especially with the attitude you express in that last line.


----------



## robots (20 December 2008)

xoa said:


> Yeah, they could've all lived in Melton, or "rack and stacked" in one of your St Kilda slums.
> 
> *Fortunately, they have more choices now. Falling prices and rents mean a world of opportunity is being opened for ordinary workers and families.*




hello,

oh the ordinary worker and family, its so tuff

constantly we are being told housing is a crap investment whether its a PPOR or being a legendary specuvestor, 

but hang on, you want to buy now 

not much opportunity in St Kilda man, we stay true to the cause

thankyou
robots


----------



## Glen48 (20 December 2008)

Strange how this World works one could have back packed around the world for 30 yrs come back to OZ save a few grand and own a house outright in 2012-15 , pick up a new car for nix, Buy Shares in BHP for 2 pound 10 and sixpence, gone to bed in St Killed her and listen to your abode growing dollars by the hour, have some ex CEO with a VIP franchise mow your lawn as you watch a new Ponzi scheme unfold on your Plasma  TV you picked up at Harveys auction see Global warming is slowing because no one is buying OIL or Power, some thing a lot of others who worked all their life will never do.


----------



## ROE (21 December 2008)

robots said:


> hello,
> 
> oh the ordinary worker and family, its so tuff
> 
> ...




what it means is speculator with borrow money lose and the guys with real cash and no debt win  ..they grow rich as the expense of the speculators....

Speculators creates the bubble they want in on the way up and when sh**t hit the fan they are out, panic starts, it drive price lower and lower

now even if they spec guys want to buy at cheap price they cant because banks wont lend them the cash knowing they have more debt than what their asset worth.

The guys with cash and no debt walk to the bank slowly and quietly borrow and casually offer bargain price and if they dont sell they dont buy knowing they got the upper hand.

Patient is a Virtue when thing run far ahead of itself all you have to do is Wait 
House price double very X year and buy now before you price out forever are playing with people
impatient nature and it works on most people but not for the wise guys.

There are a lot of people out there that it's in their best interest the stock market and house price are crashing. They buy heavily in bear market knowing it may go another 10%-20% lower
but it's better than buy them during the bull with the possibility of going 50% - 70% lower


----------



## robots (21 December 2008)

ROE said:


> what it means is speculator with borrow money lose and the guys with real cash and no debt win  ..they grow rich as the expense of the speculators....
> 
> Speculators creates the bubble they want in on the way up and when sh**t hit the fan they are out, panic starts, it drive price lower and lower
> 
> ...




hello,

oh yeah guns everywhere on ASF and the community with their money box money, 

the minute you mention "low Income earner" around here you are pretty much shot down, I think that gives a fair indication of where people are at

thankyou
robots


----------



## numbercruncher (21 December 2008)

I see those low income "experts" are at it again Robi !

Should  get these bludgers out of the office and onto the construction site I agree !



> DEBT-FREE property hunters will snap up bargains across Sydney's mortgage belt and north shore in 2009, but those who are forced to sell will be left bleeding.
> 
> Experts predict house prices will *continue* to fall next year regardless of sliding interest rates and extensions to the first-home buyer's grant.




http://www.news.com.au/story/0,,24829984-1242,00.html


----------



## robots (21 December 2008)

hello,

they havent done to well on the "I predict prices will *continue* to fall" mantra,

look at St Kilda Sept08 q, up 14.7%, they havent been falling

so tell me Number, 4.5% return on property, why are you interested in it apart from the tall poppy syndrome?

thankyou
robots


----------



## numbercruncher (21 December 2008)

> look at St Kilda Sept08 q, up 14.7%, they havent been falling





This claim isnt true, St Kilda was down ..... unless you have a link to say otherwise ?


----------



## robots (21 December 2008)

hello,

remember Numbercruncher its St Kilda, not St kilda West or St Kilda East

just plain old St Kilda, awesome stuff

all the shonk exchange pro's down 50% for the year  and St Kilda up 14.7% in just one quarter,

although probably not a big deal for the money box crew, like $1000 down to $500 not a big issue really,

utopia, this is paradise

i know i know i have to wait it takes 6 or 12 mths after shonk market collapse

thankyou
robots


----------



## ROE (22 December 2008)

robots said:


> hello,
> 
> they havent done to well on the "I predict prices will *continue* to fall" mantra,
> 
> ...




Stupid argument, it like saying the stock market is falling and a handful of stock goes up... but property double every 7 years so she be right. 

most people dont see their property fall until they sale it because it's not quoted everyday like stock price...a few percent here this year a few percent next year next thing you know it's down 20%....

you got 100 dollars, this year you take away 3 dollars, cant see much movement there, take another 3 dollar next year still not much, comes 5 years down the track and you look back **** i'm down 15 bucks now I'm start ****ting in my pants.


----------



## ROE (22 December 2008)

robots said:


> hello,
> 
> oh yeah guns everywhere on ASF and the community with their money box money,
> 
> ...




where is the word low income earner mentioned any where in my post? 
I feel your pain man, just be a man and accept the fact, I do psychology and I see lot of people like you, you need help


----------



## Lancelot (22 December 2008)

ROE said:


> you got 100 dollars, this year you take away 3 dollars, cant see much movement there, take another 3 dollar next year still not much, comes 5 years down the track and you look back **** i'm down 15 bucks now I'm start ****ting in my pants.




Who cares if you made 500 dollars(or 500 thousand ) over the few years before.

The use of the house hasnt changed, I still like it and it does what I bought it for.

If tenanted, they still pay the same rent, no evidence of them dropping.

Down a bit in value this year, pfft, big deal, it'll more than likely come back in a few years, and if I'm not selling now, what does it matter.


Now try doing that with a car (or any consumer product), buy it, lose money as soon as its off the floor, and in ten years give it away


----------



## arco (22 December 2008)

New Zealand now feeling the pain
*
1 in 5 owes bank more than house is worth*
By ADRIAN CHANG - Sunday Star Times | Sunday, 21 December 2008


Falling house prices mean one in five homeowners with a mortgage now owes the bank more than their house is worth.

And with a grim economic outlook for 2009 thousands of people are set to lose their jobs and house prices are expected to keep tumbling experts say a cocktail for financial ruin is brewing.

A Lincoln University study has for the first time revealed the extent of the "negative equity" situation when a house is worth less than the mortgage on it. Property studies professor Chris Eves found rapidly declining house prices in the past year meant that 100,000-130,000 households are now in the negative equity zone one in five of the estimated 500,000 New Zealand households with mortgages.

Eves says people who bought homes during the 2006-07 property boom, and have 75%-plus mortgages, fall within the zone of negative equity risk. House prices have fallen 10% in the past year and many commentators are picking a further 30% drop.

To reach his conclusions, Eves tracked houses sold in Christchurch in 2006-07, and their resale values in 2008. Using his findings and data from mortgage lenders he extrapolated to conclude that of the 220,000 houses sold nationwide in the same period, 130,000 had mortgages of 75% or higher big enough to be at risk of negative equity.

While negative equity is less of a worry if you can sit tight in your house, those forced to sell in the current depressed market could face huge losses. Eves says an unwilling seller could lose 30% or more of the price they originally paid for a house.

*He recalls a divorcing couple in Christchurch who had to sell the home they had bought in 2006 for $530,000. It sold last month for $420,000. Another house bought for $1,325,000 in April last year was sold in January 2008 for $865,000.*

David Tripe, director of Massey University's centre for banking studies, says banks are generally content to allow householders to live with negative equity, as long as mortgage payments are being made.

But with unemployment set to swell in the next year, tens of thousands now face financial strife.

"It's my impression that we're going to see a significant rise in unemployment in the short term, because the vague hope that the Christmas period would solve everyone's problems isn't going to eventuate," says Tripe.

This makes negative equity borrowers especially vulnerable.

"If unemployment suddenly went up to 10%, or finance companies started calling in loans, then these people [with large mortgages] would certainly be in a negative equity position, and we would see banks pushing sales," says Eves.

Unemployment sits at 4.2%, or 94,000, but the worst-case Treasury scenario has another 110,000 people losing their jobs in the next 18 months.

To make things worse, some analysts expect house prices to remain low for at least five years, extending the period of negative equity risk well into the future.

The negative equity trap has a further knock-on effect on the troubled economy Tripe says it will dent consumer confidence and spending.

"Negative equity or not, lower house prices will make people think, `oh, I'm not as wealthy as I used to be, so I'd better spend less'."

Banking expert and principal of mortgage brokers Squirrel Financial Services, John Bolton, says people feeling the financial crunch should try to ride it out if they can as property values will eventually pick up again.

"You only lose money if you sell... You've got to take a long-term view and as long as you're not forced to sell, things should come right again.

"To an extent, price drops don't reflect the real value of something; they just reflect the value at that point in time."

IF YOU'RE IN STRIFE
* Most lenders offer repayment holidays of up to 90 days enough to build up your reserves so weekly outgoings are not as great.
* Convert to an interest-only mortgage until your situation improves. This will reduce your repayments. 
* Extend the term of your mortgage. This should be seen as only a short-term solution.
* Look at how you might increase your income seek additional part-time work, take in a boarder or set up a small business from home.
* Look at ways of reducing your outgoings is there anything in your budget that you can do without? 
* Selling luxury items or household goods that you don't need is preferable to selling your house. If you have a late-model car, swap it for a cheaper model and put the money towards paying off your mortgage.

http://www.stuff.co.nz/4799888a13.html


----------



## Aussiejeff (22 December 2008)

Hahaha! I love that advice!!



> IF YOU'RE IN STRIFE
> 
> * Most lenders offer repayment holidays of up to 90 days enough to build up your reserves so weekly outgoings are not as great.




Or to pack your belongings, beat a hasty retreat to a "safe" place and leave the key in the door on the way out. Beats going bankrupt - as long as they can't find you. 




> * Convert to an interest-only mortgage until your situation improves. This will reduce your repayments.




LOL. Generally will also cost you a HEAP off the bat in penalties to convert PLUS significantly blow out the total amount to be repaid over the term of the loan. Great for when IR's jump up again in the not-so-distant future!




> * Extend the term of your mortgage. This should be seen as only a short-term solution.




Same result as above. If ya gotta do it, do it - but again this could cost big bickies over the extended term of the loan - especially if/when rates explode upwards again (and they will eventually). 




> * Look at how you might increase your income seek additional part-time work, take in a boarder or set up a small business from home.




LOL. Love this one. In a time when unemployment is blowing out, they say "go find another job" as if it is easy as pie. Good luck is all I can say. Take in a boarder? Maybe some of your fellow un-employed miners? Set up a small business from home? Who the hell is going to risk keeping their house on the chances of setting up a successful small business from home? Chances are likely 1 in 100 for those that try to. Will the bank loan them the money to set up a small business when they are in arrears? LOL 




> * Look at ways of reducing your outgoings is there anything in your budget that you can do without?




Finally a half decent commonsense tip. Cut out the ciggies, alcohol, nightly Big Mac Meals, restaurant feasts - yep - can save a fair packet there.




> * Selling luxury items or household goods that you don't need is preferable to selling your house. If you have a late-model car, swap it for a cheaper model and put the money towards paying off your mortgage.




Hahaha! How much do they think car yards pay you for a trade-down these days? Maybe if I wanted to trade a 2008 Maserati on a 2003 Holden Barina I might get some small change. 

If you are in strife and followed some of this "expert" advice, you might end up in the dog house, let alone your own house.


----------



## Lancelot (22 December 2008)

arco said:


> Falling house prices mean one in five homeowners with a mortgage now owes the bank more than their house is worth.
> 
> l[/url]




And 4 in 5 dont


----------



## Lancelot (22 December 2008)

Aussiejeff said:


> LOL. Generally will also cost you a HEAP off the bat in penalties to convert PLUS significantly blow out the total amount to be repaid over the term of the loan. Great for when IR's jump up again in the not-so-distant future!




Really, none of the ones I have charge, but it does cost a phone call each time I change it around

is that a significant blow out for you?


----------



## arco (22 December 2008)

Not all roses in California
_
The median price of a California home has gone from a peak in May of 2007 of $484,000 to the current price of $258,000.  That is a stunning drop of 46 percent in slightly over a year._


----------



## arco (22 December 2008)

Lancelot said:


> Really, none of the ones I have charge, but it does cost a phone call each time I change it around
> 
> is that a significant blow out for you?




I'm personally mortgage free so I dont know what Aussie banks are doing, but I did notice in the NZHerald that banks there are making a killing out people converting

* 'Merciless' banks fail customers*
4:00AM Sunday Dec 21, 2008
Andrea Milner

Alan Bollard's advice to banks has gone unheeded. Photo / Mark Mitchell

Banks have come under fire for not heeding Reserve Bank Governor Alan Bollard and sharing struggling borrowers' pain. While falling interest rates - driven by Bollard's enthusiastic cuts to the official cash rate - offer respite to stretched homeowners, most have to break long-term fixed loans to benefit.

*They face hefty charges for the privilege, which often negate the potential interest saving.
*
Veteran investor Olly Newland says he is scandalised by the fees banks charge struggling homeowners seeking to move from fixed to lower floating rates. He says it's an outrage that banks making multi-million dollar profits prefer to drive people to the wall than give them a break.

*"They're just merciless - and they're supposed to share the pain."*

Kiwibank's Bruce Thompson says break costs are a transfer of actual costs from the bank to the customer who is seeking to break the contract. Not passing on the costs is a direct loss to the bank.

*"The bank takes out its own contract to finance the loan and if you break your contract, then the bank contract must also be paid out."
*

Bollard told banks earlier this month to pass on lower interest rates and easier conditions to customers, observing that profit margins have stayed high "and indeed grown".

Banks have the means to stem more defaults, says Newland, but instead they remain rapacious.

BNZ's Blair Vernon says with petrol prices falling, people's ability to service their fixed rate should improve if their budget accounted for the fixed rate at the time they took the loan.

But Newland says when people return from holiday next year, those stuck on high interest rates "hanging on with their fingertips" will capitulate to the prospect of persevering another year and sell up. This will add to further property price falls before the market flattens again.

Values will spike briefly in three to six months on the back of low interest rates, says market commentator Kieran Trass: "A whole lot of people go out and buy property because they can afford to when interest rates drop, but this is a passing wave." By the end of next year values will again weaken.

The other market fundamentals are still unfavourable: prices are high relative to incomes, migration inflows are modest and job security now carries a degree of uncertainty, says Tuffley.

Westpac chief economist Brendan O'Donovan says a second consecutive year of house price decline is not something New Zealand has experienced since at least the 1950s.

But the United States has led the world into this house price bust, and their pace of house price decline accelerated from -5 per cent in the first year to -17 per cent in the second. To suggest New Zealand will behave differently would be "boldly optimistic".

Quotable Value's figures show a national housing market reversal of 6.8 per cent this year, but O'Donovan thinks prices have actually fallen around 8 per cent and he expects another 5 per cent fall next year.

"This has been one of the toughest years on record," says Massey University's analyst Bob Hargreaves.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10549106


----------



## Lancelot (22 December 2008)

arco said:


> I'm personally mortgage free so I dont know what Aussie banks are doing, but I did notice in the NZHerald that banks there are making a killing out people converting




Fixed loans cost money to convert and so they should, they SIGNED a CONTRACT to fix over X number of years.

Borrowers needed the security of a fixed rate when they were going up and they got it, and the bank lost money during this period.

Now customers complain that it will cost them to BREAK the contract  when they want to save money on the way down as well.


But if they hadnt fixed, the cost of going IO to P&I is free and the cost of a phone call.

This phone call can give many hundreds of dollars/ mth in cashflow back to the loan holder during tough times


----------



## robots (22 December 2008)

ROE said:


> where is the word low income earner mentioned any where in my post?
> *I feel your pain man, just be a man and accept the fact, I do psychology and I see lot of people like you, you need help*




hello,

i accepted the fact that St Kilda went up 14.7% last Sept08 quarter, and i accepted the fact i have mental issues and just get on with life man,

you cop it sweet, no big deal life rolls on

i wont be announcing a "holiday" and then returning, we in for the next 20, 30, 40+ years solid

thankyou
robots


----------



## awg (22 December 2008)

Attention Robots:

Hi,

I was just perusing "Your Investment Property", a magazine I find quite good.

It publishes quarterly property price guide in the rear section.

seperate entries for houses and units, for each state.

Data supplied by RP Data

It showed St Kilda units up 14.8% for the YEAR, not the QUARTER, cant remember what the quarter figure showed, but it wasnt 14.8%.

Maybe I am confused by the comment under your Avatar?

Still a very nice result for you though, especially compared to the sharemarket.

for my IP suburb showed +2.2% pa, and -0.2% for quarter.

As a bye-the-way, I was wandering thru a nearby suburb to mine (Charlestown, NSW) that is presently undergoing substantial unit and commercial construction ( 3 construction tower cranes).

I couldnt help thinking I wouldnt want to be an investor trying to tenant these new tower blocks.

a 4th one has had construction completely stopped, due to the Chinese owners not paying the sub-contractors.

In fact I think we could see decimation of commercial property prices/returns when current leases are up for renewal


----------



## robots (22 December 2008)

hello,

is that right? up 14.8% for St KIlda units for the year, WOW +14.8% thats fantastic

sorry i will adjust my signature appropriately as its 14.7% for houses in St Kilda for the Sept08 Q,

well pointed out

thankyou
robots


----------



## Glen48 (22 December 2008)

NZ is now worse than USA about  1 in 7 are underwater. Wonder where OZ home owners will end up?


----------



## knocker (22 December 2008)

Aussiejeff said:


> Hahaha! I love that advice!!
> 
> 
> 
> ...




They should rename that site http://www.stuffed.co.nz/ lol


----------



## Julia (22 December 2008)

Glen48 said:


> NZ is now worse than USA about  1 in 7 are underwater. Wonder where OZ home owners will end up?



What is the definition of "underwater"?
Can you provide a link to this, please?


----------



## numbercruncher (23 December 2008)

Julia said:


> What is the definition of "underwater"?
> Can you provide a link to this, please?







> Falling house prices mean one in five homeowners with a mortgage now owes the bank more than their house is worth.






http://www.stuff.co.nz/4799888a13.html


----------



## knocker (23 December 2008)

numbercruncher said:


> http://www.stuff.co.nz/4799888a13.html




Maybe Julias does not understand what sunk/stuffed means.


----------



## Aussiejeff (23 December 2008)

robots said:


> hello,
> 
> i accepted the fact that St Kilda went up 14.7% last Sept08 quarter, and i accepted the fact i have mental issues and just get on with life man,
> 
> ...




hello,

thanks to young robots for showing us that we should love ourselves more

thankyou
santabots
:santa:


----------



## Lancelot (23 December 2008)

knocker said:


> Maybe Julias does not understand what sunk/stuffed means.




If they can still meet the repayments why would they be stuffed?

Value has dropped this year, so what, it doesn't make the property any less of a home, especially if not having an intention to sell.


----------



## numbercruncher (23 December 2008)

Lancelot said:


> If they can still meet the repayments why would they be stuffed?
> 
> Value has dropped this year, so what, it doesn't make the property any less of a home, especially if not having an intention to sell.






Nope, Full recourse loans make it a financial prison for the debt slaves .....


----------



## knocker (23 December 2008)

Church of "give us your money":


----------



## Julia (23 December 2008)

Lancelot said:


> If they can still meet the repayments why would they be stuffed?
> 
> Value has dropped this year, so what, it doesn't make the property any less of a home, especially if not having an intention to sell.



Exactly.
And let's not forget all the people who do not have a mortgage and own their homes (and often IP's also) outright.


----------



## knocker (23 December 2008)

Julia said:


> Exactly.
> And let's not forget all the people who do not have a mortgage and own their homes (and often IP's also) outright.




And your point is?


----------



## Julia (23 December 2008)

knocker said:


> And your point is?




I should have thought my point was quite obvious, i.e. that the repetitive announcements of bad news is not balanced.  Negative equity, of itself, is unimportant in the whole cycle of home ownership.


----------



## wayneL (23 December 2008)

Lifted from another forum:


----------



## gfresh (23 December 2008)

Hello from sunny Melbourrne! :xmaswave

(well was almost sunny for 2 whole days in a row, amazing)

Weren't ASF's predicting this months ago? Resource states such as WA, and also QLD feeling some of the worst of it:

http://business.watoday.com.au/business/house-prices-will-drop-10pc-20080903-488l.html

Even the Westpac head economist coming out of the closet.. They seem to be "converting" quite quickly now eh:



> Demand for housing exceeded supply, but Mr Evans believed that the median house price would probably *drop up to 10 per cent* as housing affordability trended back towards its long-term average.




...



> "*The best you can hope for is a one per cent fall* in the next 12 months," Mr Evans said.
> 
> He predicted there would then be a period of little or no movement as the RBA looked for a substantial slowdown in the economy before further rate cuts in 2010.




:xmaswave


----------



## noirua (23 December 2008)

CFDtrader2009 said:


> We could be seeing the next round of sub prime related write when these loans default. Interesting view, lets hope its not as bad as they make it out to be. A must watch.
> 
> *Huge Crash Coming*
> http://au.youtube.com/watch?v=shYJ_KkbzWg



Worth watching if anyone missed this video. Shows why the US took rates down to 0% - 0.25%.


----------



## MrBurns (23 December 2008)

noirua said:


> Worth watching if anyone missed this video. Shows why the US took rates down to 0% - 0.25%.




Scary stuff, has the ring of truth to it also, I think we're in a very dangerous situation right now.


----------



## Lancelot (23 December 2008)

numbercruncher said:


> Nope, Full recourse loans make it a financial prison for the debt slaves .....




How so?

What has changed, they had a house and were making repayments, everyone is happy.

They still have a house and are making repayments, but now they pay off even more due to falling IR or they have more money to spend due to falling IR, smiles all round.

Sure, it may be worth less money this week, but it still provides a roof and stability for the family.

Are you clutching at straws NC?


----------



## Glen48 (23 December 2008)

If you went to a garage sale and paid $5 for a Vase and some how found out it was Roman and worth $3 gazzinion and 10cent would you sell it of hang on and hope it goes up in value?
Art is going down yet some how people can't seem want to sell their house and cash in and make a profit.
Even if your house didn't go down and stayed flat for 10 yrs it has to go up a lot to break even..


----------



## numbercruncher (23 December 2008)

> Sure, it may be worth less money this week, but it still provides a roof and stability for the family.




How does a grossly overpriced house provide stability ?


I find it cute how you guys are shifting this from a price debate to some romantic notion about finances dont matter in home ownership speil ....

If Had a house worth 100k less than the mortgage over it there would be no smiles - I find it odd that negative equity is something you embrace......


----------



## Lancelot (23 December 2008)

numbercruncher said:


> How does a grossly overpriced house provide stability ?
> 
> 
> I find it cute how you guys are shifting this from a price debate to some romantic notion about finances dont matter in home ownership speil ....
> ...




Only an issue if you have to sell as prices go into a down cycle

Only an issue if you think that prices will never rise ever again


I dont have to sell, prices would need to drop about 95% for my ppor to get into neg equity.
Do you think there are others out there in the same boat?
Why do you always assume everyone purchased this week with a 105% loan?
Why do you always think people must treat houses like a stock and sell when they drop some?


----------



## sinner (23 December 2008)

Lancelot said:


> Only an issue if you have to sell as prices go into a down cycle
> 
> Only an issue if you think that prices will never rise ever again
> 
> ...




Errr, what?

We don't think "everyone" purchased this week with a 105% loan, it's just blatantly obvious that even if the percentile of people doing this is less than 10% of total housing market it has a MASSIVE inflationary effect on housing prices and a proportional impact when they default en masse.

Sub-prime in the US: 3-6% of total home loan market.

Also, to say negative equity has no effect is rediculous, it just adds to our already gargantuan household debt avg for the nation! You think that is ok?


----------



## 2BAD4U (23 December 2008)

Lancelot said:


> Only an issue if you have to sell as prices go into a down cycle
> 
> Only an issue if you think that prices will never rise ever again
> 
> ...



Give up Lancelot.  Plenty of people in this thread can't see the difference between investing in shares and property. 

As you rightly point out, if someone has negative equity THEY DON'T HAVE TO SELL SO THERE IS NO PROBLEM. (Yes typing in capitals is akin to shouting).

What's the alternative - sell your house, turn it into a real loss and then start renting for the rest of your life, geez that's a good investment decision. Or you stay put and pay off your house over the remaining term of the mortgage and you then own the home (which isn't obvious to some people). Yes you pay more in interest etc. Yes you pay more than it ends up being worth, but how many of you have done exactly this with a car or other depreciating asset. You know it will happen yet you still do it, why?  Personal gratification, happiness, whatever but you can't put a price on somethings. Not everyone is concerned with making money in the same way many people on this forum are, some people are happy in life with nothing.  So please people, stop being so condescending with your comments and treating people with property as being stupid or having the same financial accumen / goals as you, there is more to life than how much money you have.

:chimney


----------



## 2BAD4U (23 December 2008)

sinner said:


> Also, to say negative equity has no effect is rediculous, it just adds to our already gargantuan household debt avg for the nation!



But the debt already exists, so how is it adding to the problem?


----------



## knocker (23 December 2008)

2BAD4U said:


> Give up Lancelot.  Plenty of people in this thread can't see the difference between investing in shares and property.
> 
> What's the alternative - sell your house, turn it into a real loss and then start renting for the rest of your life, geez that's a good investment decision.
> 
> Why not? better than going bankrupt, and rent and save to buy the same house or better at half the price in a few years. lol :


----------



## chops_a_must (23 December 2008)

Or you could sell, buy again in 12 months, and pay the new mortgage off over 20 years instead of 30+.


----------



## So_Cynical (23 December 2008)

2BAD4U said:


> Give up Lancelot.  Plenty of people in this thread can't see the difference between investing in shares and property.
> 
> As you rightly point out, if someone has negative equity THEY DON'T HAVE TO SELL SO THERE IS NO PROBLEM. (Yes typing in capitals is akin to shouting).
> 
> What's the alternative - sell your house, turn it into a real loss and then start renting for the rest of your life, geez that's a good investment decision.




Hey u could buy the place next door...the property equivalent of averaging down. 

Then rent out by the room to Chinese students, and live in a caravan out the back.


----------



## sinner (23 December 2008)

2BAD4U said:


> But the debt already exists, so how is it adding to the problem?






There are hundreds of economic research papers addressing this question...

http://www.prres.net/papers/Man_The_Impact_Of_Negative_Equity_Housing.Pdf

http://usj.sagepub.com/cgi/content/refs/31/2/181

http://www.bis.org/publ/qtrpdf/r_qt0812h.pdf

http://www.economy.com/dismal/article_free.asp?cid=109361

http://www.frbsf.org/education/activities/drecon/answerxml.cfm?selectedurl=/2007/0701.html

A good one for the bulls:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=271702

http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-937X.2006.383_1.x

I could paste a hundred...read ONE

Seriously, to say negative equity has no impact on the housing market is so ludicrous and irrational I am surprised to hear anyone say it.


----------



## 2BAD4U (23 December 2008)

What about the fees, cost of moving, inconvenience, disruption to family life, schooling, etc, some people would be happier to stay put.

knocker - you only go bankrupt if you can't service the debt, not if your house falls in value.


----------



## IFocus (23 December 2008)

Lancelot said:


> How so?
> 
> What has changed, they had a house and were making repayments, everyone is happy.
> 
> ...




It all depends on just how bad it gets.

If house values fall then it affects the banks capitalization 

Two things can occur from this one the banks call in loans, I suspect many equity loans holders don't realize this or two banks stop lending.

Either way it gets heavy as the waves smash from financial to the economy and then back again.

Will it happen, I don't know just know the risk bias is south


----------



## knocker (23 December 2008)

2BAD4U said:


> What about the fees, cost of moving, inconvenience, disruption to family life, schooling, etc, some people would be happier to stay put.
> 
> knocker - you only go bankrupt if you can't service the debt, not if your house falls in value.




Oh ok, So that equity thing is no problem then? great news for the 1000 of  wantabes who have borrowed to the hilt


----------



## 2BAD4U (23 December 2008)

sinner said:


> Seriously, to say negative equity has no impact on the housing market is so ludicrous and irrational I am surprised to hear anyone say it.




Never said that.


----------



## chops_a_must (23 December 2008)

2BAD4U said:


> What about the fees, cost of moving, inconvenience, disruption to family life, schooling, etc, some people would be happier to stay put.
> 
> knocker - you only go bankrupt if you can't service the debt, not if your house falls in value.



Because if you have an equity loan, it's the same as a margin loan, it can be called in.

It's already happening here in Perth mate!

Can't go bankrupt indeed... 

EDIT: Beaten to it by IFocus.


----------



## knocker (23 December 2008)

So_Cynical said:


> Hey u could buy the place next door...the property equivalent of averaging down.
> 
> Then rent out by the room to Chinese students, and live in a caravan out the back.




Best post all day. I know someone who did this up north except they had a bus kitted out with annex etc. Actually the bus was better than the house. Then when the time was ripe they sold the house, made a killing and drove off lol.
 But please don't forget out sub continental friends, they like to rent rooms as well.


----------



## Lancelot (23 December 2008)

chops_a_must said:


> Because if you have an equity loan, it's the same as a margin loan, it can be called in.
> 
> It's already happening here in Perth mate!
> 
> ...




And if I dont have an equity loan?

Who mentioned equity loan anyway, why are you intent on changing the goalposts?


----------



## sinner (23 December 2008)

Lancelot said:


> And if I dont have an equity loan?
> 
> Who mentioned equity loan anyway, why are you intent on changing the goalposts?




Are you really that short sighted?

Your personal situation is only a reflection of the market as a whole. All those who do have equity loans, interest only loans, 105% loans, etc are the ones who have inflated the price beyond sustainability.

When that shoe drops, the ripple effects through the economy as a whole will be immense. This is obvious when looking at the US and UK markets. You might have no equity, you might own your home and IP outright but if you lose your job or your tenant loses theirs then we will see what happens.


----------



## Mofra (23 December 2008)

chops_a_must said:


> Because if you have an equity loan, it's the same as a margin loan, it can be called in.
> 
> It's already happening here in Perth mate!
> 
> ...



"equity loan"... love it. Technically, any secured loan is an equity loan.

If you're speaking about an equity release loan... that is the loan purpose, which is used during the assessment of an application - it makes zero difference to the lender once the loan is funded (save for some very basic paperwork requirements depending on whether the loan is regulated or unregulated, which again is not equity release specific). 

Pray tell, do you know of any situation, in any circumstance, ever in Australia, where a confirming lender has called in a within limits residential property loan.... say, ever?


----------



## 2BAD4U (23 December 2008)

Sorry Mofra, chops is right. If you have an equity loan (line of credit) it can be reduced and you have to pay the outstanding amount if called upon to do so by the lender.  This isn't the case with a standard mortgage.


----------



## robots (23 December 2008)

sinner said:


> Are you really that short sighted?
> 
> Your personal situation is only a reflection of the market as a whole. All those who do have equity loans, interest only loans, 105% loans, etc *are the ones who have inflated the price beyond sustainability.*
> 
> When that shoe drops, the ripple effects through the economy as a whole will be immense. This is obvious when looking at the US and UK markets. You might have no equity, you might own your home and IP outright but if you lose your job or your tenant loses theirs then we will see what happens.




hello,

but the article the other day is talking about property only returning 4.5%, so they arent too inflated,

people who talk about sustainability, average income are people who dont have any money or savings, they on the floor pulling average wages, 

the bleeding heart crew who would lay a boot into the well off who have built this country

i know i know, but i have plenty in the bank and am renting for peanuts you have to wait wait wait and wait 

well done Robots, top effort brother on your hard work

thankyou
robots


----------



## knocker (23 December 2008)

robots said:


> hello,
> 
> but the article the other day is talking about property only returning 4.5%, so they arent too inflated,
> 
> ...




So you are referring to your mates the dole bludgers?


----------



## robots (23 December 2008)

robots said:


> hello,
> 
> but the article the other day is talking about property only returning 4.5%, so they arent too inflated,
> 
> ...




hello,

no, i am referring to those identified in the post

thankyou
robots


----------



## sinner (23 December 2008)

Hi robots,

Got a present for you, merry xmas.

Looks very impressive till you note the data comes with a caveat: St Kilda had less than 30 property sales this quarter!

Pretty obvious the growth number you are so proud of is not really based in reality.

14.08% growth looks very impressive until you consider this is a massive drop (almost 50% drop Year-on-Year) from the 36 month and 24 month growth rates of 25%+.

Warning lights should be flashing robots


----------



## robots (23 December 2008)

sinner said:


> Hi robots,
> 
> Got a present for you, merry xmas.
> 
> ...




hello,

well that looks as though you found the reason Sinner, its all Supply and Demand,

just not enough houses for sale in St Kilda to satisfy demand (less than 30 sales), tight rental market its all adding up

merry xmas to you and your family as well

thankyou
robots


----------



## chops_a_must (23 December 2008)

Lancelot said:


> And if I dont have an equity loan?
> 
> Who mentioned equity loan anyway, why are you intent on changing the goalposts?




What the hell are you on about?

It was just a response to a statement about falling home prices not having an impact on serviceability. 

A lot of investment properties are financed against a PPOR, and thus these equity loans that we're talking about. Not all, but I imagine a fair percentage are.

I suspect it is the reason why there is monumental volume in Perth in the specuvestor belts as people try and get out before their own homes are at risk, which is what has been reported as happening in a number of cases in the media...


----------



## Lancelot (23 December 2008)

sinner said:


> Are you really that short sighted?
> 
> Your personal situation is only a reflection of the market as a whole. All those who do have equity loans, interest only loans, 105% loans, etc are the ones who have inflated the price beyond sustainability.





Are you that short sighted as to think that if "some" idiots are overleveraged and crash and burn that this means "all" get taken down?

Try checking out delinquency rate % on loans as a comparison Aust to US and you will see we are looking pretty good



> you might own your home and IP outright but if you lose your job or your tenant loses theirs then we will see what happens.




Yawn, you sound bitter

Well if I lose my job its no biggy is it, if my tenant loses there job, hardly the end of the world, two are long term dollies now and great tenants thanks, guaranteed income from K Rudd.

If others lose theirs, so what, there are plenty in the wings to take up the slack in 1 week max and the repayments are now negligable anyway


----------



## Lancelot (23 December 2008)

chops_a_must said:


> What the hell are you on about?
> 
> It was just a response to a statement about falling home prices not having an impact on serviceability.
> 
> ...




What the hell are you talking about, a lot aren't, a lot are owned outright

Yes, I saw your word, IMAGINE

Try facts, not wet dreams


----------



## knocker (23 December 2008)

robots said:


> hello,
> 
> well that looks as though you found the reason Sinner, its all Supply and Demand,
> 
> ...




Warning will robinson lol:


----------



## sinner (23 December 2008)

robots said:


> hello,
> 
> well that looks as though you found the reason Sinner, its all Supply and Demand,
> 
> ...




Sorry robots, 

This explanation you provide is simplistic and plain incorrect.

The correct explanation is given as a caption in the image: low house sales will increase house price volatility readings, thereby reducing its utility as an indicator of growth.

Even if we take the number at face value being correct and accurate, you should still be pretty worried. A 50% decline in YoY median house price growth is a south facing forward looking indicator.


----------



## Aussiejeff (24 December 2008)

A sad Xmas present from Santa Unca Sam to our dear Yankee friends - 



> [size=+1]*U.S. Economy: Housing Prices Collapse at Near-Depression Pace*[/size]
> 
> By Bob Willis and Shobhana Chandra
> 
> ...




http://www.bloomberg.com/apps/news?pid=20601087&sid=aQ7HBEgYCzUE&refer=home

Of course, this will never happen here. Phew!

Merry Xmas for all in St Kilda! :santa:


----------



## robots (24 December 2008)

hello,

yes sinner we all finished here in St Kilda man, gone all washed up on debt 

i like your "opinion" on the data, awesome

would like to thank CBA for dropping the interest rates on my loans a FULL 1% point, might drop of a bottle of plonk to the Prahran office today

the good times just keep rolling on for the Money Renters, nirvana 

enjoy the day

thankyou
robots


----------



## knocker (24 December 2008)

robots said:


> hello,
> 
> yes sinner we all finished here in St Kilda man, gone all washed up on debt
> 
> ...




Yes but maybe next time they will not be so generous.


----------



## xoa (24 December 2008)

Plummeting prices are great news for ordinary families looking for a home in Australia, New Zealand, UK, and the United States!

Renting or buying, you're getting a better deal.

thankyou
xoa


----------



## knocker (24 December 2008)

xoa said:


> Plummeting prices are great news for ordinary families looking for a home in Australia, New Zealand, UK, and the United States!
> 
> Renting or buying, you're getting a better deal.
> 
> ...




OMG robots twin lol


----------



## IFocus (24 December 2008)

Lancelot said:


> What the hell are you talking about, a lot aren't, a lot are owned outright
> 
> Yes, I saw your word, IMAGINE
> 
> Try facts, not wet dreams




My own experience is that the vast majority are not owned out right as the property investment gurus pushed the using of home equity to buy investment properties by doing this you can have a larger exposure.

I do not know any one who owns out right an investment property


----------



## Lancelot (24 December 2008)

IFocus said:


> My own experience is that the vast majority are not owned out right as the property investment gurus pushed the using of home equity to buy investment properties by doing this you can have a larger exposure.




Yes you are probably correct, the majority of mine are not owned outright either but they arent far from it, though, believe it or not,  at one stage I owed a lot on them, but *OVER TIME*, the rent increased and the principle decreased



> I do not know any one who owns out right an investment property




Well today's you're lucky day, now you do.

Just because you personally don't know anyone else who owns doesn't mean they don't exist


----------



## awg (24 December 2008)

IFocus said:


> It all depends on just how bad it gets.
> 
> If house values fall then it affects the banks capitalization
> 
> ...





It is almost inconceivable that the banks would call in any conforming loan, (except perhaps in isolated cases where cross-collaterisation or other unusual factors are involved)

it is against their own interests for several reasons.

1) They would have to sell the property in a falling market,(as almost no-one could re-finance),  this sort of action would cause a freefall in property prices, thereby further damaging their capitalisation.

2) The political and reputational heat would be almost unendurable


----------



## IFocus (24 December 2008)

awg said:


> It is almost inconceivable that the banks would call in any conforming loan, (except perhaps in isolated cases where cross-collaterisation or other unusual factors are involved)
> 
> it is against their own interests for several reasons.
> 
> ...




I agree AWG the gov has already signal that it will try to under pin house prices just thinking about worst case, in the end the housing market is much bigger than the Gov as the US is finding out. 

This is all uncharted from here in on so we have to consider all possibilities such as has unfolded in the stock market, tell me who guessed today's position mid way through last year.  

The housing market is a bigger elephant which is seeing softening look to see if momentum increases if so then we will see over shoot then we have a problem.

My hope is it will not happen but I know the risk bias is south.....


----------



## Lancelot (24 December 2008)

IFocus said:


> in the end the housing market is much bigger than the Gov as the US is finding out.
> 
> .




If you are going to compare AUS to the US maybe you need to think about the overbuilding in the US the excessively high vacancy rates in the US and the default rates in the US compared to Australia.


----------



## chops_a_must (24 December 2008)

Yep... those dozens of cranes building apartments in the middle of Perth don't exist either...


----------



## robots (24 December 2008)

hello,

you getting a run on hpc these days Sir Lancelot?

keep up the good work man

thankyou
robots


----------



## IFocus (24 December 2008)

Lancelot said:


> If you are going to compare AUS to the US maybe you need to think about the overbuilding in the US the excessively high vacancy rates in the US and the default rates in the US compared to Australia.




Yes I agree Lancelot that's the situation now and 2009 will unfold differently in Oz to the US as the economies are quite different but we will still take a hit its how big and what the consequences are remains the question.

In the mean time Rio has closed the Hi Smelt plant here on the strip for 3 months not likely to restart, Tiwest's sister plants in the US one closed other at 50% production rate's Tiwest likely to reduce production March, April 2009.

Like I keep saying the risk bias is south


----------



## Lancelot (25 December 2008)

IFocus said:


> Yes I agree Lancelot that's the situation now and 2009 will unfold differently in Oz to the US as the economies are quite different but we will still take a hit its how big and what the consequences are remains the question.
> 
> In the mean time Rio has closed the Hi Smelt plant here on the strip for 3 months not likely to restart, Tiwest's sister plants in the US one closed other at 50% production rate's Tiwest likely to reduce production March, April 2009.
> 
> Like I keep saying the risk bias is south




Don't believe everything you see in the paper, as an example I have an involvement with this mine

http://www.abc.net.au/news/stories/2008/12/23/2453473.htm?section=business

At the hearing on Thursday it came out that it is actually getting maintenance done in that section, the staff have positions in other nearby mines and maybe 20 contractors will not have contracts renewed, big difference to the report.

Also of interes was that the ABC reporter was not allowed to sit in on the hearing.


----------



## sinner (25 December 2008)

US mortgage defaults hit an all time high in Q1 2007.

VIC mortgage defaults hit an all time high in Q1 2007.

Are we different where it counts?


----------



## xoa (25 December 2008)

Many locals in CQ will be happy with the mining downturn. Many little CQ towns have gone from being the most affordable in the nation, to among the most unaffordable, with rents higher than inner-city Brisbane. With hundreds of miners losing their jobs and jetting back to the coast, locals will soon be able to reclaim their towns.


----------



## Lancelot (25 December 2008)

xoa said:


> Many locals in CQ will be happy with the mining downturn. Many little CQ towns have gone from being the most affordable in the nation, to among the most unaffordable, with rents higher than inner-city Brisbane. With hundreds of miners losing their jobs and jetting back to the coast, locals will soon be able to reclaim their towns.




Possibly short lived though, money is still being spent on infrastructure to get the coal to ships and out, so that is an indication that we are in a consolidation phase getting ready for the next run up.

Coal prices dropping?  Well the companies were still making money before at $20 a tonne, exchange rates are better now and the cost of capesize and panamax is cheaper as well

Like I said in the post before, don't believe all you read in the media


----------



## Pommiegranite (26 December 2008)

Lancelot said:


> Possibly short lived though, money is still being spent on infrastructure to get the coal to ships and out, *so that is an indication that we are in a consolidation phase getting ready for the next run up.*




Rubbish.


----------



## Lancelot (26 December 2008)

Pommiegranite said:


> Rubbish.




Really?

A quick search found this



The Mackay region's mining section has received a much needed confidence boost with news that plans for a third coal port are continuing full steam ahead.

http://www.dailymercury.com.au/story/2008/12/19/dudgeon-point-coal-terminal/


> New port in a storm
> 
> 19th December 2008
> 
> ...




By saying "rubbish", I take it that you are saying no one will mine coal ever again?


----------



## knocker (26 December 2008)

Lancelot said:


> Really?
> 
> A quick search found this
> 
> ...




And since when have mayors been a reputable source of information. Or even politicians.


----------



## Lancelot (26 December 2008)

knocker said:


> And since when have mayors been a reputable source of information. Or even politicians.




Did you miss this bit?



> The Ports Corporation of Queensland (PCQ) is looking into a third coal port at Dudgeon Point
> __________
> PCQ chief executive officer Brad Fish said the port, when built, would be “about the same size as Hay Point and Dalrymple Bay (coal terminals)”.
> “We saw some years ago that there were issues that infrastructure was not there to meet the demand,” Mr Fish said.
> The speed of the site’s development depended heavily on demand from coal companies and the expectation that the latest expansions of Dalrymple Bay Coal Terminal and Hay Point would eventually reach their limit.




PCQ are neither Mayors or Politicians

In addition there is this

http://www.budget.qld.gov.au/budget-papers/2008-09/budget-highlights-6-2008-09.pdf



> Highlights
> for 2008-09 include:
> 
>  $576.4 million for additional track works on the coal
> ...




plenty more infrastructure upgrades if you look


----------



## Pommiegranite (27 December 2008)

Lancelot said:


> Really?
> 
> A quick search found this
> 
> ...




Did you purposely not respond to the part of your text which I higlighted in bold?

It's your inference that I put in bold. I don't dispute that a coal port may go ahead. 

If only investing was that easy.


----------



## Lancelot (27 December 2008)

Pommiegranite said:


> Did you purposely not respond to the part of your text which I higlighted in bold?
> 
> It's your inference that I put in bold. I don't dispute that a coal port may go ahead.
> 
> If only investing was that easy.




From what I gathered at the hearing last week and from a few meetings I have been to recently, the mining companies are taking the opportunity of a slow down to do maintenance on equipment and infrastructure that has arguably been neglected previously due to just being to bloody busy.

Are you  implying that this is not an indicator that they feel it will be a short lived?

If it was all over for the coal industry, why would companies and govt. be spending money on maintenance and infrastructure?

To me, this is 







> *indication that we are in a consolidation phase getting ready for the next run up.*




What do you see it as an indicator of?


----------



## wayneL (27 December 2008)

Meanwhile, in The Old Dart:

http://www.telegraph.co.uk/finance/...-to-32000-estate-agents-losing-their-job.html



> Housing market crash has led to 32,000 estate agents losing their job
> More than 30,000 estate agents have lost their jobs since the start of the credit crisis, according to research which highlights how the housing crash has wreaked havoc across the economy.
> 
> By Harry Wallop, Consumer Affairs Editor
> ...


----------



## kincella (27 December 2008)

heard similar on the radio this morning...commentators were suggesting they will all go back to doing whatever they did before they became...ie agents, banking guru's or whatever....go back to being engineers, salesman, etc

its the way the cycle works....easy money is always attractive enough to entice some away from the old job

a survey recently said 80% of the world bankers had no prior experience in banking or finace......that made me shudder a little at the time


----------



## wayneL (27 December 2008)

kincella said:


> heard similar on the radio this morning...commentators were suggesting they will all go back to doing whatever they did before they became...ie agents, banking guru's or whatever....go back to being engineers, salesman, etc




Nice theory, 'cept they're all getting sacked too.


----------



## YChromozome (27 December 2008)

kincella said:


> go back to being engineers




I thought engineering was beyond RE Agents. They seem to have trouble with basic concepts such as compounding and only understand straight line graphs.


----------



## numbercruncher (27 December 2008)

Some other industries will boom .....




> POLICE are bracing for a new wave of economic crimes driven by the financial crisis and rising unemployment, such as theft and burglary, after studying crime patterns from the previous downturn.
> 
> Senior officers have drawn on crime statistics from the 1990 recession, when so-called property crime jumped sharply, to pinpoint the types of offences expected to rise as the financial crisis deepens.




http://www.theaustralian.news.com.au/story/0,,24845195-5006785,00.html


----------



## Lancelot (27 December 2008)

numbercruncher said:


> Some other industries will boom .....
> 
> 
> 
> ...




Meaning what?

Do you think it will only property owners being robbed and renters will somehow be immune?


----------



## numbercruncher (27 December 2008)

Lancelot said:


> Meaning what?
> 
> Do you think it will only property owners being robbed and renters will somehow be immune?





Erm no geo, I dont know why or even how you would make that connection - if anything a home OWNER you would think on average would have better security and less theft ? or maybe home owners on average are wealthier and make more likely targets ? wonder ifthese stats are even recorded ?


Just providing ancedotal evidence to support the " House prices to keep falling for years " debate with economic downturn news ....


----------



## robots (27 December 2008)

numbercruncher said:


> Erm no geo, I dont know why or even how you would make that connection - if anything a home OWNER you would think on average would have better security and less theft ? *or maybe home owners on average are wealthier and make more likely targets ? wonder ifthese stats are even recorded ?*
> 
> 
> Just providing ancedotal evidence to support the " House prices to keep falling for years " debate with economic downturn news ....




hello,

those stats are definitely recorded Number, home owners are some 4 or 5x wealthier than the rent/invest crew,

i am surprised these numbers are still so out of wak considering its so cheap to rent i thought the renters might of saved some more $ but doesnt appear so,

thankyou
robots


----------



## knocker (27 December 2008)

robots said:


> hello,
> 
> those stats are definitely recorded Number, home owners are some 4 or 5x wealthier than the rent/invest crew,
> 
> ...




hey robi. didn't you mention no need to pack heat in your glorious melbourne.....
http://www.theage.com.au/national/m...d-in-head-with-screwdriver-20081227-75pe.html and

http://www.theage.com.au/national/road-rage-sparks-double-stabbing-20081227-75pb.html

Wow great place to live. lol:

thankyou


----------



## numbercruncher (27 December 2008)

Yah Melbourne has become crime capital of oz it seems @! very dangerous sounding place these days hey ....


----------



## robots (27 December 2008)

hello,

was going to post this earlier today but thought against, but since you kicking off knocker thought I would join in:

http://www.theage.com.au/world/nint...oting-santas-killing-spree-20081227-75pp.html

yeah man we just like the united states of crap, didnt see santa at westfield doncaster popping *nine* dudes the other day

i got to Coles today a couple of times without getting popped at or running into any crackheads, glorious melbourne

thankyou
robots


----------



## YChromozome (27 December 2008)

Is that what the stat is on the bottom off Robi's messages. Crime rate in St Kilda is up 14.8%?


----------



## numbercruncher (27 December 2008)

YChromozome said:


> Is that what the stat is on the bottom off Robi's messages. Crime rate in St Kilda is up 14.8%?





Yes only place more dangerous is WA beaches where you have to dodge great whites.


----------



## kincella (31 December 2008)

love the heading.....just be careful....the falling prices might have more to do with the inferior props selling on the market and bringing the overall prices down....
versus the average ordinary house prices that would ordinarily be selling....

suburb I watch closely and am very familar with the area....only the bottom end of the market has been turning over...and its not a house most of us would aspire to or consider.....the better homes are not for sale...
so of course the median prices are showing a decline....if in an ordianry market you have 10 low priced homes, 10 average priced, and 10 above average....its a normal market...
but the suburb I watch as had on average only 30 low priced homes selling each month for the past 6 months....totally screws up the median average for that period....
but hey...it makes the media and scaredy cats doomsday scenarios appear to come true....
one needs to delve a bit deeper into the figures and circumstances before assuming the worst....
cheers


----------



## robots (3 January 2009)

hello,

bloody hell AussieJeff, this thread is getting smashed now!

looks like everyone thinks the prices are going to boom boom boom again

thankyou
robots


----------



## kincella (3 January 2009)

no..they are just fighting and arguing on the other thread.....this is the thread they should be onto...the heading says it all....the doomsdayers outnumber the positive for property posters....


----------



## numbercruncher (3 January 2009)

Australian median down for 2008....

Thats one nil folks .....


we are adjusting for inflation as well ?


lets check back in 2010.


----------



## kincella (3 January 2009)

If , as I have found, all the lower priced properties are selling, rather than the usual average priced homes, with a mix of low priced, medium priced and high prices as per a normal marklet.....
then of course the median price will come down....
you may need to delve deeper to find the truth behind the lower median values now.....
an old saying ...'traps for players'....
the median value does not necesarily mean all the houses sold for a lower price....it could be that more lower priced homes were on the market and sold.....
there are a couple of us that actually track the sales in  suburbs we watch...and that has been the case....good average houses have been taken off the market....only the bottom of the market has been selling....
but hey if that sounds good to you...and fits in with the news....
the media just take it as a news story and run with it....
no detail or behind the scene to find the details....comes back to the anchoring thing we all apparently suffer from....preconceived ideas that we do not budge on


----------



## robots (3 January 2009)

numbercruncher said:


> Australian median down for 2008....
> 
> Thats one nil folks .....
> 
> ...




hello,

i think its 1 all Numbercrunch, remember the thread "House prices to stagnate for years", over three years old and during that period some ripper gains were made,

i think a dark horseman whipped in and closed the thread because it was just too embarrassing

oh yeah, well done robi 14.8% for the year.

yeah i know i know, i have to wait it takes time after the shonk market collapse thats how it goes

thankyou
robots


----------



## numbercruncher (3 January 2009)

Yes v nice work Robi !


Should lock in those gains with a line of credit ?


----------



## robots (3 January 2009)

numbercruncher said:


> Yes v nice work Robi !
> 
> 
> Should lock in those gains with a* line of credit *?




hello,

whats that?

thankyou
robots


----------



## numbercruncher (3 January 2009)

Its free money or something someone was saying ...


not sure really, new 21st century invention ....


----------



## robots (3 January 2009)

hello,

i will type it in the search engine, find some blogs, do some reading for an hour or 2

and then I will be an expert on "line of credit"

thankyou
robots


----------



## knocker (3 January 2009)

numbercruncher said:


> Yah Melbourne has become crime capital of oz it seems @! very dangerous sounding place these days hey ....




Body found dumped in Park orchards. how nice. Gee I live Victoria. Will sell up and buy there as per robies advice lol


----------



## Aussiejeff (3 January 2009)

robots said:


> hello,
> 
> i will type it in the search engine, find some blogs, do some reading for an hour or 2
> 
> ...




hello,

don't be sidetracked if "line of heroin" pops up.

effect of overdosing on either can be the same.

thankyou
aussiebots


----------



## Aussiejeff (3 January 2009)

knocker said:


> Body found dumped in Park orchards. how nice. Gee I live Victoria. Will sell up and buy there as per robies advice lol




hello,

ask legend Ron Barassi how welcoming St Kilda folk are.

thankyou
aussiebots


----------



## robots (3 January 2009)

hello,

with Ron it must of been a neighbourly dispute 

thankyou
robots


----------



## knocker (3 January 2009)

robots said:


> hello,
> 
> with Ron it must of been a neighbourly dispute
> 
> ...




Hello

Yes pimp bashes Hooker because he got ripped off.

Thankyou


----------



## kincella (6 January 2009)

homeowners represent 70% of the housing market, renters 30%....govt provides ??? guess 10% of the rental market....so 20% investors (homeowners) also contribute....that makes up about 90% market....give or take a % here and there....
so when some of those homeowners elect to sell, or lose their jobs and forced to sell...they become renters....will the other renters take up the slack and buy the houses ???....
either way a large majority are owners...or investors or both.....
a good % of renters are young ones, working on careers, not ready to take the plunge.....
we probably have maybe !% are waiting for the houses to drop in price and become home owners....
but they make up a greater % of the voices on these forums....
there are people who will rent all their lives...their choice and happy with it....but they dont whinge about it either....
renters should be proud of themselves....make a choice and stay convicted, and do not have to worry about this subject...houses up down sideways, who cares


----------



## gfresh (6 January 2009)

I get the feeling you seem to be worried that people do not share your same perspective? and even bothered at the fact some wish to discuss these thoughts?

There are some that even believe that there is a general social good in having lower priced property for all.. not necessarily for our own individual benefit, but to ensure everybody in Australia has an enjoyable standard of living. I don't think some can understand that perspective.


----------



## MrBurns (6 January 2009)

See this , a little big to post here -

https://www.aussiestockforums.com/forums/showthread.php?t=13964


----------



## Glen48 (6 January 2009)

Spoke to a bloke in Perth ho has paid $392 to a house that was listed at $475 he thinks he got a good deal and can't see that $392 is now top of the market but that was a few days ago so it will be lower now.


----------



## Lancelot (6 January 2009)

MrBurns said:


> See this , a little big to post here -
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=13964




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


----------



## MrBurns (6 January 2009)

Lancelot said:


> 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





Dunno but he writes for Crilkey and you don't.


----------



## Temjin (7 January 2009)

gfresh said:


> I get the feeling you seem to be worried that people do not share your same perspective? and even bothered at the fact some wish to discuss these thoughts?
> 
> There are some that even believe that there is a general social good in having lower priced property for all.. not necessarily for our own individual benefit, but to ensure everybody in Australia has an enjoyable standard of living. I don't think some can understand that perspective.




And then we have a lot of people who fails to step back and look at the bigger picture and only solely focus on the supply and demand situation as being protrayed by the media and vested interest parties. 

They say credit is NOT in a bear market and we will find it much easier to borrow money because short term interest rate has dropped (and may drop to 0%) and that their "personal" experiences tell them the banks are still lending like as if they were free. Very few people bothered to look at why people were able to purchase homes at such inflated prices in the first place and how the banks have managed to lend so much money and the cause and effect of this global financial crisis. 

They simply extrapolate the future by assuming credit lending will remain intact and supply and demand will continue to worsen and ultimately leads to higher property prices or at the very least, stagnate. Of course, then you have those Keynesian inspired economists telling them (via the media) that according to their computer models, house prices will never crash and credit lending will go back to "equilibrim" and confidence shock will never occur because it is not explained in their book theories based on some guy called Keynes who had been wrong for the last 40 years.  

Like I said again, this thread has become too emotional to make it worthwhile to make any more constructive opinions. hehe


----------



## wayneL (7 January 2009)

Lancelot said:


> 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



Nice attitude.


----------



## noirua (7 January 2009)

Lancelot said:


> 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




Buying property, seeing what is happening in the world, must be a most worrying pastime these days.


----------



## Temjin (7 January 2009)

We will have more of these kind of fellas soon.

http://money.cnn.com/2009/01/05/real_estate/Lereah.moneymag/index.htm



> *Confessions of a former real estate bull*
> 
> *As chief economist for the National Association of Realtors, David Lereah was famously optimistic. Now a private consultant, he's abandoned what he calls the 'positive spin.'*
> 
> ...




Of course, Australia is different with its lack of supply and high demand regardless of the global credit situation.


----------



## noirua (7 January 2009)

Temjin said:


> We will have more of these kind of fellas soon.
> 
> http://money.cnn.com/2009/01/05/real_estate/Lereah.moneymag/index.htm
> 
> ...



It's never different, it's, always the same.


----------



## CamKawa (8 January 2009)

The ABS released the building approval figures for November today. The charts maybe looking a little bit bearish I think.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0?OpenDocument


----------



## Aussiejeff (8 January 2009)

CamKawa said:


> The ABS released the building approval figures for November today. The charts maybe looking a little bit bearish I think.
> 
> http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0?OpenDocument




Nice understatement. 

The Private Sector Housing Approvals for the 12 months up to Nov 2008 look like they fell off a cliff.....


----------



## kincella (8 January 2009)

Ok, so the banks not lending to the builders and developers.....mum and dad not building a new home.....hello it compounds the shortage of houses....

but where are the builders with the deal with the fed govts plan for 50,000 new homes...the ones where the builder receives 6000 per year per house for 10 years....pretty certain news article in Dec said they were on track to completing some of the homes....???....and assumed  since the govt only gave the go-ahead in Nov....that some of those new homes would show up in future houses stats ????....or could it be the developers had put in applications a year ago ...to start this year....and then applied for the govt deal....
its not all adding up....50,000 new homes should show up in the stats


----------



## chops_a_must (8 January 2009)

Kincella, talking to my developer contact early last year, he had stopped virtually all projects in Nov 07. Obviously he was not alone, as there was a 25% YOY drop in Perth.

His reasoning: speculators had driven up the price of land to the point where costs had crossed the line in which people could pay for the end product.

Demand means jack all when ability to pay is hampered, or not sufficient.


----------



## Beej (8 January 2009)

chops_a_must said:


> Kincella, talking to my developer contact early last year, he had stopped virtually all projects in Nov 07. Obviously he was not alone, as there was a 25% YOY drop in Perth.
> 
> His reasoning: speculators had driven up the price of land to the point where costs had crossed the line in which people could pay for the end product.
> 
> Demand means jack all when ability to pay is hampered, or not sufficient.




Yes but that is a situation the will produce a price plateau, rather than a crash due to the supply constraint that is being built into the market.... strangley exactly what is actually happening, especially in the lower end of the market! 

Beej


----------



## Aussiejeff (8 January 2009)

kincella said:


> Ok, so the banks not lending to the builders and developers.....mum and dad not building a new home.....*hello it compounds the shortage of houses....*




Maybe a shortage of NEW houses, BUT the sellers market for EXISTING homes has also tanked bigtime - so there is a glut of homes for sale by increasingly desperate existing homeowners who obviously need to downsize - they aren't selling so some are now being rented out short term to those new home buyers that might be missing out (and reflected in the massive drop in NEW HOME approvals). 

I believe the demand for RENTAL homes has shot up at the same time, which figures.



aj


----------



## chops_a_must (8 January 2009)

Beej said:


> Yes but that is a situation the will produce a price plateau, rather than a crash due to the supply constraint that is being built into the market.... strangley exactly what is actually happening, especially in the lower end of the market!
> 
> Beej



I wouldn't call what is happening in Perth a plateau.

For property, it is very significant.


----------



## kincella (8 January 2009)

aussiejeff, I keep a close on on albury properties..(not wodonga) and all the cheaper lower priced homes were sold Jun 08 to Oct....Nov produced a whole different price range.....the median value would have dropped up to Nov due to the excessive large number of properties at the lower end of them market,, screws the median figure downwards....a consistent monthly average of 30 houses per month selling since Mar 08..when I started the watch.....
I believe a lot of the average priced homes have been pulled from the market,,,those above the FHB range of 300,000.....
Those houses will come back on the market at a higher price as interest rates go down....and the fhb have filled up

pretty certain there are on average only 200 for sale in albury at any given time...and a similar number of rental props....
the drought breaking rain , if it continues will have a big impact on that area...ie farmers start spending again etc
I believe one needs to look at each area, and not use a one size fits all, australia wide policy to guage the markets.


----------



## 2BAD4U (8 January 2009)

chops_a_must said:


> I wouldn't call what is happening in Perth a plateau.




I would.


----------



## michael_t_f (8 January 2009)

I was speaking to my elderly nieghboor today and he is selling up. He cant afford to survive on his stock investments anymore. He does have another property but he is selling the one he is in because of the market decline. I don't know the full details, just repeating what he said, he's probably not the only one in this situation.


----------



## awg (8 January 2009)

As a long time property investor, and in my late 40's

I am of the opinion changing demographics are likely to force down the price of the mid-to-high priced houses.

Many people in my age bracket have very large and fancy houses with only 2 people living in them.

When they want to cash them in, who will be able to afford to buy?

A lot of these premises are not well suited to rental investment.

I believe ABS figures show average household has shrunk to around 1.6 persons!

I personally dont like strata-title, previously owning various property types.

Now prefer lower price bracket, large, flat land area, with low maintenance properties. Very easy to rent out

I reckon we will see very different markets in different areas over the next couple of years.

Interested in other opinions re demographics


----------



## smithy (8 January 2009)

Recent report ....Melbourne Age. 
40% of privately owned homes in exclusive seaside resort suburb Portsea  ..... to be on the market following January (after letting contracts expire) !!!  Hmmmm.... seems just a tad excessive ..... but who knows ?  A lot of business owners ..... geared ??? We'll see in a cuppla weeks. Supply in most middle > up market zones certainly seems destined to overpower demand in Melbourne generally.


----------



## noirua (8 January 2009)

If Australia is 1 year behind then house prices will fall between 8% and 12% in 2009.
Australia is no Japan,  we're not exactly running out of land you know.


----------



## Glen48 (8 January 2009)

http://graphics8.nytimes.com/images/2009/01/06/business/economy/rogoff3.jpg
From Economix:


----------



## kotim (8 January 2009)

there is no shartage historically speaking.  When people have less money more people live together, whether it be at home or in sharing a place.

For the boom to have worked it means that lots of investment properties had to be built, all that happened was that more people who were previously renting went out and bought to get in on the action somehow, so when times get tougher again nolt only will people not be buying and building like they used to during the boom but some of those who did buy will be selling up for whatever reason adn going back to living at home or in shared accomadation.

What peopel fail to appreciate is that now we have a big casual workforce, the unemployment figures get skewif real easy.  David Jones for example has a 93% casual workforce, so what will happen besdies a few people being put off, many ofthe workers will have their hourse reduced, which means less income etc etc.  These sorts of figures willnot show up properly in the stats, so the underlying real problem will be much greater than what appears at face value.


----------



## Glen48 (9 January 2009)

I remember when Hawke/Keating stopped neg. gearing people set up Caravan in the back yards or rented under a house for some inlaw /mates who got the extra money tax free and every one was happy once they reintroduced neg gearing every thing went back to normal not that Neg . gearing is a good thing.


----------



## numbercruncher (9 January 2009)

kincella said:


> .....hello it compounds the shortage of houses....





Hello, there is no shortage, just spruiker lies .....


----------



## Aussiejeff (9 January 2009)

Now here's a novel approach. Not sure how existing house prices would be maintained under this scheme though! 



> *Brazil gives away homes to help spark economy*
> January 9, 2009 - 6:57AM
> 
> Brazilian President Luiz Inacio Lula da Silva is planning to hand out more free homes in a bid to help the construction industry and ignite economic growth as the first global recession since World War II looms over the world’s fifth-most populous country.
> ...



http://business.theage.com.au/busin...omes-to-help-spark-economy-20090109-7d1k.html


----------



## ROE (9 January 2009)

what people dont realise is a few percentage point drop in RE is very significant...most people negative gear plus capital capital lost that's a double whamming.

if it prolong with and circumstances change in their life they could face a massive lost in capital.

Take  a trip to the coast and you get local paper and you see people reduce price to off load their properties as there are no buyers...so if force to sell you are in a deep hole...this is good news for me as I wait a little longer and I buy a bargain holiday house.

Supply play a very small role when there is no money to buy and people are losing jobs, you can see that happening world wide.


----------



## knocker (9 January 2009)

ROE said:


> what people dont realise is a few percentage point drop in RE is very significant...most people negative gear plus capital capital lost that's a double whamming.
> 
> if it prolong with and circumstances change in their life they could face a massive lost in capital.
> 
> ...



Spot on Bro. But don't get too excited yet. Wait another 3 or 4 years because prices have not yet even begin to fall compared to what is about to happen.


----------



## Beej (9 January 2009)

Aussiejeff said:


> Maybe a shortage of NEW houses, BUT the sellers market for EXISTING homes has also tanked bigtime - so there is a glut of homes for sale by increasingly desperate existing homeowners who obviously need to downsize - they aren't selling so some are now being rented out short term to those new home buyers that might be missing out (and reflected in the massive drop in NEW HOME approvals).
> 
> I believe the demand for RENTAL homes has shot up at the same time, which figures.
> aj




So what data exactly are you basing this opinion on? Auction clearance rates? Sales volume data? Median price movements? Can you provide data that indicates an increased number of houses currently for sale than would have been typical over the past say 10 years?

And are you talking Australia wide or just the area in which you live?? I suspect you will find that currently WA and SEQ are experiencing very different market conditions to say Melbourne/Canberra/Sydney and surrounds.

I sold 2 properties (1 PPOR, 1 investment) last year and purchased one (PPOR), so have been pretty active in the market. This is Sydney lower north shore region. My domain.com.au property watch list has 72 properties on it that we were looking at for one reason or another since about September last year. Of those, 16 are still currently for sale, about 50 have sold (and I know the actual sale price in each case), and the rest were withdrawn from sale. The properties still for sale in most cases are compromised in some significant way and/or are over-priced for the current market. Towards the end of last year (late Nov) the number of new properties coming onto the market in this area slowed dramatically (maybe due to the xmas/NY period of course).

I'm awaiting eagerly the Dec quarter median price and sales volume stats, as based on my experience I don't believe the market in SYDNEY at least is anything like what AussieJeff generalises above. I expect median prices will have held steady in most more expensive area's, and possibly increased a little in mid-range and lower prices suburbs. I will back this OPINION up with the hard data once it is available (I expect!). 

Cheers,

Beej


----------



## knocker (9 January 2009)

I sold 2 properties (1 PPOR, 1 investment) last year and purchased one (PPOR), so have been pretty active in the market. This is Sydney lower north shore region. My domain.com.au property watch list has 72 properties on it that we were looking at for one reason or another since about September last year. Of those, 16 are still currently for sale, about 50 have sold (and I know the actual sale price in each case), and the rest were withdrawn from sale. The properties still for sale in most cases are compromised in some significant way and/or are over-priced for the current market. Towards the end of last year (late Nov) the number of new properties coming onto the market in this area slowed dramatically (maybe due to the xmas/NY period of course).

So how do you know the actual sale prices may i ask... (spruik):


----------



## numbercruncher (9 January 2009)

The RE market doesnt revolve around Sydneys lower nth shore my furry little friend.

Australian Medians down for 2008, record amount of listings, glut of unsold homes, growing recession.


St Kilda and Nth Shore, np though, boom forever.


----------



## Glen48 (9 January 2009)

If the owners of the houses that were withdrawn for sale are holding out until the market rises again or are not desperate to sell then find things change they will decide to rent them out or sell and flood the market.
Houses are just the same as shares both go up and down only with shares you can tell what they are worth each day. 
Coming to a town near you house prices down rents down.
If we have CGT on houses we would not be in this mess.


----------



## kincella (9 January 2009)

Beej, 
I undertake similar research in the area of my interest....what some fail to see is the inferior properties sold...bottom of the market....and those properties will require significant upgrades to bring them up to the standard of the normal or average houses sold in the usual market....(non crisis market)

The '2 minute about to become property tycoon' just reads the headlines, property prices slump, sale numbers slump, houses prices down....all the media's sensational headlines that are published every second day....
then the 2 min tycoon's celebrate....house prices falling.....blah blah blah......

I also note properties have been removed from sale, and there are properties on the market for a quick sale, due to the misfortune of the owners....I also believe there are more than enough cashed up investors waiting to pounce and buy bargains when they see them.

I missed out on a bagain myself, and it was a huge bargain....obviously some of that bad news seeped into my normal thinking process....anyway the house is gone...another grabbed the bargain...and doubt I will see a similar opportunity....
cheers


----------



## Aussiejeff (9 January 2009)

Beej said:


> So what data exactly are you basing this opinion on? Auction clearance rates? Sales volume data? Median price movements? Can you provide data that indicates an increased number of houses currently for sale than would have been typical over the past say 10 years?
> 
> And are you talking Australia wide or just the area in which you live?? I suspect you will find that currently WA and SEQ are experiencing very different market conditions to say Melbourne/Canberra/Sydney and surrounds.




I am not aware of any official, independent monitoring stats for either the national number of existing houses being listed, or waiting to be sold per month, nor the waiting time, nor the number withdrawn etc. I don't expect any RE mobs would be eager to divulge what is unsold on their books, either? So, it is mine and a few other's personal observation, if you like. Of course, you can DYOR as you have done in your local area - but that is hardly representative of the nation as a whole?



> I sold 2 properties (1 PPOR, 1 investment) last year and purchased one (PPOR), so have been pretty active in the market. *This is Sydney lower north shore region*. My domain.com.au property watch list has 72 properties on it that we were looking at for one reason or another since about September last year. Of those, 16 are still currently for sale, about 50 have sold (and I know the actual sale price in each case), and the rest were withdrawn from sale. The properties still for sale in most cases are compromised in some significant way and/or are over-priced for the current market. Towards the end of last year (late Nov) the number of new properties coming onto the market in this area slowed dramatically (maybe due to the xmas/NY period of course).
> 
> I'm awaiting eagerly the Dec quarter median price and sales volume stats, as based on my experience I don't believe the market in SYDNEY at least is anything like what AussieJeff generalises above. I expect median prices will have held steady in most more expensive area's, and possibly increased a little in mid-range and lower prices suburbs. I will back this OPINION up with the hard data once it is available (I expect!).
> 
> ...




Crikey mate! *Sydney "lower north shore"* is hardly typical of outer suburban housing! How many km from the city? Surely, one of the most desirable places to live in Sid-uh-nee?

Hmmm. I bet if you conducted your RE existing homes for sale *research* in Parra or Cambelltown or Penrith or Liverpool or Woollongong or Sutherland Shire or Gosford or Newcastle or Wagga etc, you might just get a totally different idea of how the "suburban housing market" is performing atm.

Personally, I couldn't be bothered. I just know this. Some friends of mine in some of those areas have kept me informed on how many "For Sale" signs seem to be around - and lingering on for months and months. So, it's a fact in my own mind... 

Enjoy your status.


aj


----------



## Beej (9 January 2009)

knocker said:


> So how do you know the actual sale prices may i ask... (spruik):




Ummm - because I actually looked at them with a view to potential purchase and the agents ring me up and tell me when they sold? Or I was at the auction when they sold? Or I saw them reported sold in the weekly auction results?

Pretty obvious I would have thought?

Beej


----------



## kincella (9 January 2009)

mediocre....is alive and well, permeating society....more so than ever as noted on the net.....and these forums

the dumbing down of society

Mediocracy has two approaches to transforming culture. Dumbing down involves coarsening and trivialising output to the point where it becomes stupefying rather than enlightening. Sexing up involves wrapping up the trivial and vacuous in jargon and technique, in order to render it sufficiently opaque for its vacuity to be concealed. Often both qualities are combined, resulting in a low-grade product with a veneer of esoteric complexity.


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## So_Cynical (11 January 2009)

Just found a great example of falling real estate values and the effect of a local bubble bursting.



			
				Link said:
			
		

> One for the investor, Situated on the top floor with 180 deg ocean views from balcony, is
> this spacious 3 bedroom unit, 50m to the beach for snorkeling, diving, fishing or utilize the
> modern bbq facilities on your doorstep. Cafe and supermarket in walking distance.




Situated on a quiet dead end street...for the bargain price of just 200K :22_yikes:

http://www.realestate.com.au/cgi-bi...mt=&header=&cc=&c=58094406&s=wa&tm=1231592013


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## Glen48 (11 January 2009)

Sunshine Coast 100 K off holiday homes, only buyers are FHO's using ATO money but the sellers are buying.
Suppose it is one way to get a few more $$ in to the community.
Smart ones are getting out while on top.


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## Trevor_S (11 January 2009)

So_Cynical said:


> Just found a great example of falling real estate values and the effect of a local bubble bursting.











_50m to the beach for snorkelling,_

Have to be one brave snorkeller if that photo is "typical" !


----------



## knocker (11 January 2009)

Trevor_S said:


> _50m to the beach for snorkelling,_
> 
> Have to be one brave snorkeller if that photo is "typical" !




Well at least the place is top floor. Now worries about the sinking island lol. And look you get a shed to keep the tinny and the store is within rowing distance lol:


----------



## sinner (11 January 2009)

Hi guys,

Some news from the haves for the have nots:

*Financial crisis 'yet to hit Sydney land values' *
http://www.abc.net.au/news/stories/2009/01/10/2462994.htm
New South Wales Valuer-General Phillip Weston says it will be another six months before the impact of the global financial crisis will be reflected in the state's land values.

*Qld Treasurer stays optimistic on home buyers grant*
http://www.abc.net.au/news/stories/2009/01/10/2462933.htm
The Queensland Government says new figures show a big surge in Queenslanders applying for the first home owners grant. 

*Figures indicate first home owner grant boost*
http://www.abc.net.au/news/stories/2009/01/10/2463030.htm
Tanya Plibersek says new figures showing a boost in applications for the First Home Owner Grant are encouraging.


----------



## numbercruncher (11 January 2009)

> Some news from the haves for the have nots





Ahhh I see you desperados going hard sell more and more ....... the end is near ?


----------



## Aussiejeff (11 January 2009)

sinner said:


> *Figures indicate first home owner grant boost*
> http://www.abc.net.au/news/stories/2009/01/10/2463030.htm
> Tanya Plibersek says new figures showing a boost in applications for the First Home Owner Grant are encouraging.




Why then is this "boost" having practically NO effect on reducing the mega-drop in TOTAL new private dwelling building approvals?

Maybe Tipsy Tanya hasn't seen (or would want to accept) that Bureau of Stats graph I attached a few posts back!

So, what IS the actual number of First Home Buyers being approved - as a percentage of total private dwelling approvals? It can't be significant. The graph doesn't lie (post #2969).


----------



## kincella (11 January 2009)

in November only...one month...fhb approvals were 5385.....and talk of extending the grant...see the link...
fhb ....approval given to buy a new home or old existing building......or to build a new home........maybe, just maybe, the fhb are happy to buy out there on the market....and not get tied up in building a new house....
I think over 5000 grants for the first month is a good start......have no figures regarding  what % FHB would start from scratch and build a new home, but think it would be quite low.......once they start having a
babies is when they start looking at building the dream home.
I know more people middle aged, who do build the dream house....more money available, and investors.......but almost everyone in that category has stopped doing anything.....blinded by the lights of the WFC
.................................................................................................
quote  from aussie jeff....Why then is this "boost" having practically NO effect on reducing the mega-drop in TOTAL new private dwelling building approvals?
So, what IS the actual number of First Home Buyers being approved - as a percentage of total private dwelling approvals? It can't be significant. The graph doesn't lie (post #2969).  
.......................................................................................
http://www.theage.com.au/national/push-for-home-grant-extension-20090110-7e1t.html


----------



## Aussiejeff (11 January 2009)

kincella said:


> in November only...one month...fhb approvals were 5385.....and talk of extending the grant...see the link...
> fhb ....approval given to buy a new home or old existing building......or to build a new home........maybe, just maybe, the fhb are happy to buy out there on the market....and not get tied up in building a new house....
> I think over 5000 grants for the first month is a good start......have no figures regarding  what % FHB would start from scratch and build a new home, but think it would be quite low.......once they start having a
> babies is when they start looking at building the dream home.
> ...




Thanks for the link.

According to the data in that article, FHB's would appear to make up about 20-25% (at best) of housing finance transactions. So, if the number of "minority" FHB's are up, say, 50% and the number of "majority" other transactions are down 50%, it explains why the big drop in overall housing approvals (and thus the overall health of the RE industry) appears to be extending and flying in the face of such FHB optimism. 

It doesn't really surprise me that such unbridled optimism for FHB is being clung to by pollies. It is the only little flicker of light they can see at the end of the long, dark tunnel. They are hoping a puff of ill wind won't upset the dreamtime too soon! 


aj


----------



## kincella (11 January 2009)

Aussiejeff, I do not believe the FHBG has anything to do with boosting the RE industry........it was brought in to address the problem of helping FHB into the market.....while the RE industry was raging over the past 5 or more years...it was the FHB that were complaining......

as for the govt...well they have had their heads in the sand regarding Aus going into recession or depression....they were still believing China and the resources industry would save us....even up until mid Dec ...Swan was saying we are fine....

the FHBG was introduced in Oct.....govt still unaware of the impending crisis,
it was only after the RBA began cutting interest rates (after raising them non stop for almost a year) that has boosted the FHB into taking up the grants.....

Interest rates were only ever used as an excuse to curb inflation, when they curbed retail spending, and business...the RBA reacted....and since the RBA had ignored calls the rates were hurting home owners.....I do not believe the RBA suddenly sat up and took notice of the home buyers

I do not believe the govt has done or intends to do anything regarding the building industry and housing.....a lot of people employed in that industry, but if you are in the  car  industry....the govt panicks to protect jobs...doubt that industry is as big as the building industry


----------



## Glen48 (11 January 2009)

Imaging you drop $1 in a pokie machine and it gives you $XK's do you take take the money and walk or put it back in and try and win more?
Housing is the same do you sell now or hold on and hope it will go up more?
Pokies you know you can't win, housing there is now sign any where it will go up but a lot of signs it will go down.


----------



## kincella (11 January 2009)

glen, fancy comparing buying a house to a $1 gambler....

I do not have to hope house prices will go up.....I know they will !
its all there in the history charts.....who cares about picking a  date in the future...1 year...or  2 or more..but eventually prices will go up again....I can wait it out


----------



## numbercruncher (11 January 2009)

kincella said:


> glen, fancy comparing buying a house to a $1 gambler....
> 
> I do not have to hope house prices will go up.....I know they will !
> its all there in the history charts.....who cares about picking a  date in the future...1 year...or  2 or more..but eventually prices will go up again....I can wait it out





They can stagnate for a decade pretty much as they did through the 90s ....


----------



## MrBurns (11 January 2009)

numbercruncher said:


> They can stagnate for a decade pretty much as they did through the 90s ....




Agree, been there experienced that, fall by 30% and stagnate for a decade.

And this boom makes the one we had then look like a blip on the radar, yes it will go up but not without a lot of pain first.


----------



## grace (11 January 2009)

MrBurns said:


> Agree, been there experienced that, fall by 30% and stagnate for a decade.
> 
> And this boom makes the one we had then look like a blip on the radar, yes it will go up but not without a lot of pain first.




Yes, I bought at the top after the 80's, ten years later, sold for the same price and had reno'd quite a bit.  Better house, same price, 10 years on.

I suspect we won't see that peak in Jan 08 reached for 10 years, but that's just my personal opinion.


----------



## kincella (12 January 2009)

usual for property to stagnate for 7 years...then rise in the last 3 years, so what is that property worth now...???? double what you sold for or triple ??

look at this report for housing from 1986.....it shows no reduction in the median prices.....so maybe the homes of the posters who agreed with the reduction....were in locations where the prices stayed low.......but other houses in those years obviously rose in price....so the affect was rises all those years....
I did some research on   Melton in Vic some months ago.....180,000 to 230,000 in 5 years,,,growth of only 5% pa....that is like nothing compared to the inner suburbs....so compare apples with apples, not the one size fits all policy....ps I do not like Melton....but looked for unpopular suburbs to prove a point


http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


----------



## CamKawa (14 January 2009)

Housing Finance figures came out today. The long and short of it seems to be "Investment housing commitments decreased 6.1%, while owner occupied housing commitments increased 1.4%."
source: http://www.abs.gov.au/AUSSTATS/abs@...05DBCE56402EC566CA25723D000F2999?OpenDocument

Looks like:
1. The increasing of the FHOG has done fark all
2. Specuvestors are heading back into their caves


----------



## robots (14 January 2009)

hello,

going to be a major issue with real estate specuvestor's staying in the cave,

will be a fantastic time if the trend continue's

thankyou
robots


----------



## explod (14 January 2009)

robots said:


> hello,
> 
> going to be a major issue with real estate specuvestor's staying in the cave,
> 
> ...




Of course, that is why I am waiting on the sidelines.   Glad I do not have any invstment properties at the moment.

The money is going to be on the gold thread Robots, you should pop over, put that wobbly St Kilda stuff into something of real value.


----------



## Glen48 (14 January 2009)

If we had some way of getting an accurate record regarding the true cost of buying a house including bank fee's, inspections etc and selling houses and how much had been spent during the term the owner had the property, we would have a more accurate price structure and therefore be able to compare R E against other " investments."
People should be given a disclosure statement before buying a house just like any other risk.


----------



## prawn_86 (14 January 2009)

Glen48 said:


> how much had been spent during the term the owner had the property




this is something i was thinking about the other day. I'll use easy figures just as an example, but if someone borrows 100% of 500k.

Say IR at 8% means 40k pa in interest. Even with neg gearing if they wanted to sell a couple yrs later, it means their returns have to be pretty much matching what the IR on the loan is (a bit less taking neg gearing into account) it means just to breakeven there has to be a hell of a lot of capital gains.

Does that make sense...

Its all well and good for people to buy a property at 5yrs later its worth 25% more, but how much interest have they paid in that time...?


----------



## white_crane (14 January 2009)

prawn_86 said:


> this is something i was thinking about the other day. I'll use easy figures just as an example, but if someone borrows 100% of 500k.
> 
> Say IR at 8% means 40k pa in interest. Even with neg gearing if they wanted to sell a couple yrs later, it means their returns have to be pretty much matching what the IR on the loan is (a bit less taking neg gearing into account) it means just to breakeven there has to be a hell of a lot of capital gains.
> 
> ...




Isn't the interest tax deductible?


----------



## prawn_86 (14 January 2009)

white_crane said:


> Isn't the interest paid on money borrowed to buy the property tax deductible?




Yeh, but you will only get a certain amount back (depends on your tax bracket). Its not as though you get the interest for free.


----------



## Glen48 (14 January 2009)

I was talking about Owner occupied were most people would not keep a record things like a new Hot water sys. Having to get a room painted, fitting a new patio or old one repaired even things like having the carpet or pest control done etc.
Claiming  interest on rentals etc is ok as long as you are in a high income bracket and if you are paying child support it is added back in as income.
We have all spoken to people who will tell you how much they sold a place for and what they paid for it which still gives you no idea how much profit they made.


----------



## numbercruncher (14 January 2009)

The bears are cutting loose in Ireland .....




> Warning that house prices may fall by 80%





http://www.irishtimes.com/newspaper/finance/2009/0113/1231738220759.html


Just as well we are in Oztraaaalia and have kangaroos n' stuff ....


----------



## MrBurns (14 January 2009)

numbercruncher said:


> The bears are cutting loose in Ireland .....
> http://www.irishtimes.com/newspaper/finance/2009/0113/1231738220759.html
> Just as well we are in Oztraaaalia and have kangaroos n' stuff ....




Exactly, ours may only fall 50%


----------



## 2BAD4U (14 January 2009)

prawn_86 said:


> this is something i was thinking about the other day. I'll use easy figures just as an example, but if someone borrows 100% of 500k.
> 
> Say IR at 8% means 40k pa in interest. Even with neg gearing if they wanted to sell a couple yrs later, it means their returns have to be pretty much matching what the IR on the loan is (a bit less taking neg gearing into account) it means just to breakeven there has to be a hell of a lot of capital gains.
> 
> ...




What about the rental income?
What about depreciation of the house?
What about depreciation of the fittings?
What tax bracket is the investor in?
What if the investor NEVER sells the property?

You can't use such simple numbers when looking at property investment.


----------



## Beej (14 January 2009)

CamKawa said:


> Housing Finance figures came out today. The long and short of it seems to be "Investment housing commitments decreased 6.1%, while owner occupied housing commitments increased 1.4%."
> 
> Looks like:
> 1. The increasing of the FHOG has done fark all
> 2. Specuvestors are heading back into their caves




On 1) you are dead wrong - that report shows the proportion of FHBs up to 23.5% in Nov (from 19.5% the month before), and that's on the over-all OO increase of 1.4% 2 months in a row. This is close to an all time high in FHB proportion numbers....

On 2), unsurprisingly, property investors are still sitting on the sidelines yes. 

In my view the current stats support my view that the market is at/near the bottom in AU, and it certainly isn't falling off any cliffs. Can't wait for the median stats being for Dec 1/4 being released over the next couple of weeks...

Beej


----------



## Beej (14 January 2009)

prawn_86 said:


> Say IR at 8% means 40k pa in interest. Even with neg gearing if they wanted to sell a couple yrs later, it means their returns have to be pretty much matching what the IR on the loan is (a bit less taking neg gearing into account) it means just to breakeven there has to be a hell of a lot of capital gains.
> 
> Does that make sense...




Ahh grasshopper!.... 

You have to factor in the tax deductibility. If you are in the top, or even the second top tax bracket, then interest of 8% actually only costs you 4.5%to 5% net. So, if you are getting 5% gross rent, you are pretty much at break even from day 1 in terms of the cash flow, and the capital gain is PURE profit generated from ZERO capital put in by you up front - think about it! Now do those sums again at 6% interest rate (say locked in for 5 years) and fast forward a few years to when the rent is now 6%/7%/maybe even 8% of what you originally bought the property for? These are the type of deals I look for and they are around RIGHT NOW because everyone is paralysed by fear and misunderstanding of the market situation and prospects.

Get it?

Cheers,

Beej


----------



## 2BAD4U (14 January 2009)

Beej

Go straight to the head of the class, you get top marks. 

Some people just fail to see that if you have a property with positive returns, then what does it matter if it goes down in value.  As said time and time again, it only matters when (if) you sell.


----------



## numbercruncher (14 January 2009)

Hello,


Just discussing the generic Idea " House prices to keep falling for years "


Personal situations of little value.



Thankyou.


----------



## 2BAD4U (14 January 2009)

What personal situation?

Beej has rightly pointed out that there are properties available now that are positive from day 1.  I added that if the property falls in value, it won't matter.

As for what all this means for the generic Idea " House prices to keep falling for years ", evidence FOB's have returned to the market, investors will start returning now so house prices will start to level out and won't keep falling for years.

Glad I could elaborate for you.


----------



## numbercruncher (14 January 2009)

2BAD4U said:


> As for what all this means for the generic Idea " House prices to keep falling for years ", evidence FOB's have returned to the market, investors will start returning now so *house prices will start to level out and won't keep falling for years.*
> .





Tarot or crystal ball ?


----------



## 2BAD4U (14 January 2009)

Economics 101


----------



## numbercruncher (14 January 2009)

It is nice to see a few permas actually admit prices have been falling though instead of the old head in the sand its all lies denial we keep getting.


----------



## Beej (14 January 2009)

numbercruncher said:


> Tarot or crystal ball ?




Et tu???? 

Your tarot cards must be water damaged and your crystal ball cracked I'd say! How long have you been making predictions here that have not yet eventuated???



> It is nice to see a few permas actually admit prices have been falling though instead of the old head in the sand its all lies denial we keep getting.




Nice straw man there!!!!


----------



## prawn_86 (14 January 2009)

2BAD4U said:


> Some people just fail to see that if you have a property with positive returns, then what does it matter if it goes down in value.  As said time and time again, it only matters when (if) you sell.




I have always said positive geared properties are the way to go, never once doubted that


----------



## 2BAD4U (14 January 2009)

numbercruncher said:


> It is nice to see a few permas actually admit prices have been falling though instead of the old head in the sand its all lies denial we keep getting.




Hey I've never said they didn't, you can't deny the facts. But, some of the bears have to admit that property will start to rise again at some stage, it's just a case of when.  And in some ways this whole debate is about the WHEN and the fact that some believe it will be sooner rather than later.


----------



## numbercruncher (14 January 2009)

2BAD4U said:


> . But, some of the bears have to admit that property will start to rise again at some stage, it's just a case of when.  .






Woo hoo I concede you are 100pc correct with this statement !

Im not so sure about in real terms though  


I have this feeling that we will never see median houses at 8/9x median incomes or higher again, ever in our lifes ....


----------



## 2BAD4U (14 January 2009)

prawn_86 said:


> I have always said positive geared properties are the way to go, never once doubted that




Sorry prawn, that wasn't a shot at you. It was a statement in general that some people aren't concerned by falling property prices.  For the record I am, because it has put a big dent in my future plans. I estimate it has put me back 3 - 5 years.


----------



## Beej (14 January 2009)

numbercruncher said:


> I have this feeling that we will never see median houses at 8/9x median incomes or higher again, ever in our lifes ....




Just to get this on record - do you mean the national median, or the median of any major capital city?

If national - did it EVER actually reach 8 x average full time earnings? It might have in Sydney, and maybe even Perth, but I'm not so sure about the national median ever getting that high??

Beej


----------



## 2BAD4U (14 January 2009)

numbercruncher said:


> I have this feeling that we will never see median houses at 8/9x median incomes or higher again, ever in our lifes ....




We will.  Each generation thinks they won't make the same mistakes as the last and when we're old and grey and it happens again we will be listening to the youngins saying, well the same things that are being said now.


----------



## Temjin (15 January 2009)

2BAD4U said:


> We will.  Each generation thinks they won't make the same mistakes as the last and when we're old and grey and it happens again we will be listening to the youngins saying, well the same things that are being said now.




Of course we will get another credit boom later down in the track. That is when the current generations that remembered this crisis almost completely dies off.  

There is a reason why our grand parents are so paranoid with borrowing and always love to stash cash under their beds. At least I always thought so with their ultra conservative thinking anyway. 



			
				Beej said:
			
		

> Et tu????
> 
> Your tarot cards must be water damaged and your crystal ball cracked I'd say! How long have you been making predictions here that have not yet eventuated???




But aren't you making the same predictions too? That properties will not face a crash and at best, stagnate or decline a few % and expect it to bottom in the short term? (or whatever less "serious" scenario that others believe) It hasn't eventuated yet and you can't guarantee with 100% certainly that it will. Of course, neither could others with their own predictions. 

Property discussions has long since become more of a religious talk with emotions just about everywhere.

Not to mention every time I post something more "philosophical" and concentrate on referring to human psychological biases, I get completely ignored by the perma-bulls. (back many many threads ago)

Like I said again and for the...third time I think, we will never expect to change your "believes" with mere words alone. It's not like anyone would expect you to completely side with a different "opinion" and start liquidating all your properties.   Only something physical has to happen to give it away. 

And it's fine to just ignore me again.


----------



## Beej (15 January 2009)

Temjin said:


> But aren't you making the same predictions too? That properties will not face a crash and at best, stagnate or decline a few % and expect it to bottom in the short term? (or whatever less "serious" scenario that others believe) It hasn't eventuated yet and you can't guarantee with 100% certainly that it will. Of course, neither could others with their own predictions.




Yes but I temper most of my comments with words like "probably", "indicating", and provide historical situations data that back up my view. The worst of the bears (not all of them but I won't name names!) just come in here with smarty-pants one liners and make predictions of doom and gloom with absolute certainty! And they have been doing it for YEARS, and have been proven wrong so far, but they keep doing it. My response above was just a retort to one such post showing how silly it was.

From where I sit, since I have been posting opinions here my outlook has so far aligned pretty closely with all the data that is actually coming out about the market.



> Property discussions has long since become more of a religious talk with emotions just about everywhere.
> 
> Not to mention every time I post something more "philosophical" and concentrate on referring to human psychological biases, I get completely ignored by the perma-bulls. (back many many threads ago)
> 
> ...




I'll respond to these points so you don't feel ignored 

You are correct that there is a lot of emotion in these discussions - I suppose if there wasn't then facts alone should cause us all to converge on the same opinion and there would be no argument! Your points re psychological bias etc are well taken, and I would not deny that there are elements of that in everyones, including my own, views on this matter. Ie - I admit that I "want" the property market to do reasonably well - because that benefits most people I know, myself, my family, my friends. It benefits those with the financial discipline to have saved up a deposit, to have taken the risk to enter the market, and who have then worked hard to pay down their mortgage debt, pursue opportunity etc etc.

It's the opposite for many other people who "want" prices to fall, as they don't own property, but might like to, so that would be a plus to them. Unfortunately the reality is that if a real property crash were to eventuate the economic situation would be so dire that most of those people probably would still not be able to afford to buy a house, due to lack of available credit, savings/investments being wiped out, income reduced or gone, no job, prospects nil due to economic stagnation etc etc - so in my view no one will win in that dire situation, and so of course I don't want that to happen. But even then, you would be better off if you owned property than if you didn't IMO!

To get back on topic - I still think, objectively, that all the current data is pointing to a stagnation rather than a crash in AU property market right now while the economy works through the impact of this global slowdown. If the world economy grows again in a year or so, AU property will do just fine. Additionally, as always if you buy well, even in a dead market you can still do well 

Cheers,

Beej


----------



## Glen48 (15 January 2009)

From the SMH.

New buyers provide hope
Jessica Irvine
January 15, 2009

FIRST-home buyers are storming back into the property market, lured by aggressive interest rate cuts and generous government grants, but official job figures out today hold the key to whether the recovery is shortlived.

The jobless rate is tipped to have reached a two-year high of 4.5 per cent and most economists expect it to hit 6 per cent or more by the end of the year. Job losses could lead to an increase in forced property sales while weakening demand for new loans.

But official home loan figures for November show a tentative recovery following a series of rate cuts by the Reserve Bank totalling 2 percentage points and the Rudd Government's decision to double the first-home buyers' grant on established homes to $14,000 and triple it on new homes to $21,000.

The number of new home loans rose 1.3 per cent, while the number of first-home buyers jumped 18 per cent, pushing their share of new loans to 23 per cent - the highest since January 2002.

The federal Housing Minister, Tanya Plibersek, said the figures showed the grant increase, designed to stimulate activity in the housing sector, was working.

"It seems that first-home buyers are taking advantage of historically low interest rates and the first-home owners' boost to enter the market," she said.

Ms Plibersek was speaking after announcing that Edmondson Park in south-western Sydney was one of 33 projects that would share $112 million from the $512 million housing affordability fund. The fund provides grants for sewerage and other infrastructure to lower the cost of building homes.

NSW will receive only 14 per cent of the initial funding pool, while Western Australia benefits the most with 23 per cent.

Economists said first-home buyers were likely to continue buying this year as stagnating house prices and spiralling rents made purchasing a house more attractive.

"With strong population growth driving rents higher, low interest rates and the doubled home-buyer grant should see pent-up demand from first-home buyers unleashed over the course of 2009," an economist at Commonwealth Bank, James MacIntyre, said.

However, the prospect of job losses continues to hang over the economy. "The extent to which labour market conditions deteriorate will be key to the outlook for households, and the economy generally," he said.

But even as first-home buyers advance, investors are beating a retreat. The value of loans to investors fell 6.1 per cent in November, bringing the annual decline to 27.3 per cent.

An ANZ economist, Alex Joiner, said the lack of finance for investors was a worrying sign for new home building, a key employer and driver of the economy.

"Confidence in the property market is still shaky and economic uncertainty is high. The prospect of a climbing unemployment rate throughout 2009 … poses a real risk to any significant recovery in the sector."

The retreat by investors is expected to compound the rental shortage and put more upward pressure on rents.

Further interest rate cuts are also expected to improve affordability. Financial markets are tipping the Reserve Bank will cut official rates by another 0.75 percentage points at its first meeting of the year on February 3 to help stave off recession, following a string of bad news on building approvals, retail sales and job ads.


----------



## kincella (15 January 2009)

I say there are plenty of affordable houses out there now...always has been, but they are not within 10 klms of the city centre.....and plenty around Melb that are now close to the new freeways, or where new freeways will be contructed...half hour to the city centre....around 240,000...they were the neglected suburbs during all the hype ...but can hold their own now....obviously the fhb's can see the sense...cheaper houses and govt assistance ......
I take the 40% drops people, in the same vein as the 200 barrel of oil predictions.....blue sky and out of this world....

people dreaming of 40% drops or more are dreamers.....yet there will be places that look like a huge drop....will you really want to live there ?
alice springs has a 2 bdr for 75,000...other less remote places will get you a 1bdr for 100,000.....compared to 400,000 in the city....


----------



## aleckara (15 January 2009)

Beej said:


> You are correct that there is a lot of emotion in these discussions - I suppose if there wasn't then facts alone should cause us all to converge on the same opinion and there would be no argument! Your points re psychological bias etc are well taken, and I would not deny that there are elements of that in everyones, including my own, views on this matter. Ie - I admit that I "want" the property market to do reasonably well - because that benefits most people I know, myself, my family, my friends. It benefits those with the financial discipline to have saved up a deposit, to have taken the risk to enter the market, and who have then worked hard to pay down their mortgage debt, pursue opportunity etc etc.
> 
> It's the opposite for many other people who "want" prices to fall, as they don't own property, but might like to, so that would be a plus to them. Unfortunately the reality is that if a real property crash were to eventuate the economic situation would be so dire that most of those people probably would still not be able to afford to buy a house, due to lack of available credit, savings/investments being wiped out, income reduced or gone, no job, prospects nil due to economic stagnation etc etc - so in my view no one will win in that dire situation, and so of course I don't want that to happen. But even then, you would be better off if you owned property than if you didn't IMO!
> 
> ...




There is always emotion when it comes to property. Property is a home, not just an investment. The fact that it is an investment as well has caused some issues with affordability and such but that's another topic. People that missed out on the boom of course feel like they will have to work harder, save harder just to get the same thing. That's the inequality of debt and how it puts the burdens of profit further in time to the next generation of future payers.

I believe property in terms of price-income is the least affordable that it has ever been in the last few years. Wages haven't nearly kept up with property inflation especially since the micro-reforms on wages done over the years. Offsetting this is low interest rates, but I don't think that people should ever take interest rates into account, rather how long it would take to pay off the average loan or pay it off to a level where people can live in comfort (i.e not watching every penny just to pay the mortgage). Interest rates are a penalty, they aren't the principal people have to pay off. i.e if the principal is higher compared to wage the payback period is greater meaning a saving for a deposit is much harder than it used to be.

The fact that interest rates are progressively getting lower and lower over the years globally to fund housing shows that there is a serious problem. It makes it harder to save for a deposit (where can you get a return to save up?). The fact that houses have beat a bank account which has been beating inflation in recent years shows that wages have no hope.

Property prices rising Beej only causes damage in the long run. Property ideally inflation adjusted should be worth the same yesterday as today (i.e an inflation hedged saving mechanism). Any more and someone is getting something at the expense of someone else. It's causing social issues with the young who many are staying at home and not becoming 'adults'.

The old adage that property is owned by the hardworker non-bludger is a bit outdated nowdays. We are catching up to other nations where the majority rent and have no hope of every owning a property. If we have one more boom after this one the kids will have no hope at all.

I really don't understand how Governments want housing to go up. What's worse the whole financial industry is tied to housing. Housing is a social good, it shouldn't be a financial one.


----------



## Beej (15 January 2009)

aleckara said:


> Property prices rising Beej only causes damage in the long run. Property ideally inflation adjusted should be worth the same yesterday as today (i.e an inflation hedged saving mechanism). Any more and someone is getting something at the expense of someone else. It's causing social issues with the young who many are staying at home and not becoming 'adults'.




I would be quite happy if MEDIAN house price only ever rose in line with inflation! But potential home buyers have to understand that there are many ways that can happen, and generational opportunity for specific property will always change over time - that cannot be stopped if you have a growing population..... That's also the reaosn why you can make good money from property without "ruining" it for coming generations - but the key is government policy, new development etc that keeps that median price in line.

Cheers,

Beej


----------



## aleckara (15 January 2009)

Beej said:


> I would be quite happy if MEDIAN house price only ever rose in line with inflation! But potential home buyers have to understand that there are many ways that can happen, and generational opportunity for specific property will always change over time - that cannot be stopped if you have a growing population..... That's also the reaosn why you can make good money from property without "ruining" it for coming generations - but the key is government policy, new development etc that keeps that median price in line.
> 
> Cheers,
> 
> Beej




You have highlighted a few issues.

One of them is overpopulation. Property values really do depend on population growth in order to rise. How much more population can our capital cities sustain? Sydney particularly is reaching its limits in terms of infrastructure. Immigration helps keep property prices high as well.

I would be happy going to a median house if my job is local. How about if it wasn't? Here in Sydney if you live on the outskirts (Western Sydney areas for example) to travel into the city is an hour by train, and then to get to the train a bus which is probably another half an hour. So each week 15 hours is spent travelling - that's probably about 7 hours more than the previous generation did not have to spent. Some people are lucky to work locally, good for them. Most aren't with the way these cities have been planned.

In fact prices should be lower in these areas anyway not for your reasons of MEDIAN price but because a lot more people are settling for less. Less time with their families (i.e more broken families), working harder to get the same thing as other people enjoyed. At the moment these outskirts have kept up with the growth (more so in the boom). It's no wonder that in the outskirts suburbs single mothers/stay at home mothers on government assistance represent a lot more families than the average.

Median prices are lower on the outskirts. But the payback is still higher there than it was for the previous generation who got a better property utility wise. That's the difference - property has overshot inflation. Your argument is that the longer you wait the less you should settle for. I argue patience and saving should be rewarded by society.

I think if property goes down so that it reaches the inflation long term trend initially we would be stuffed sure in the short term - the system would reset itself - and more people would be able to take up housing in the future.


----------



## Temjin (15 January 2009)

Beej said:


> Yes but I temper most of my comments with words like "probably", "indicating", and provide historical situations data that back up my view. The worst of the bears (not all of them but I won't name names!) just come in here with smarty-pants one liners and make predictions of doom and gloom with absolute certainty! And they have been doing it for YEARS, and have been proven wrong so far, but they keep doing it. My response above was just a retort to one such post showing how silly it was.




Yep, it is certainly more sensible to use "probably" in this prediction business. Just look at some of the predictions made by high profile commentators and investors at the end of 2007 for the year 2008. It's very curious how they moved up in that kind of position in the first place. Nothing is ever certain in life. So I would not suggest the "perma-bears" have been "proven wrong" so far because no one has ever given an exact timeframe on when the "predictions" will happen. Nourine has already been a doom and gloomer since years ago and have been proven wrong again and again every year until 2008.

Unfortunately, I do feel there have been a reduction of "quality" bear remarks in recent posts. That's including myself because I have already said what I want to say. I don't think you were here when the thread first started right? (or the rising thread which started even eariler) It can be valuable if you go back and read some of the more "quality" comments, but I know it's not fun to go through so much stuff again...



> From where I sit, since I have been posting opinions here my outlook has so far aligned pretty closely with all the data that is actually coming out about the market.




Likewise, for where I site and since I followed this thread from the start, my outlook has also so far aligned pretty closely with what has happened so far. Stuff like credit bust, bank failures, increase in unemployment, stagnating or drop in national house prices, massive drop in sales, etc. (and certain things I did not expect like the speed of the commodity crash, quick cut in interest rates, etc) 

Of course, the future trend is unpredictable. But my current knowledge and interpretation of current data points to a further downturn. Details have already been provided in this thread (and the other rising thread) by myself and many others a long time ago. 




			
				Beej said:
			
		

> You are correct that there is a lot of emotion in these discussions - I suppose if there wasn't then facts alone should cause us all to converge on the same opinion and there would be no argument! Your points re psychological bias etc are well taken, and I would not deny that there are elements of that in everyones, including my own, views on this matter. Ie - I admit that I "want" the property market to do reasonably well - because that benefits most people I know, myself, my family, my friends. It benefits those with the financial discipline to have saved up a deposit, to have taken the risk to enter the market, and who have then worked hard to pay down their mortgage debt, pursue opportunity etc etc.




It's good that you acknowledge your own biases.  Unlike certain "individual" who never acknowledge it and his presence and posts tend to provoke us in using smart-ass one liners as an attempt to emulate his own total denial. In fact, I think this is exactly why we have made these nonsense comments because I am a guilty of it too and felt I was influenced by that very individual.  

It's like some of us have given up on logical reasoning because the other side does not seem to accept it.



			
				Beej said:
			
		

> It's the opposite for many other people who "want" prices to fall, as they don't own property, but might like to, so that would be a plus to them. Unfortunately the reality is that if a real property crash were to eventuate the economic situation would be so dire that most of those people probably would still not be able to afford to buy a house, due to lack of available credit, savings/investments being wiped out, income reduced or gone, no job, prospects nil due to economic stagnation etc etc - so in my view no one will win in that dire situation, and so of course I don't want that to happen. But even then, you would be better off if you owned property than if you didn't IMO!




I cannot speak for others, but I highly doubt everyone here want to see our economy to crash down so hard that it would affect their loved ones and their family miserably. Of course, while it would mean I can buy a property at a lower price in the future, my family members would suffer from the economic downturn and consequently, I suffer too. 

But what should one do here? "Hope" for the best and ignore all contradicting information? Reality can be a cruel thing and it takes a huge effort for someone to realise they may have made a mistake and change their opinion on something they have invested so much into it. (both in monetary and emotional term) 

When is a time when we need to accept reality and stop being in denial? Until it's all too late? I see this happens again too often to many other individuals, and when the game is over, they would blame other for their own mistakes. 

And I'm definitely not going into the topic of "having an owned property is better if I didn't".  



			
				Beej said:
			
		

> To get back on topic - I still think, objectively, that all the current data is pointing to a stagnation rather than a crash in AU property market right now while the economy works through the impact of this global slowdown. If the world economy grows again in a year or so, AU property will do just fine. Additionally, as always if you buy well, even in a dead market you can still do well




Yes, back on topic. 

Likewise, I still think, objectively, that all current date point to a potential crash in AU property market and do not think Australia will come out with just a mild recession (or even with no recession). The reverse of a 30-40 years long credit boom, the end of investment banking era, the end of securitisation, the end of no-payment down loan, the possible end of US dollar as a world reserve currency (yes, related!), the sudden collapse of global trade, etc, etc. These are all big picture stuff and I place more value on them than local supply and demand data. 

A lot of people still think this recession is only a typical one and we will recover soon again and everything will be back to normal with ever growing asset prices. However, they don't appreciate how serious the whole crisis is and how much things would have changed when the economy is back on its feet. Things that supported the boom in property prices (as well as other assets) over the last 3 decades will disappear. A lot of people will be in shock because they couldn't visualise the changes and are certainly not prepared to handle it. 

Too gloom and doom? Maybe, but we would call it being a realist. 

Thanks for not ignoring me this time too.  

Cheers,

Temjin


----------



## kincella (15 January 2009)

I like this quote by Jack Miller......
*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
cheapest loans in a long time coming our way soon


----------



## robots (15 January 2009)

Temjin said:


> Unfortunately, I do feel there have been a reduction of "quality" bear remarks in recent posts. That's including myself because I have already said what I want to say. I don't think you were here when the thread first started right? (or the rising thread which started even eariler) It can be valuable if you go back and read some of the more "quality" comments, but I know it's not fun to go through so much stuff again...
> 
> Likewise, for where I site and since I followed this thread from the start, my outlook has also so far aligned pretty closely with what has happened so far. Stuff like credit bust, bank failures, increase in unemployment, stagnating or drop in national house prices, massive drop in sales, etc. (and certain things I did not expect like the speed of the commodity crash, quick cut in interest rates, *St Kilda up 14.8% for Sept08 Quarter* etc)
> 
> ...




hello,

great stuff Temjin, I just wacked an extra piece of info in there you missed

what another fine day

thankyou
robots


----------



## Temjin (15 January 2009)

robots said:


> hello,
> 
> great stuff Temjin, I just wacked an extra piece of info in there you missed
> 
> ...




Thanks robot, I appreciated it. 

I see a certain "individual" is enjoying his fine day to the fullest.


----------



## numbercruncher (15 January 2009)

Got to be good for house prices ? ....




> The economy lost 44,000 full-time jobs in December as companies reduce payrolls to brace for a possible recession.





http://business.theage.com.au/business/massive-drop-in-fulltime-jobs-20090115-7hdk.html?page=-1


Better stop that immigration if ya'll want to keep your jobs eh ??


----------



## Beej (15 January 2009)

numbercruncher said:


> Got to be good for house prices ? ....
> 
> 
> 
> ...




Yes that's right - biggest drop in full time jobs since 2003 - house prices really crashed back then didn't they???? 

Quiet seriously - although not a great situation for the economy, the unemployment rate is still only 4.5% - which by historical standards is incredibly low. I'm not saying things aren't going to get worse (although of course I hope they don't get too much worse for everyones sake), but you would need to see unemployment at 10% plus before the housing market would really be starting to shake on it's foundations due to unemployment. So don't get too excited just yet.......

Beej


----------



## numbercruncher (15 January 2009)

Yes all those "employed" people working 2 hours a week or more will be biddin' it up baby.


----------



## Glen48 (15 January 2009)

Ch 7 tonight had a story on reno's buy a house slap some paint around and sell it for a mozza.


----------



## apra143 (15 January 2009)

aleckara said:


> I really don't understand how Governments want housing to go up. What's worse the whole financial industry is tied to housing. Housing is a social good, it shouldn't be a financial one.




+1 doesn't make sense to me. I get the feeling that a crash in housing prices would be like the end of the world - far worse than any market crash.

When the boomers and GenXers die out, won't there be an oversupply of housing?


----------



## grace (15 January 2009)

Beej said:


> Yes that's right - biggest drop in full time jobs since 2003 - house prices really crashed back then didn't they????
> 
> Quiet seriously - although not a great situation for the economy, the unemployment rate is still only 4.5% - which by historical standards is incredibly low. I'm not saying things aren't going to get worse (although of course I hope they don't get too much worse for everyones sake), but you would need to see unemployment at 10% plus before the housing market would really be starting to shake on it's foundations due to unemployment. So don't get too excited just yet.......
> 
> Beej




Unfortunately, they keep changing the way "unemployed" is calculated.  We were never at these low rates.  You can't compare to the past.  It was calculated in a different way then.  Not comparing apples with apples as I understand it.

I say the unemployment rate is much higher than what is reported if wanting to compare historically.  Isn't 2 hours per week termed as employed these days?  Please correct me if I'm wrong.  We also have a lot more subbies that came with the mining boom.  There drop in workload not reflected in unemployment figures either.

Sorry, I kind of reread your post, talking about full-time jobs.  Nonetheless, the way unemployed is calculated has changed significantly over the years.


----------



## ROE (16 January 2009)

Housing must fall... but not now... i want it to fall in 3 years time 

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=D8B1AE05-1871-E587-E1D16DF6DC1CEF52


----------



## Aussiejeff (16 January 2009)

grace said:


> Unfortunately, they keep changing the way "unemployed" is calculated.  We were never at these low rates.  You can't compare to the past.  It was calculated in a different way then.  Not comparing apples with apples as I understand it.
> 
> I say the unemployment rate is much higher than what is reported if wanting to compare historically.  Isn't 2 hours per week termed as employed these days?  Please correct me if I'm wrong.  We also have a lot more subbies that came with the mining boom.  There drop in workload not reflected in unemployment figures either.
> 
> Sorry, I kind of reread your post, talking about full-time jobs.  Nonetheless, the way unemployed is calculated has changed significantly over the years.





Hi grace. See my post #83 here for some enlightening ABS details.

https://www.aussiestockforums.com/forums/showthread.php?t=13405&page=5


----------



## CamKawa (17 January 2009)

The new way to sell property?
http://www.abc.net.au/news/video/2009/01/17/2468267.htm


----------



## MrBurns (18 January 2009)

I heard from a _VERY_ good source today that the word is house prices wont bottom for 1 or 2 years so there's no rush to buy, knowing the source as I do I'll be taking that advice.


----------



## robots (18 January 2009)

hello,

sensational Mr Burns, more quarters of 14.8% rises for St Kilda by the sounds of it Mr Burns

will be walking tall down Chapel St to get a cafe latte, might even do as Numbercruncher suggested and flip a street urchin 50 cents instead of the usual 20

paradise

thankyou
robots


----------



## Glen48 (18 January 2009)

USA house prices started going down in 2006 in 2009 the figures are now worse , You are correct Mr. Burns.


----------



## nunthewiser (18 January 2009)

Unemployment will not peak for at least 2 years yet

but what do i care i am from nirvana and petty things like this worry me not


----------



## Trembling Hand (18 January 2009)

Robots don't you live in St Kilda road?


----------



## robots (18 January 2009)

hello,

chapel st, in a part of st kilda called St Kilda Hill

near st michael's grammar school

thankyou
robots


----------



## Trembling Hand (18 January 2009)

robots said:


> hello,
> 
> chapel st, in a part of st kilda called St Kilda Hill
> 
> ...




LOL. St Kilda East!!

Hardly St K proper.

And pretty sure anything over Brighton road is not considered the real St K.

LOL


----------



## robots (18 January 2009)

hello,

no st kilda, 3182 not 3183 like st kilda east

http://www.astor-theatre.com/

gee the astor has the same problem as me, also thinks its in St Kilda


thankyou
robots


----------



## MrBurns (18 January 2009)

Glen48 said:


> You are correct Mr. Burns.



I don't hear that very often, thanks Glen48


----------



## basilio (19 January 2009)

Australia is not America but to a significant extent our boom in borrowing to buy/build/renovate houses has followed  the yanks.

So where are they now? Washington Post has an excellent analysis of how much trouble homeowners are in America. It's not the sub prime its everyone who has  upgraded or bought or borrowed in the last 6 years. Doesn't leave many people out.

Implications for America are horrendous. We will have a knock on effect and of course we have our own overhang of consumer debt which can't be sustained.


> *The Growing Foreclosure Crisis*
> *One oft-repeated assertion no longer holds true. Those in trouble are not, primarily, lower-income borrowers. The foreclosure crisis has become a wave, afflicting neighborhoods of every stripe -- but particularly communities created by the boom itself.*
> 
> 
> ...




http://www.washingtonpost.com/wp-dyn/content/article/2009/01/16/AR2009011604724.html


----------



## ROE (19 January 2009)

Party is over, easy day are over..people need to understand money a little bit better...when you generate negative cash flow and you still want to buy and buy now they need to go back to accounting 101 and understand what is a cash flow statement and what a -ve cash flow will do to you in a long run 

Road runner run out of puff like that articles


----------



## Glen48 (19 January 2009)

The Yanks have now spent enough bail out money to give every one in the World $1,000.00 which is what they should have done in the first place.


----------



## robots (19 January 2009)

hello,

good suggestion Glen48, 

help out those putting in on the planet

thankyou
robots


----------



## explod (19 January 2009)

robots said:


> hello,
> 
> good suggestion Glen48,
> 
> ...




In dire need of your help now Robots, the call is out all along the eastern coastline, cant sell thier wonderfull properties (investment and holiday ones, can you believe it) 

So with all your profits growing in Sti Kilda now is the opportunity for you to branch out into some luxury along the coast.  And no one can say that you do not deserve such a great break.     

So go for it and become really rich.  And if you need some fast help, Aussie home loans are reducing the credit card down to 9.9%

Yeeeeeeeee Haaaaaaaaaaaaaaaaarrrrrrrrrrrr

thankyou
explod


----------



## robots (19 January 2009)

hello,

surely the Government should be helping though Explod, yeah I agree i do deserve it along with all the others keeping the economy going, without us it would be in total dire straits

get a beach house grant going or bump up the investor concessions I think

i will write a letter to Kevin 07 with some of the fine suggestions

thankyou
robots


----------



## Glen48 (19 January 2009)

Robots,
Noosa: tonight Ch 7 they did a story a couple whho could not sell their house ( AKA Mill stone ) so they dropped the price 800K still no lookers so maybe Robots you could offer advice on were they are going wrong.


----------



## overlap (19 January 2009)

Glen48 said:


> Robots,
> Noosa: tonight Ch 7 they did a story a couple whho could not sell their house ( AKA Mill stone ) so they dropped the price 800K still no lookers so maybe Robots you could offer advice on were they are going wrong.




Easy, the house is not in St Kilda.

Move it. Problem solved.


----------



## Pommiegranite (27 January 2009)

ROE said:


> Party is over, easy day are over..people need to understand money a little bit better...when you generate negative cash flow and you still want to buy and buy now they need to go back to accounting 101 and *understand what is a cash flow statement and what a -ve cash flow will do to you in a long run *
> 
> Road runner run out of puff like that articles




Very good point Roe. I've been busy over the past couple of weeks helping out a friend who didn't understand the above point. 

He has had 3 properties on the market since mid December and has had only 2 offers, both of which were very very low. He has had to put them on the market as there have been redundancies at his workplace, and he now fears about his own position.


----------



## Glen48 (27 January 2009)

Might be a market to Tee shirts saying I survived the 2009-? Depression and start up a victims support group in every Town except St Killedher


----------



## Pommiegranite (27 January 2009)

OUCH!!!!!Here's a link to the research mentioned in the below report from today's 'The Age': http://www.earthsharing.org.au/wp-content/uploads/iw2lh-08-report.pdf

I think it highlights exactly what is going on with the manipulation of rental vacancy figures. How many readers does 'The Age' have? I wonder what the true rental vacancy figure for St Kilda is?.....6% perhaps? 



> *Agents accused of 'hyping up' rental crisis*
> 
> 
> *Natalie Craig*
> ...


----------



## ROE (27 January 2009)

Pommiegranite said:


> Very good point Roe. I've been busy over the past couple of weeks helping out a friend who didn't understand the above point.
> 
> He has had 3 properties on the market since mid December and has had only 2 offers, both of which were very very low. He has had to put them on the market as there have been redundancies at his workplace, and he now fears about his own position.





In business if you have -ve cash flow you classified as bankrupt but some how in RE they make it pretty and call it negative gear  ...great financial engineering..


----------



## Lancelot (27 January 2009)

Glen48 said:


> Robots,
> Noosa: tonight Ch 7 they did a story a couple whho could not sell their house ( AKA Mill stone ) so they dropped the price 800K still no lookers so maybe Robots you could offer advice on were they are going wrong.




Buying expensive wee wee extensions that most of the population could never afford to buy always ends in pain if forced to sell in a downturn

On the other hand , how are the average joe houses going?  Stuff around $400k?


----------



## Dowdy (31 January 2009)

Here's one for that tool Robots,

StKilda - 
DEC 08  $750,125        
SEP 08   $1,070,500        
% Change   -29.9


Source Herald Sun (real estate institute of victoria)


*Nice loss Robots, Well Done!*:bonk:


----------



## numbercruncher (31 January 2009)

> PROPERTY watchers have attacked the real estate industry for "hyping up" a rental crisis to lure people into buying at the top of the market.





Send the criminals to jail.


----------



## numbercruncher (31 January 2009)

Dowdy said:


> Here's one for that tool Robots,
> 
> StKilda -
> DEC 08  $750,125
> ...






Hello



Does not compute ....

Bzzt bzzt bzzzzt

Does not compute


Thankyou

:bonk:


----------



## robots (31 January 2009)

hello,

thanks Dowdy but you missed the asterik next to St Kilda man, which basically means the data is unreliable (sounds familiar Sinner)

less than 30 sales Numbercruncher, got all the excuses lined up as I collected them over the past couple of years when others where in denial

craigieburn, thomastown, st albans, boronia, ferntree gully, deer park all up paradise brothers

thankyou
robots


----------



## nunthewiser (31 January 2009)

Dowdy said:


> Here's one for that tool Robots,
> 
> StKilda -
> DEC 08  $750,125
> ...




UH??? wonders why the insults???

its only a bloody forum .....

dont take it so personal dowdy 

Robots and others are just as entitled to there opinions just as you are yours 

why the angst my good fellow ?


----------



## CamKawa (31 January 2009)

Here's the chart for St Kilda. :bananasmiI'm off to ride my bike down Chapel St to have a coffee...


----------



## robots (31 January 2009)

hello,

gee look at that, on a yearly basis not much has changed CamKawa, down 5%

what a result, how did the Australian Shonk Exchange go over that year? 

anybody got a graph

another fabulous day, already been out on the pushie for a couple of latte's

thankyou
robots


----------



## Cooks (31 January 2009)

http://www.news.com.au/business/story/0,27753,24987953-31037,00.html

the battle for middle earth begins Frodo


----------



## Dowdy (31 January 2009)

nunthewiser said:


> UH??? wonders why the insults???
> 
> its only a bloody forum .....
> 
> ...





He only gets back what he's dishing out.
 He constantly parades positive figures like he's a genius but conveniently ignores the neg. ie. He made his sig *StKilda up 14%* etc but now that's negative he just ignores it.

He rubs the positive in your face so time to do the same to him.

I've got nothing against him, just called karma.


----------



## robots (31 January 2009)

hello,

i dont accept that graph Dowdy as you know it has the * next to st kilda, 

many didnt accept the graph and data when I and others presented it so I just play the same game, good isnt it?

life just rolls on man

thankyou
robots


----------



## Aussiejeff (31 January 2009)

robots said:


> hello,
> 
> gee look at that, on a yearly basis not much has changed CamKawa, down 5%
> 
> ...




hello,

gee look at this, *St Albans* gets honorable mention.



> *A MOTHER accused of filming a brutal attack by her daughter on a teenager shouted advice on how to land a good kick, with the footage later posted on MySpace, a court has been told*. The mother shouted at her daughter to hit and kick the 16-year-old victim, who is developmentally delayed, during the 30-minute attack in Melbourne's west earlier this month, police allege.
> 
> The assault was posted on the popular social networking website MySpace. Police allege the daughter was joined by another teenager in attacking the girl, while bystanders encouraged the bashing. *The girl was left with 38 bruises, including a closed eye and scratches to her face and body. She was unable to stand up by herself after the attack and had to be treated in the Royal Children's Hospital*. Her wallet and mobile phone were also taken during the assault.
> 
> The 39-year-old mother [size=+1]*from St Albans*[/size] is facing charges including armed robbery, intentionally causing serious injury, affray and unlawful imprisonment.  http://www.news.com.au/heraldsun/story/0,21985,24985575-5005961,00.html





must be paradise for robots with nice, civilized people everywhere.

keep sipping those flatte's robots

thankyou
aussiebots


----------



## Dowdy (31 January 2009)

robots said:


> hello,
> 
> gee look at that, on a yearly basis not much has changed CamKawa, down 5%
> 
> ...




AGL Energy over one year. You compare one suburb so i'll compare one stock.


----------



## robots (31 January 2009)

hello,

great effort Dowdy, nice graph, well done man

thankyou
robots


----------



## gfresh (31 January 2009)

It's the aussie way!  the more somebody steadfastly believes in something, the harder it is thrown back when proven wrong


----------



## ROE (31 January 2009)

House price Rise = Love
House price Fall = 15

http://www.news.com.au/story/0,27574,24987962-421,00.html

2009 we call it Love - 30
2010 we call it Love - 40
2011  we call it game set and match 
2015 time to go shopping.

wise man once said sometimes doing nothing at all and wait is the best course of action 

$50 on Nadal My man for tomorrow and help tabcorp keep 70 cents dividend each year


----------



## Aussiejeff (1 February 2009)

or, 




ROE said:


> House price Rise = Love
> House price Fall = 15
> 
> 2009 we call it Love - 30
> ...


----------



## knocker (1 February 2009)

Aussiejeff said:


> or,




lets burn robots at the stake lol

Or maybe just have a barbie to celebrate his total ineptness


----------



## knocker (1 February 2009)

Must have been a big night out on the town for robots. What with catching up with his good friends in St Albans, the shooting gallery around the corner and the delightful ladies there in St Kilda, one could say he is truely in heaven

lol


----------



## Glen48 (1 February 2009)

I can understand now why St. Killedher keeps rising in value having  free entertainment in the Street and the amount of free enterprise with traders using a full assault  to beating the recession and their own little Video production unit.
One we could see a bike riding Latte drinker going down the  U tube.


----------



## nunthewiser (1 February 2009)

Dear Robots,

it has come to my attention that you have found yourself yet another internet stalker and worshipper.

i have noticed that this poster has mentioned you in nearly EVERY post he has posted in the last few days

man i wish i could get some groupies to think about me as much as this said poster thinks of you 

be proud brother! hold ya head up high and be gracious in the fact that you have helped a fellow man out with something to consume there waking thoughts with 

kind of reminds me of that pizza dude that was infatuated with your presence here

i should be so lucky!!

you rock man!


----------



## robots (1 February 2009)

hello,

hahaha, spot on Nunthewiser

plenty of others have joined the cause and changed there username as a sign of dedication, these include: aussiebots, numberbots, kimobots, pepperonibots (rip), the list goes on and on

i have also struck a deal for royalties with ASF when people use my patented typing format

paradise man, i am holding a massive service next weekend down here in St Kilda for those that are interested, spots are limited, get in early as around 500k are expected

thankyou
robots


----------



## numbercruncher (1 February 2009)

Hello,


Yes we must admit that what bot lacks in financial acumen he makes up for in botic personality ....


Thankyou

numberbots


----------



## robots (1 February 2009)

numbercruncher said:


> Hello,
> 
> 
> Yes we must admit that what bot lacks in financial acumen he makes up for in botic personality ....
> ...




hello,

what about my number one tip over the years Numbercruncher:

work on your income and save hard

not that silly

thankyou
robots


----------



## nunthewiser (1 February 2009)

nah , number cruncher AOK in my book , no mindless abuse , no mindless insults .....
it seems only the ones with the lack of intelligence argue a point with the use of abuse and personal slagging off

at least numbercrunch keeping things honest too


----------



## CamKawa (2 February 2009)

ABS housing stats came out this morning. Good to see Melbourne leading the charge down.







source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument


----------



## robots (2 February 2009)

CamKawa said:


> ABS housing stats came out this morning. Good to see Melbourne leading the charge down.
> 
> 
> 
> ...




hello,

some more ammo for me when I go to my next centrelink appointment for mortgage assistance this week

like with home owners worse off than renters in the financial scheme it should be a no-brainer for the centrelink guy to give me some assistance

actually why do people get rent assistance?

thankyou
robots


----------



## nunthewiser (2 February 2009)

robots said:


> hello,
> 
> some more ammo for me when I go to my next centrelink appointment for mortgage assistance this week
> 
> ...




Gday Robots

is there truly such a thing re "mortgage assisance" from centrelink?


----------



## gfresh (2 February 2009)

Here is Brisbane chart for latest figures.. Back to December 2007 prices.. 

Wouldn't be surprising to see prices back to early 07 prices in the next 12 months. 2007 was a large "boom" year in Brisbane with double digit rises, so wouldn't be surprising to see that knocked off. No problem for most, but bad news if you bought last year though.


----------



## robots (2 February 2009)

hello,

no, it doesnt exist but it should 

normally they want you to sell property, then go and rent and THEN they will give you rent assistance, amazing!

you should just get it straight off the cuff, another unfair policy against certain people of the community

thankyou
robots


----------



## kincella (2 February 2009)

robots..............thought it was TIC

if you have a problem with the mortgage...one would talk to the bank..otherwise sell, then go renting ...max rent assistance is about 100 pf for a single..if paying 240 pf ( dont get much for 120 pw)

oh and the abs figures...less than 1 % falls....wow...mind blowing...
and that figure is created by all the lower value houses sold to the fhb....

now where are those 40- 50% drops the kids have been shouting about

think some more interest as the rates keep dropping.....no interest in term deposits, or the stock market....
cheers


----------



## numbercruncher (2 February 2009)

Soooo early in the crash too .....


All 2007 flippers must be destroyed by now ....


RE at 10x incomes doesnt compute afterall huh ?


----------



## nunthewiser (2 February 2009)

robots said:


> hello,
> 
> no, it doesnt exist but it should
> 
> ...




No worries

cheers


----------



## numbercruncher (2 February 2009)

robots said:


> actually why do people get rent assistance?





SO they can hand it over to money renters to keep the state sponsored bubble going ?


----------



## robots (2 February 2009)

hello,

ah, centrelink pays direct to money renter do they?

thankyou
robots


----------



## Beej (2 February 2009)

CamKawa said:


> ABS housing stats came out this morning. Good to see Melbourne leading the charge down.
> 
> 
> 
> ...




Well very interesting! My notes and observations:

1) National y/y Dec 07 -> Dec 08 fall = -3.3%.

2) Sydney, the largest market in AU and typically the leading indicator for other markets,  was basically flat (-0.3%) in Q4, after the previous 2 quarters of larger negative moves. This data supports my previously stated (anecdotal evidence based) view that in Sydney prices pretty much stabilised at the end of last year due mainly to lowering interest rates and the FHB grant boost.

3) Perth is not down for the quarter anywhere near as much as everyone expected - why is that? Any Perth people got an explanation for that one?

4) Despite all the economic doom and gloom, the international situation etc etc, 3 cities still managed to put in a median PRICE INCREASE for the last quarter (Adelaide, Darwin and Canberra). Additionally, Adelaide and Darwin are both still in positive y/y territory (+2.0% and +3.8% respectively).

With interest rates continuing to fall plus the delayed impact of the cuts already in play, the FHB grant boost in full swing, and the effect of increased FHB numbers starting to flow through to sales volumes at higher rungs on the ladder in the first half of this year, normally I would say we were set up for a strong market and price rises. However, these factors will be offset by rising unemployment and lower job security with a corresponding lack of confidence to buy for many, even if not directly impacted by those factors.

The combined effect in my view will be a continued stabalisation of the market (I'm talking Sydney in particular) on falling turn-over as a lot of people - both potential buyers and sellers - pull their heads in some more. We will see quarterly stats through the year with small negative or small positive moves. Anyone intending to buy (or sell) will need to look at the trends in their own individual suburb/area to get an accurate picture of where things would stand if you were to pull the trigger.

Am I still considered a perma-bull here because I still think it is highly unlikely (virtually impossible) that prices will fall by 40+% across the board in Australia, and Sydney in particular?  A view incidentally shared by most mainstream economists and commentators. Or because I think there is some real opportunity out there at the moment for FHBs, upsizers and astute investors alike? It still seems to me there is mounting evidence that the market here is not currently, and is not going to be, impacted by the same factors that have pushed the US and the UK down over the past 12-18 months.

Cheers,

Beej


----------



## kincella (2 February 2009)

beej, heard an interview today.... a lot of people were upsizing....and the fhb were taking those props,....sounds reasonable....
that was a good post....indicative of  most prop investors thoughts imo
the other idea is to do those renovations....cheap money....and help keep the economy moving along....
I just see it as a huge window of opportunity for many .......if they can keep their jobs


----------



## robots (2 February 2009)

hello,

yes Kincella, i think its a fantastic time if you are "handy" to do basic reno's around the house to keep above the next joint,

plaster, painting, landscaping, tiling, front fence etc with the more you can do the better things will work out

in my travels around the local streets you always see the places which do sell are those which have been updated, presented well and a prominent agent

thankyou
robots


----------



## Dowdy (2 February 2009)

robots said:


> hello,
> 
> some more ammo for me when I go to my next centrelink appointment for mortgage assistance this week
> 
> ...




Why do you need 'mortgage assistance'. I thought it's paradise where you are.


----------



## knocker (2 February 2009)

Dowdy said:


> Why do you need 'mortgage assistance'. I thought it's paradise where you are.




Because he is FOS. (Full Of S...)


----------



## Pommiegranite (2 February 2009)

CamKawa said:


> ABS housing stats came out this morning. Good to see Melbourne leading the charge down.
> 
> 
> 
> ...




Not surprising at all. This quarter's falls will be even greater. The thing that many of these propvestors have forgotten is that that trend has well and truly changed, and the property market moves in one direction for years (hence the title of this thread). *10%+ per annum falls over the next several years is a given. *


----------



## Santoro (2 February 2009)

Pommiegranite said:


> Not surprising at all. This quarter's falls will be even greater. The thing that many of these propvestors have forgotten is that that trend has well and truly changed, and the property market moves in one direction for years (hence the title of this thread). *10%+ per annum falls over the next several years is a given. *




Spot on.............while unemployment figures increase (+250,000), pressure is on current home owners and property prices and throws increasing caution on first home buyers......the fall will continue until data turns positive in the US or China.


----------



## robots (2 February 2009)

Dowdy said:


> Why do you need 'mortgage assistance'. I thought it's paradise where you are.




hello,

what do renters need rent assistance for? i thought they on the money with like not being on board the ponzi scheme and being gun traders

confusing isnt it, another rough ruling for the people doing the most work in the community

thankyou
robots


----------



## Dowdy (2 February 2009)

I feel sorry for all the first home owners who get duped into buying because of the government grant.


----------



## prawn_86 (2 February 2009)

robots said:


> hello,
> 
> what do renters need rent assistance for? i thought they on the money with like not being on board the ponzi scheme and being gun traders
> 
> ...




I know your being deliberately provocative Robots, but rent assistance is only provided to those with a low income (IE those already recieving centrelink). It's there because no one could live off of the amount that you get without rent assistance.


----------



## Beej (2 February 2009)

Pommiegranite said:


> Not surprising at all. This quarter's falls will be even greater. The thing that many of these propvestors have forgotten is that that trend has well and truly changed, and the property market moves in one direction for years (hence the title of this thread). *10%+ per annum falls over the next several years is a given. *




How do you know this quarters falls will be greater, when in the major market (Sydney) the falls decelerated compared to the past 2 quarters? What about those cities where prices actually grew? How do they fit in with your hypothesis?

Re 10% pa falls for years - I don't think so. Hasn't been the trend at all during past downturns. What's the LONG term trend for property? Up and only up! Down trends are only a blip. In past recessions you see a maybe a year with some slow falls (national or regional trend) followed by a soft/flat market for a couple of years rather than ongoing falls. Of course the higher they rose the harder they can fall, so those regions that had incredibly strong growth through 2006/2007 will be hit harder than Sydney for example, which has been pretty stable since 2004 over-all.

Even in the current Sydney market many sub-area's have seen decent price growth during the last quarter (as shown in stats I posted in the other thread).

That's still my view anyway - it's supported by a range of stats/data so overly aggressive bears please don't attack me for having an opinion that differs to yours! 



Santoro said:


> Spot on.............while unemployment figures increase (+250,000), pressure is on current home owners and property prices and throws increasing caution on first home buyers......the fall will continue until data turns positive in the US or China.




Yes but these factors are offset by supply side issues, growing population, government support/grants and historically low interest rates plus rising rents. You are right though in that there will be little growth and certainly no boom until after the US and China worms turn again....



Dowdy said:


> I feel sorry for all the first home owners who get duped into buying because of the government grant.




Why do you feel sorry for them? If they are happy because the have a house they can afford for themselves and their family to live in with security and stability, and it's costing about the same as it was costing to rent, and they paid zero stamp duty and got $14k-$21k from the government to subsidise their purchase, what have they got to lose? I think in the long run they will be the ones who end up feeling sorry for those who want to but choose not to buy -  those who end up waiting too long, missing the market turning up and again (eventually), who keep waiting for the "big" falls that never come, and in the meantime have sunk so much $$$ into rent and possibly had the hassle and expense of having to move their families multiple times etc etc. Whatever happened to house prices, I would not give up at least owning my own home for anything!

Cheers,

Beej


----------



## robots (2 February 2009)

hello,

no i am not, i am telling you as it is

rent assistance is also available to people not on welfare

people who live in areas they shouldnt, people who spend up everything and then get down to the assistance centre's

professional's

thankyou
robots


----------



## dhukka (2 February 2009)

Beej said:


> Well very interesting! My notes and observations:
> 
> 1) National y/y Dec 07 -> Dec 08 fall = -3.3%.
> 
> ...




Sydney prices for Sep08 and Jun08 were both revised lower by more than 1.0%. All cities down from their respective peaks except for Darwin which is the most unreliable, even the abs doesn't put much faith in the Darwin numbers;



> The series most affected by limited market scope is the Darwin established house price index. As can be seen from the data in Table 8, the series for Darwin is affected by a relatively low number of transactions in any quarter. Rather than suppress publication, the series are included here because it is believed that the long term trends are reliable. However, because of the limitations in the reliability of individual quarter-to-quarter movements, users are advised to exercise due care when analysing such movements.




As usual, you can't read too much into one quarter's worth of data. I don't expect much more than small incremental declines akin to the current quarter for the next couple of quarters. The second half of the year could get interesting as unemployment rises, the economy deteriorates and expectations are reigned in.


----------



## nomore4s (2 February 2009)

dhukka said:


> Sydney prices for Sep08 and Jun08 were both revised lower by more than 1.0%. All cities down from their respective peaks except for *Darwin which is the most unreliable*, even the abs doesn't put much faith in the Darwin numbers;




lol, why doesn't that surprise me.

Prices up here have come off the boil a bit but not a great deal, property up here is extremely overpriced imo. 
People up here generally have thier heads in the sand regarding the economic downturn thinking Darwin will be immune due to the massive growth we have had in the past few years but money is getting harder to collect and alot of projects are being shelved, I also think the 2nd half of the year will be telling.


----------



## Santoro (2 February 2009)

robots said:


> hello,
> 
> no i am not, i am telling you as it is
> 
> ...




WRONG

Centrelink


You may be eligible for Rent Assistance if you:

- receive a pension (special rules apply if you are under 21 years and receive Disability Support Pension), or 
- have dependent children and get more than the base rate of Family Tax Benefit, or 
- have care of a child between 14% and 35% of the time and are not eligible for Family Tax Benefit but meet other Family Tax Benefit requirements, or 
- receive an allowance or benefit (but don't have dependent children) and: are over 25 years, or 
have a partner, or  are under 25 and living permanently or indefinitely apart from your parents or guardians. 

To receive Rent Assistance you must also meet the residence requirements of your *pension, allowance, or benefit.*


----------



## grace (2 February 2009)

Interesting on ABC TV News tonight Alan Kohler discussed the ranges of reporting of house drops in Australia from
0.8% to 8.6%, depending on who was quoting.  Ranged from Real Estate Industry, RPData, and I can't remember the last one.

He said "lucky I can work out what shares are selling for".


----------



## CamKawa (3 February 2009)

grace said:


> Interesting on ABC TV News tonight Alan Kohler discussed the ranges of reporting of house drops in Australia from
> 0.8% to 8.6%, depending on who was quoting. Ranged from Real Estate Industry, RPData, and I can't remember the last one.
> 
> He said "lucky I can work out what shares are selling for".



That's one of the big disadvantages of property. You are forever trying to work out what your joint is worth and in a sliding market it may catch a few specuvestors out. Oops I'd realize I was down $150,000 until they actually try to sell - lol. Welcome to the joy of owning property.


----------



## MR. (3 February 2009)

With volumes down perhaps it is only the better properties selling at just below the old average prices!  Would make some sense would it not?  Wouldn't change the averages much!

You were going to buy a dump for 600k but then were able to buy something "finished", perhaps "new" for 600k you would be mighty happy! 

How would the stats look?  Just as they do?


----------



## Beej (3 February 2009)

CamKawa said:


> That's one of the big disadvantages of property. You are forever trying to work out what your joint is worth and in a sliding market it may catch a few specuvestors out. Oops I'd realize I was down $150,000 until they actually try to sell - lol. Welcome to the joy of owning property.




That same "surprise" can work in the other direction as well - Ie you go to sell and get $100k over your reserve at the auction....

Property is different to shares - all shares in one company are the same - every property is different, that's why property is harder to value accurately until you actually sell. If you don't like that then don't buy property! 

Cheers,

Beej


----------



## stock_man (3 February 2009)

> RELATIVELY RESILIENT
> The steep cuts in interest rates seemed to be offering some support to house prices as the pace of decline slowed on a quarter-to-quarter basis.
> Prices dipped a smaller-than-expected 0.8 percent in the fourth quarter, compared to the third quarter when they sank 2.4 percent.
> In any case, the annual losses of 3.3 percent in Australia are relatively modest compared to declines of 15 to 20 percent suffered in the United States and Britain.
> ...




http://www.guardian.co.uk/business/feedarticle/8337988


----------



## kincella (3 February 2009)

I monitor 2 suburbs on a weekly basis...I look at whats for sale and the prices...all the good average houses have not been available for sale for over 6 months....a lot of new listings are the bottom of the range....thats whats been selling...to fhb....
late Nov...something changed...all the lower priced ones had been sold....a range up from the average was now selling....ie props over the 400-500 mark...
some people were up sizing...hence the higher price range.....and the fhb were picking off all the lower stock...
of course these figures will tip the scale to a lower median price....
I do not believe people have dropped their prices.....but then again there are not many million dollar houses on the market...and it is a small market that I watch...trend or not....I think it is


----------



## Dowdy (3 February 2009)

Beej said:


> Why do you feel sorry for them? If they are happy because the have a house they can afford for themselves and their family to live in with security and stability, and it's costing about the same as it was costing to rent, and they paid zero stamp duty and got $14k-$21k from the government to subsidise their purchase, what have they got to lose? I think in the long run they will be the ones who end up feeling sorry for those who want to but choose not to buy -  those who end up waiting too long, missing the market turning up and again (eventually), who keep waiting for the "big" falls that never come, and in the meantime have sunk so much $$$ into rent and possibly had the hassle and expense of having to move their families multiple times etc etc. Whatever happened to house prices, I would not give up at least owning my own home for anything!
> 
> Cheers,
> 
> Beej





Well most people who buy with the grant can't afford the house without it  which means they shouldn't be buying in the first place.
The grant artificially inflates the price. You look in the first home buyers suburbs that the price has increased usually to the same percentage as the government grant.
And most of those buyers think the price can only go up.

The market hasn't even begin to lose value yet and when they really do, then the first home buyer will get hit the most.

I do believe the market will crash over the next few year. You can listen to Stephen Keen and he explains why. http://au.youtube.com/watch?v=wHJrMUa1HBQ

_Please_ watch it and don't brush it off


----------



## aleckara (3 February 2009)

The real truth of the matter is that at this stage of the game all I see is a lot of undecided people, and a lot of opposing views. With low volume sales while the price is going down slowly it isn't as substantiated. No one in the market really knows the direction; particularly the FHB who have everything to lose by getting into nominal debt. The market to me is in a state of indecision.

Human nature will always benefit property against all other investments. Most people think property will never go down, want to own a house. That is a big resistance to prices going down, almost a cartel. If demand dies down then supply on the market follows because Australians almost act in unison to cut supply.

To be honest I think we are at a tipping point. Either the housing market will go down significantly, or up significantly depending on who wins (i.e the government vs the credit crunch). I think the government just may win at the expense of future services, and prosperity.

The saddest thing about our country is that all we have got is housing and mining. Basically industries that are naturally protected as it's quite hard to move them offshore, anything that can be moved has been because we aren't a hard working country. Governments are going to prop up these businesses because to be honest it's all we got.


----------



## gfresh (3 February 2009)

Dowdy said:


> Well most people who buy with the grant can't afford the house without it  which means they shouldn't be buying in the first place.




Yup.. Seems like FHB'ers don't need a 10% deposit, $14k+ say cash $10k (sell the car, lots of that happening if you check carsales).. So really they've got a 3% deposit. Not really a great buffer if prices do come down and/or they lose a job. 

JPM guesses house prices to fall another 10% in Melbourne this year: http://www.theage.com.au/national/melbourne-leads-house-price-tumble-20090202-7vrt.html


----------



## Beej (3 February 2009)

Dowdy said:


> _Please_ watch it and don't brush it off




Prof Keen is well known here and his views have been discussed several times. I do not accept his analysis and think he is wrong, (as do many respected economists). He in fact has a bet with another economist whereby if his views on house prices prove wrong he has to walk from Sydney to the top of Mt Kosciusko wearing a T-Shirt stating "I was hopelessly wrong about house prices - ask me how!". I reckon we will be seeing that event take place in a couple of years.... 

Cheers,

Beej


----------



## kincella (3 February 2009)

plenty of affordable houses out there now....and the price should rise by about 2500...thats how much the govt is spending on insulating houses....
for free to the owners......unfortunately my houses are already insulated...so I miss out on govt handouts again...

does this sound like some of our bears on here....is this the real story, why they wish house prices would come down ????
taken from a blog today...ref below
.....................................................................................
Hired Goon
 February 03, 2009 10:11 AM I wish the RBA would stop cutting rates. They should let the housing market crash. Australia needs a good recession to teach the specufestors a lesson for destroying this country by gambling on shelter. These rate cuts will keep the bubble inflated. I hate the RBA. I want to buy a house in Adelaide but the prices keep going up and up. Now I can't afford anything. I stupidly invested all my money in commodities and energy stocks that crashed big time, if my wife finds out I've blown my money on worthless shares instead of buying a house, she will kill me! I keep telling my wife that I won't buy a house for us and our little baby because the house prices are going to crash. They have to crash sometime. Please? You are not helping RBA. Please let houses crash so I can buy a house for a reasonable price. I hate the RBA and the Somersoft specufesting house gamblers. It's just not fair! They are ruining it for hardworking people like me.
........................................................................................................
http://blogs.smh.com.au/business/2009/02/03/yoursaytherb.html?page=fullpage#comments


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## pilots (3 February 2009)

kincella said:


> plenty of affordable houses out there now....and the price should rise by about 2500...thats how much the govt is spending on insulating houses....
> for free to the owners......unfortunately my houses are already insulated...so I miss out on govt handouts again...
> 
> does this sound like some of our bears on here....is this the real story, why they wish house prices would come down ????
> ...



Hired Goon will NEVER own a house.


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## numbercruncher (3 February 2009)

Hello,


House prices falling along with interest rates.

Such is the nature of the beast.


Thankyou


ps. Can permabulls provide some "proof" of rising prices ? thought not, your all spin doctors.


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## kincella (3 February 2009)

numbercruncher....its a con....been happening for years now...thats exactly what you wanted to hear

but to the fhb...they think about how much they can afford...and do the sums...find they can afford more as rates come down.....they dont even have to be number crunchers....pretty basic assumption....so they bid more...or look for a better house...or better price
and of course they always want more for less......

one of those 10 houses I bought a few years back...the agent said to me are you a fhb....I said no...so in an instant he dropped the price by 7000...

someone needs to benefit from the govt handouts....I mean its my taxes paying for it...so what better way then for me to up the price when selling ???
sadly I will miss out again...this time for 14,000...due to the fact I am not selling ....
maybe you sould change your nic......your number crunching skills need an upgrade..imo


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## Dowdy (3 February 2009)

Beej said:


> Prof Keen is well known here and his views have been discussed several times. I do not accept his analysis and think he is wrong, (as do many respected economists). He in fact has a bet with another economist whereby if his views on house prices prove wrong he has to walk from Sydney to the top of Mt Kosciusko wearing a T-Shirt stating "I was hopelessly wrong about house prices - ask me how!". I reckon we will be seeing that event take place in a couple of years....
> 
> Cheers,
> 
> Beej





Are those the same _respected economists_ who *didn't* see this economic crisis coming and the same one who are advising what to do now?
He (Keen) looks at the official numbers so if a respected economist choose to ignore those numbers then they can be called 'respected' now, can they?

What does the other guy have do to if he loses the bet?


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## numbercruncher (3 February 2009)

kincella said:


> numbercruncher....its a con....been happening for years now...thats exactly what you wanted to hear
> 
> but to the fhb...they think about how much they can afford...and do the sums...find they can afford more as rates come down.....they dont even have to be number crunchers....pretty basic assumption....so they bid more...or look for a better house...or better price
> and of course they always want more for less......
> ...






Hello,


10 houses is a nice even number to buy, did you get them on the same day a few years back ?

How many commercial buildings do you own ?

Have any agricultural land, you know to diversify ?

Do you drive a red car ?

Thankyou.


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## knocker (3 February 2009)

kincella said:


> plenty of affordable houses out there now....and the price should rise by about 2500...thats how much the govt is spending on insulating houses....
> for free to the owners......unfortunately my houses are already insulated...so I miss out on govt handouts again...
> 
> does this sound like some of our bears on here....is this the real story, why they wish house prices would come down ????
> ...




You know all this government does is had out money. I like the way the deputy treasurer said when we are we are in surplus on tv. So now Swan is not even facing the media. lol he gets his deputy to go and answer question lol Good luck with your property boom.


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## MrBurns (3 February 2009)

numbercruncher said:


> Hello,
> 
> 
> 10 houses is a nice even number to buy, did you get them on the same day a few years back ?
> ...




He was playing Monopoly on acid with robots


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## robots (3 February 2009)

hello,

bloody hell, cant believe it, the guy from Centrelink has come through brothers

at my appointment this morning he said I would qualify for assistance and presto he has reduced my interest rate on my loans,

great that other members of society are getting a few benefits, paradise 

a massive 1% reduction in the money renting rates

robots is in da house, get a few more ruski's at the St Kilda festival this 
weekend

if any fellow ASF members want to meet up will be at the corner of Brighton Rd & Alma Rd at 1pm Sunday, we will get a slab of ruski's and a bit of arctic

thankyou
robots


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## nunthewiser (3 February 2009)

robots said:


> robots is in da house, get a few more ruski's at the St Kilda festival this
> weekend
> 
> if any fellow ASF members want to meet up will be at the corner of Brighton Rd & Chapel St at 1pm Sunday, we will get a slab of ruski's and a bit of arctic
> ...




hahahahahahah its a date man!


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## Pommiegranite (3 February 2009)

Today was the last throw off the dice by Rudd, in a blatant attempt to shore up the housing market. Or should I say, "last attempt to shore up a sinking ship?" 

Unfortunately for the econonomy, many of the rats have already made up there minds to abandon. Only a few robotic ones will be left, and we all know how robots malfunction when exposed to water.

A few borrowers are still jumping for joy that rates have been cut. I suggest they take a good look at how much banks around the world have been passing on at reserve rates below 3%. Answer - not much at all!


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## MrBurns (3 February 2009)

Pommiegranite said:


> Today was the last throw off the dice by Rudd, in a blatan attempt to shore up the housing market. Or should I say, "last attempt to shore up a sinking ship?"
> 
> Unfortunately for the econonomy, many of the rats have already made up there minds to abandon. Only a few robotic ones will be left, and we all know how robots malfunction when exposed to water.
> 
> A few borrowers are still jumping for joy that rates have been cut. I suggest they take a good look at how much banks around the world have been passing on at reserve rates below 3%. Answer - not much at all!




He can still drop rates more just to finish off those that saved and give the banks more profit, his work is not done yet.


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## Pommiegranite (3 February 2009)

MrBurns said:


> He can still drop rates more just to finish off those that saved and give the banks more profit, his work is not done yet.




I don't think savings rates will drop past 3-3.5% either. In effect the RBA have fired their last bullet.

Here's an interesting poll that is suggesting that only 24% will spend their handouts. It's a pity that Rudd & Co (insolvent), didn't do some research on this BEFORE today!

http://www.news.com.au/business/story/0,27753,25001488-462,00.html


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## Aussiejeff (3 February 2009)

Pommiegranite said:


> I don't think savings rates will drop past 3-3.5% either. In effect the RBA have fired their last bullet.
> 
> Here's an interesting poll that is suggesting that only 24% will spend their handouts. It's a pity that Rudd & Co (insolvent), didn't do some research on this BEFORE today!
> 
> http://www.news.com.au/business/story/0,27753,25001488-462,00.html




Like I posted in the second stimulus plan thread, all everyone who gets the cash has to do to get MORE, QUICKLY, is to sit on it for a few weeks, during which time the Gummint will get desperate about the lack of cash being spent and will play pass the cash bailout parcel again.

They have shown their hand - that they are prepared to flog cash willy-nilly to the needy until the economy is "fixed". That is their Grande Plan. Seems it is their ONLY main plan.

Well, then. Thanks for the cash. It looks nice in my account.

_"But, Please, Sir. I want more!!!"_ 

Can I open a savings account at Ruddbank? 

What are their savings interest rates?

LOL


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## Glen48 (3 February 2009)

Well now a I P is a thing of the past just like Buggy whips some thing we can tell our kids about and how people thought buying house and renting it out was a way of making money and how they were suppose to double every 10 yrs, of course make sure you have a firm understanding with your kids so they won't think you have one Oar in the water and they want to put you in  a home.
Poor Robots will be walking around saying " it was suppose to work 14.8 % what went wrong?".


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## knocker (3 February 2009)

Glen48 said:


> Well now a I P is a thing of the past just like Buggy whips some thing we can tell our kids about and how people thought buying house and renting it out was a way of making money and how they were suppose to double every 10 yrs, of course make sure you have a firm understanding with your kids so they won't think you have one Oar in the water and they want to put you in  a home.
> Poor Robots will be walking around saying " it was suppose to work 14.8 % what went wrong?".




RIP ROBOTS or should i say MIA lol


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## gfresh (3 February 2009)

What is it they say, holiday locations always are the the first to fall during hard times, and the last to rise... playing out that way. 

http://www.goldcoast.com.au/article/2009/02/02/44781_gold-coast-real-estate.html



> GOLD Coast house prices are showing signs of reaching the bottom of their downward slide. (*cough, pure guess, bs, bs*)
> 
> *The average Gold Coast house price fell by 4.04 per cent in the December quarter*, according to the latest figures from Australian Property Monitors.
> 
> But the fall caps a year that saw the city's housing market hit by the global financial crisis, causing a 9.8 per cent drop throughout the year.


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## robots (3 February 2009)

knocker said:


> RIP ROBOTS or should i say MIA lol




hello,

what you reckon Nun, this poster a plant?

I have been hearing a lot of voices recently

thankyou
robots


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## nunthewiser (3 February 2009)

robots said:


> hello,
> 
> what you reckon Nun, this poster a plant?
> 
> ...




Dunno m8 ...... mushroom springs to mind 

he sure is obsessed with you tho 

just smile and consider your good deed done that you put meaning into someones dreary life

LOL some might say you even give him a reason to live , seeing as he seems consumed with you at every moment here


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## robots (3 February 2009)

hello,

oh well, will keep a couple of ruski's for the legendary poster on Sunday at the meet up,

thankyou
robots


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## gazelle (3 February 2009)

I hope propery gets dumped  : the quicker the better and then we can get rid of that naive turkey from reiv propping up his own intersests and begging the govt for assistance , sink you bastards sink .


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## theasxgorilla (4 February 2009)

Thought I'd post this one up.  Note: no "Australia" in the category of "systemic" banking crisis.


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## Aussiejeff (4 February 2009)

theasxgorilla said:


> Thought I'd post this one up.  Note: no "Australia" in the category of "systemic" banking crisis.




Good one Mr Gorilla.

So, based on past history, the countries listed as being "current" in the housing/banking crisis would be doing very well to get out of the do-do's within 3-4 years at best (given the 6 year average and least recovery time of 3-4 years). 

"Only" a few more years to go then, if we are lucky and this "downturn" is of the "historically average" type ...


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## numbercruncher (4 February 2009)

gazelle said:


> I hope propery gets dumped  : the quicker the better and then we can get rid of that naive turkey from reiv propping up his own intersests and begging the govt for assistance , sink you bastards sink .





Another fan of Australias underbelly realestate cartel i see


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## Beej (4 February 2009)

theasxgorilla said:


> Thought I'd post this one up.  Note: no "Australia" in the category of "systemic" banking crisis.




Great post! So really the key as to whether AU will follow the US/UK property market has more to do with whether we are in fact suffering a "systemic banking crisis" as they are, or not. 

It would seem the answer is we are not, due to a modicum of good luck, the relative size of our banking sector in the global scheme, plus prudent regulation and government management of the sector over the past decade or two.

Some evidence of this comparing what happened in the UK vs what happened here, (info from a  UK made TV show on Lifestyle channel about this the other day - "The Truth About Property")

* In the UK, mortgage interest rates continued to rise, even as official rates came down (due to credit freeze, rise in risk premium attached to housing lending). In AU mortgage rates have come down almost inline with official interest rate reductions.

* In the UK, Credit standards significantly tightened and number of mortgages/providers massively reduced. In AU this occurred to a small extent, via the demise of and reduction in market share for non bank lenders, but to nowhere the same extent as in the UK. Additionally here in AU it seems the big four have simply picked up the extra volume.

* As the UK market fell, FHB numbers also fell dramatically. In AU, through the current period of relatively small price falls, FHB numbers are increasing dramatically - boosted by government subsidy (grant boost etc), lowering interest rates, but clearly and most importantly, *actual availability of credit!*.

* In the UK, the default rate has risen significantly in the past 12-18 months (though nowhere near the US level!). In AU, the default rate has fallen in the past 12 months.

* In the UK there have been some serious bank failures/issues, bank runs etc (Black Rock, RBS), and talk of nationalisation of the entire sector to resolve the crisis. In AU our banks are still posting multi-billion $$ profits even as we write.

The above demonstrates why the Australian market will hold up much better than the UK (and of course the US). It really comes down to whether we are just going to have an economic downturn triggered by the global banking/financial crisis, or whether we still have our own "systemic banking crisis" in store. 

IMO, all the evidence so far seems to suggest we have dodged the latter bullet, meaning our house prices are not going to crash - and as we come out the other side of the economic downturn they will continue to grow as they historically have. Although to be fair I don't think the rate of price growth will be as great as in the past 10-15 years - personally I am expecting 15-20 years before we see the next "doubling" of median prices, but with more differentiation between high growth and lower growth areas. I also expect rents/yields to move higher than the last 10-15 year average. Future inflation will be the major factor that could shift this time frame....

Cheers,

Beej


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## Beej (4 February 2009)

PS - an interesting little audio clip plus slide show from Ross Gittins of the SMH talking about whether now is the "right" time (or not) to lock in interest rates, or jump in (or not) if you are a FHB: 

http://www.smh.com.au/interactive/2009/business/ross-gittins-mortgage-advice/index.html

He provides some pretty realistic and sensible views IMO.

Cheers,

Beej


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## lioness (4 February 2009)

theasxgorilla said:


> Thought I'd post this one up.  Note: no "Australia" in the category of "systemic" banking crisis.




Many thanks, this is a great chart and very good info gorilla.

I am dumping one rental property at the moment. I may just get out in time!!


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## prawn_86 (4 February 2009)

lioness said:


> Many thanks, this is a great chart and very good info gorilla.
> 
> I am dumping one rental property at the moment. I may just get out in time!!




Weren't you just looking at buying 5 properties? Or do i have you confused with another member?


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## lioness (4 February 2009)

prawn_86 said:


> Weren't you just looking at buying 5 properties? Or do i have you confused with another member?




Yes prawn, that is right, I admit it. I have just completed extensive research on property trend and economic links and have realised it's best to move to cash.

I have a high paying job and no debt after dumping this, but that's not the point. I don't want that debt risk any more when I will not get any capital growth for 5 years.

I intend to buy again but with 50% deposits.


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## prawn_86 (4 February 2009)

lioness said:


> Yes prawn, that is right, I admit it. I have just completed extensive research on property trend and economic links and have realised it's best to move to cash.
> 
> I have a high paying job and no debt after dumping this, but that's not the point. I don't want that debt risk any more when I will not get any capital growth for 5 years.
> 
> I intend to buy again but with 50% deposits.




Ok thats cool. Good to see you have done your research.

My partner and I will buy a PPOR (our first) 1. when i get a job after uni and 2. when the deposit we have saved is enough to make the property cashlow +ve if it were being rented.


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## lioness (4 February 2009)

prawn_86 said:


> Ok thats cool. Good to see you have done your research.
> 
> My partner and I will buy a PPOR (our first) 1. when i get a job after uni and 2. when the deposit we have saved is enough to make the property cashlow +ve if it were being rented.




I wouldn't rush, you will have years to get a bargain.


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## gfresh (4 February 2009)

Beej said:


> * In the UK, mortgage interest rates continued to rise, even as official rates came down (due to credit freeze, rise in risk premium attached to housing lending). In AU mortgage rates have come down almost inline with official interest rate reductions.




Already our banks are severely cutting *commercial* lending significantly, to the point where the Government has had to step in. There is no real reason they would not do so for retail bar government pressure. They may be well pressuring the banks to take it easier on retail lending, but better hope they can continue doing so. 



Beej said:


> * In the UK, Credit standards significantly tightened and number of mortgages/providers massively reduced. In AU this occurred to a small extent, via the demise of and reduction in market share for non bank lenders, but to nowhere the same extent as in the UK. Additionally here in AU it seems the big four have simply picked up the extra volume.




We've lost many non-bank lenders, and so have they - moot point. Demand for non-bank lenders has fallen off a cliff, as per ABS stats posted here a while back. Well borrowers have gone for our main 4, simply as they are still borrowing, although in reduced numbers. In the UK they are in the midst of a nasty recession and plunging house prices, maybe we are only a few months away from one?



> * As the UK market fell, FHB numbers also fell dramatically. In AU, through the current period of relatively small price falls, FHB numbers are increasing dramatically - boosted by government subsidy (grant boost etc), lowering interest rates, but clearly and most importantly, *actual availability of credit!*.




I know you made a point of it, but ~25% increase in FHB is still not a massive number of buyers. Remember, 25% increase on 20% is only another 5%. It is better than nothing, but properties under $500k and FHB's are not the entire market, as you would well know.

In fact, it seems they are only stimulus keeping the market alive. Post June 30th.. what happens then? Low interest rates are not the only factor now when buyers are considering taking on large debt. 

Plenty of evidence amongst the housing investment forums, that lo-doc is near impossible to come by, and loans for "just one more" investment property are being refused. I wouldn't say it's anywhere near the free credit of 12 months ago, and likely to become worse as we actually enter recession. 



> * In the UK, the default rate has risen significantly in the past 12-18 months (though nowhere near the US level!). In AU, the default rate has fallen in the past 12 months.




Possibly, having the lowest rates since the 60's probably helps.. Although number of bankruptcy here are at the highest point since last recession, and we are not even *in* recession supposedly. Lot of other debt out there, other than simply mortgage debt, and credit card rates, personal loan rates, etc not coming down that much. 



> * In the UK there have been some serious bank failures/issues, bank runs etc (Black Rock, RBS), and talk of nationalisation of the entire sector to resolve the crisis. In AU our banks are still posting multi-billion $$ profits even as we write.




Bank runs and forced mergers locally were only *days away* back when all the overseas banks were collapsing late last year. There was only *one thing* that saved our banks from that situation, and that was the Government deposit guarantee coming in. All Australian's should thank their lucky stars, we were very very close to the US and UK situation with our banks. 



			
				beej said:
			
		

> IMO, all the evidence so far seems to suggest we have dodged the latter bullet, meaning our house prices are not going to crash - and as we come out the other side of the economic downturn they will continue to grow as they historically have. Although to be fair I don't think the rate of price growth will be as great as in the past 10-15 years - personally I am expecting 15-20 years before we see the next "doubling" of median prices, but with more differentiation between high growth and lower growth areas. I also expect rents/yields to move higher than the last 10-15 year average. Future inflation will be the major factor that could shift this time frame....




Some markets may hold up okay, but some are going to still get punished. Stats already show 10% falls for Melbourne, Perth and the Goldcoast, which is a large number when dealing with leverage. And that was only 2008. 

Buying a PPOR is probably a great time with low rates, as you find what you like and you live in it, and appreciation is not so important.. but for investment the numbers don't seem to stack up in most areas without capital growth, and such ****ty yields of 4-6%. So prices either need to come down, or rents need to go up. Rent rises will continue, but during a recession cannot be endless. Investors are more likely to be the ones driving any future "boom", and it's just not there right now. 

Apparently in the early 90's there was positive yield properties "everywhere" (not my words, but older investors), which probably led to the market holding up fairly well. But conditions then were not as now, it was not a worldwide credit crunch, where credit for possibly a decade will not be easy to come by as it once was. 

Goldcoast on the precipice right now it seems. Maybe something will come along and pull it out, but at the moment, the rentals/number for sale, and those willing to purchase right now on the GC is slipping into a very dark place. Other areas throughout Australia like that as well, just on that edge... too many rentals, not enough demand, what happens? Most cannot afford to hold a property for months with *no return*

People putting places up for rental, simply as they cannot sell the property and are "hoping" for better times, not really by choice, is *not* the signs of a healthy market. This is happening in many suburbs in QLD.


----------



## CamKawa (4 February 2009)

Sorry to rain on the back patting permabull frenzy here but the ABS has just released the last building approval figures for December 2008. I'm afraid to say they aren't going up, but I'm sure a small detail like this won't hold a good permabull down.

Dec 07 to Dec 08 approvals fell -30.1%. Where are all the immigrants?






source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0?OpenDocument


----------



## knocker (4 February 2009)

CamKawa said:


> Sorry to rain on the back patting permabull frenzy here but the ABS has just released the last building approval figures for December 2008. I'm afraid to say they aren't going up, but I'm sure a small detail like this won't hold a good permabull down.
> 
> Dec 07 to Dec 08 approvals fell -30.1%. Where are all the immigrants?
> 
> ...




Where are all the immigrants? You mean the "lets get rich quick crew"?
Well lets just say they have hard rubbish collection in my area, and I often see then foraging through other peoples refuse for rags and other odieties.

Too bad hey.


----------



## Beej (4 February 2009)

gfresh said:
			
		

> Buying a PPOR is probably a great time with low rates, as you find what you like and you live in it, and appreciation is not so important.. but for investment the numbers don't seem to stack up in most areas without capital growth, and such ****ty yields of 4-6%. So prices either need to come down, or rents need to go up. Rent rises will continue, but during a recession cannot be endless. Investors are more likely to be the ones driving any future "boom", and it's just not there right now.




I agree with you on these points. Due to the uncertainty late last year I sold my previous PPOR and one investment property, and combined the proceeds to buy a "better" PPOR. I'll be sitting tight on the PPOR front for a while now (hopefully 10-20 years!) and enjoy what we have, which is actually my wife's "dream house", in most respects (happy wife = happy life! ).

As far as further property investment goes, I'm still sitting on the side-lines for many of the reasons you state, but keeping close tabs on the market (for sale, prices, rents, vacancy) in areas I am interested in. My aim for any investment in the current environment would be to purchase in an exclusive/quality area, be cash-flow positive from day 1 and lock that in with a long term fixed interest rate.




CamKawa said:


> Sorry to rain on the back patting permabull frenzy here but the ABS has just released the last building approval figures for December 2008. I'm afraid to say they aren't going up, but I'm sure a small detail like this won't hold a good permabull down.
> 
> Dec 07 to Dec 08 approvals fell -30.1%. Where are all the immigrants?
> 
> ...




Why do think falling new dwelling approvals = falling prices?? Can't you see the seeds this is sewing re reduced housing supply into the future?

Oh and PS: Don't forget the government just announced they are going to build 20,000 new houses to help avoid a future housing crisis due to the drop off in new dwelling construction....

Beej


----------



## knocker (4 February 2009)

Beej said:


> Why do think falling new dwelling approvals = falling prices?? Can't you see the seeds this is sewing re reduced housing supply into the future?
> 
> Oh and PS: Don't forget the government just announced they are going to build 20,000 new houses to help avoid a future housing crisis due to the drop off in new dwelling construction....
> 
> Beej




lol seem to recall in the great depression, the government made lots of roads. So what is your point dude? make more home for societies burdens?


----------



## investorpaul (4 February 2009)

lioness said:


> Yes prawn, that is right, I admit it. I have just completed extensive research on property trend and economic links and have realised it's best to move to cash.
> 
> I have a high paying job and no debt after dumping this, but that's not the point. I don't want that debt risk any more when I will not get any capital growth for 5 years.
> 
> I intend to buy again but with 50% deposits.




If you dont mind what cities did your research cover and what were the key points you found?

I hold the view that property prices will drop at least 10%, maybe more. It is hard to say at this time due to the uncertainty in almost every sector of the economy. Your research may shed more light on that though?

I like a few others in here will be looking at buying a home in the next few years, but for now I am saving, trading and waiting.


----------



## knocker (4 February 2009)

investorpaul said:


> If you dont mind what cities did your research cover and what were the key points you found?
> 
> I hold the view that property prices will drop at least 10%, maybe more. It is hard to say at this time due to the uncertainty in almost every sector of the economy. Your research may shed more light on that though?
> 
> I like a few others in here will be looking at buying a home in the next few years, but for now I am saving, trading and waiting.




Well good luck. If you are not already in property then not much prospect for some years if ever. But do not fret ok. As someone already pointed out, the government is going A over T to make sure everyone will have a home to live in ROFLMAO


----------



## CamKawa (4 February 2009)

knocker said:


> Where are all the immigrants? You mean the "lets get rich quick crew"?



All the permabulls could say throughout 2008 was immigration this, immigration that... Looks like the days of becomming a millionare by ripping up the carpet and polishing the floor boards are over.


----------



## Trevor_S (4 February 2009)

CamKawa said:


> Sorry to rain on the back patting permabull frenzy here but the ABS has just released the last building approval figures for December 2008. I'm afraid to say they aren't going up, but I'm sure a small detail like this won't hold a good permabull down.




Wouldn't that be bullish for residential property ? So few properties being built, many, many more will be needed, therefore supply goes down, prices go up ?



investorpaul said:


> I hold the view that property prices will drop at least 10%, maybe more. It is hard to say at this




It's actually hard to even know what direction the property market is moving.   The medians (even that is arguably not enough info to be indicative of housing prices as the median can be skewed for all sorts of reasons) produced seem to vary wildly, depending on who complies them.

As a bear, the more research I do the more I feel comfortable with beej's position and I have been bearish on property for 25 years, the returns never made sense to me   Although I see no issue with waiting 12 months to confirm my views and then reassess if I was wrong. I have one IP I have owned since the late '90's and others that were sold 2, 4 and 6 years ago respectively, so I am not immune to investing in property, just wary of it.


----------



## Dowdy (5 February 2009)

You hear the news story where they are going to build a big apartment block somewhere for the homeless. It being developed with the Grollo's.

Well, all i can say is that it will probably be trashed within a few months and turned into a crack/***** house


----------



## MR. (6 February 2009)

investorpaul said:


> I hold the view that property prices will drop at least 10%, maybe more.




If property drops by 10%   
some 300,000 Australian home owners will have negative equity.


----------



## knocker (6 February 2009)

MR. said:


> If property drops by 10%
> some 300,000 Australian home owners will have negative equity.




Life is tough


----------



## Dowdy (6 February 2009)

Here's an interesting graph

Looks at the bust phase in housing price cycles surrounding banking crises, including the current episode in the US and a number of other countries now experiencing banking crises.

Notably, the duration of housing price declines is quite long-lived, averaging roughly six years. Even excluding the extraordinary experience of Japan (with its 17 consecutive years of price declines), the average remains over five years.

Look at it as a sign of things to come in Australia or you can just ignore it and keep thinking it's paradise


----------



## Beej (7 February 2009)

Dowdy - that graph was already posted and discussed at length a few days ago (see https://www.aussiestockforums.com/forums/showthread.php?p=394010#post394010 and the following discussion).

Bottom line - interesting data, but Australia is not currently suffering from a "systemic banking crisis" like the US and UK are - That bullet seems to have  been dodged, and it's why their markets have crashed and ours hasn't. PHEW!

Cheers,

Beej


----------



## knocker (7 February 2009)

Beej said:


> Dowdy - that graph was already posted and discussed at length a few days ago (see https://www.aussiestockforums.com/forums/showthread.php?p=394010#post394010 and the following discussion).
> 
> Bottom line - interesting data, but Australia is not currently suffering from a "systemic banking crisis" like the US and UK are - That bullet seems to have  been dodged, and it's why their markets have crashed and ours hasn't. PHEW!
> 
> ...




Really Beej? http://business.theage.com.au/business/bad-debts-spiral-amid-shockwave-fears-20090206-800b.html

Doesn't sound too promising to me. But then spruiking always distorts the facts hey.


----------



## Beej (7 February 2009)

knocker said:


> Really Beej? http://business.theage.com.au/business/bad-debts-spiral-amid-shockwave-fears-20090206-800b.html
> 
> Doesn't sound too promising to me. But then spruiking always distorts the facts hey.




You need to research the difference between a "systemic banking crisis" and an increase in loan defaults/bad debts/bad debt provisions etc due to an economic downturn (that happens all time). The two are FAR from the same thing. 

I'll give you a clue - what profits did NAB and CBA just announce for example? The figures are in the very article you posted. If one (in fact it would really have to be more than one) of the big four goes under/insolvent or has to be nationalised by the government then you might have a case. Until then no cigar, no matter how hard you keep "spruiking" your property crash fantasy in the meantime!

On another note - more evidence of significantly increased FHB activity in NSW: (some interesting exerts below)


> *First-time buyers take advantage of grants*
> 
> FIRST-HOME owners are buying property in greater numbers than for the past six years after the recent boost in Government grants.
> 
> ...




from http://www.smh.com.au/news/national...ntage-of-grants/2009/02/06/1233423496702.html

If we were in the middle of a "systemic banking crisis" then there is NO WAY all those FHBs would be able to get loans. QED. The longer approval times may be due to the banks being more cautious/careful - but equally might just be because the are so busy right now!

Beej


----------



## gfresh (7 February 2009)

I probably can't post the entire newsletter for copyright reasons, however small snippet:



> As can be seen from the graphs, the top 10% of properties based on price have shown the largest decline in median prices over the last year. The analysis is based on RP Data’s stratified median house price index which divides each market into ten ‘strata’ allowing an analysis of different price segments in the market.


----------



## kincella (7 February 2009)

interesting article about how the low interest rates are attracting a lot of buyers......
and this piece, about individual homes are not necessarily lower in price...its just that they are selling a stack of lower priced homes...which affects the median values for a suburb (traps for players to be aware of)

***The current declines are due to a change in the composition of sales, and not individual houses losing value. 

About half of the house sales across Brisbane during the June quarter were for less than $500,000. In the September quarter, 62percent of Brisbane sales brought less than $500,000 and Matusik's preliminary data suggests close to 70 per cent of sales in the last three months of last year were for less than $500,000. 

He says the median price must fall under these circumstances


http://www.theaustralian.news.com.au/business/story/0,28124,25017182-25658,00.html


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## kincella (7 February 2009)

I posted this on another site.....but the article confirms my own research in the suburbs I watch......there is a lot of activity out there
...........................................................................................

Garth Makowski, of Dougmal Real Estate at Campbelltown in Sydney's southwestern suburbs, said inquiries had nearly doubled to about 600 a month, while the time it took to sell a property had fallen from up to 100 days to as little as one week. 

"That happened for us back in October. As soon as the grants came in, then bang, it just went through the roof," Mr Makowski said yesterday. 
....................................
and graphs I saw yesterday showed most loans in sydneys west past 5 years were done by the brokers.....not the banks....there were stories the brokers were glossing up the applications....the people could not speak english, let alone read it...and had no jobs

http://www.theaustralian.news.com.au/business/story/0,28124,25019266-25658,00.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.


----------



## Beej (7 February 2009)

Interesting graph gfresh - thanks for posting!

FYI - one thing that data shows, is that if you sell a cheaper house (PPOR) now, and upgrade to a more expensive one, the difference in price will be less today than it was a year ago - this is exactly why I chose to upgrade my PPOR at the end of last year in this market.

IMO those expensive suburbs will in the future rise just as strongly  as they are falling right now (probably even more so), due to their desirability/exclusivity. In Sydney in particular that top 10% is some pretty desirable, special property!

Cheers,

Beej


----------



## knocker (7 February 2009)

Beej said:


> You need to research the difference between a "systemic banking crisis" and an increase in loan defaults/bad debts/bad debt provisions etc due to an economic downturn (that happens all time). The two are FAR from the same thing.
> 
> I'll give you a clue - what profits did NAB and CBA just announce for example? The figures are in the very article you posted. If one (in fact it would really have to be more than one) of the big four goes under/insolvent or has to be nationalised by the government then you might have a case. Until then no cigar, no matter how hard you keep "spruiking" your property crash fantasy in the meantime!
> 
> ...




Well getting a loan is one thing, being able to service that loan is yet another. Good luck with your "non systemic" banking cisis. lol


----------



## nomore4s (7 February 2009)

Beej said:


> On another note - more evidence of significantly increased FHB activity in NSW: (some interesting exerts below)
> 
> from http://www.smh.com.au/news/national...ntage-of-grants/2009/02/06/1233423496702.html
> 
> ...




Beej, do you actually think this is a good thing though?

Maybe we are setting ourselves up for some problems in the future with the Government trying to prop up the property market at all costs?

If all these FHB are now buying due to the grants and low interest rates the thing that worries me is can these people really afford to buy? What happens when interest rates rise again, if they double can these FHB afford to keep up the payments? What happens if/when higher unemployment kicks in?

With our economy only really starting to feel the effects from what is happening on a global scale I think we are in real danger of creating a larger problem for ourselves. If we continue to see unemployment rise (and we will) and then see inflation return causing rates to rise again we could start to see alot of problems imo.

The rest of the world appears to be in the middle of a massive unwinding of credit and is paying the price in a big way. Yet here we are in Aust with very high household debt levels and high debt to income ratios but are still being encouraged to spend more money and take on more debt, doing everything possible to keep the bubble inflated. Are we totally stupid?

There will come a time when we do have to repay our debt and pay for our excesses like the rest of the world is now doing, if we think this will never happen in Aust we are delusional. We could very well find ourselves in freefall while the rest of the world has bottomed out due to our refusal to take our medicine now.
As I have stated before, I think we are in a unique position here in Aust due to the fact we have seen this play out overseas before really feeling the effects here due in part to our isolation and maybe the China factor but instead of preparing for the storm we appear to think we are going to be immune because we have been so far. Our Government seems intent on wasting all its reserves early on bullsh!t measures that will last for about 2min but will keep them popular with the general voting public. I wonder how popular they will be when the **** really hits the fan and the $950 handout is long ago spent and forgotten and the well is now dry.

Rant over


----------



## nomore4s (7 February 2009)

Beej said:


> In Sydney in particular that top 10% is some pretty desirable, special property!




lol, this maybe true but what % of the population will ever be able to own these properties? 2%? 5%?

The people that can afford these types of properties are in a postion to ride out the recession with a fair bit more easy then your general Joe blow.


----------



## hotbmw (7 February 2009)

i was very bearish on property some months ago but i dont think we will be as affected as overseas. it seems govt will do all to prop things up and we wont have the price correction/fall we should of had.

2009 will be a write off and i would expect a further 5 to 15% lower from here depending on the area. so a 10% fall on average. which isnt too bad on a world scale.

Late 2009, early 2010 world economies will stabilise/recover. we will still have historically low interest rates by early 2010 and together with the better economic outlook things will turn bullish on everything & prices will start to increase on everything again. 

The media will talk about how property is a bargain at current prices, we have an under supply here in oz bla bla

High Inflation in 2010+ will increase the cost of everything as it did in the 80's and 90's.

i reckon if u can buy at the end of the year and lock in a rate of 5.5% for 5 yrs your laughing by the time your fixed rate loan is up.

thoughts?


----------



## CamKawa (7 February 2009)

I wonder what the auction attendance in Melbourne is like this arvo.


----------



## awg (7 February 2009)

I was looking at buying a property at the lower end of the price scale recently, in the coastal Newcastle area.

What I found was the good cheap ones, are getting snapped up very quick.

everything else is languishing.

FBH scheme according to the agents


----------



## hotbmw (7 February 2009)

awg,

the upper and mid range is affected mostly now.
i reckon by mid year once more jobs are lost the lower end will be affected also (for the short term - 6 mths or so).


----------



## knocker (7 February 2009)

hotbmw said:


> i was very bearish on property some months ago but i dont think we will be as affected as overseas. it seems govt will do all to prop things up and we wont have the price correction/fall we should of had.
> 
> 2009 will be a write off and i would expect a further 5 to 15% lower from here depending on the area. so a 10% fall on average. which isnt too bad on a world scale.
> 
> ...




Well five seems to be a mgic number for you. How about wait five years then buy a house at 55% discount and lock in a rate of 5.5% for 5 years?


----------



## hotbmw (7 February 2009)

knocker said:


> Well five seems to be a mgic number for you. How about wait five years then buy a house at 55% discount and lock in a rate of 5.5% for 5 years?




lol
your joking right?
lock in a 5yr rate for 5.5% in 5 yrs??????????????

more like a 15% rate

inflation is coming my friend. u know what that means to interest rates and asset prices..........


----------



## knocker (7 February 2009)

hotbmw said:


> lol
> your joking right?
> lock in a 5yr rate for 5.5% in 5 yrs??????????????
> 
> ...




Really? So why buy now? If people are struggling to service debt now imagine what it will be like in five years? The veritable je*ish fire sale.


----------



## hotbmw (7 February 2009)

knocker said:


> Really? So why buy now? If people are struggling to service debt now imagine what it will be like in five years? The veritable je*ish fire sale.




with all this printing of $$$$$ our salaries will be a lot higher in 6 yrs time (6 yrs cos i said to buy a home in a year & hold 5 yrs)

back in the 80's when annual incomes were lets say $4000 a year & if u bought a house for $20,000 with an $18,000 loan, with inflation at 15% what did it do to incomes and asset prices? ur debt was wiped out by inflation. ur left with wages doubling and asset prices doubling and an 18k loan.

asset prices will rise with all the actions taking place now by govts around the world.

what do others think about high inflation?
do u agree incomes rise and asset prices along with it?


----------



## hotbmw (7 February 2009)

knocker said:


> Really? So why buy now? If people are struggling to service debt now imagine what it will be like in five years? The veritable je*ish fire sale.




and now over the next 12 months, buy physical gold and silver when opportunities arise (a bit too pricey for me now) but i did buy both (mainly silver) some mths ago. as well as oil stocks on the cheap.

will be a nice down payment on ur mortgage in a year or 2


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## Trevor_S (7 February 2009)

hotbmw said:


> back in the 80's when annual incomes were lets say $4000 a year & if u bought a house for $20,000 with an $18,000 loan,




What ... Where did you get those numbers ?


----------



## Julia (7 February 2009)

nomore4s said:


> Beej, do you actually think this is a good thing though?
> 
> Maybe we are setting ourselves up for some problems in the future with the Government trying to prop up the property market at all costs?
> 
> ...



No rant, Nomore4S but rather a very lucid summary of the situation.
I'd like your comments to be put to K. Rudd for his answer.




Trevor_S said:


> What ... Where did you get those numbers ?



I'm wondering the same.  They look very sus to me.


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## xoa (7 February 2009)

Another month, another encouraging drop in house prices. 
	

	
	
		
		

		
			





Prices are dropping all over Australia but the situation is particularly encouraging in my newly adopted home town of Townsville.

Speculators' pain is ordinary people's gain.


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## Glen48 (7 February 2009)

XOA
Some bad news for you Townsville House prices went up by 9.3% according to today's _Courier Mail_ which is good because 100 Ponzi victims have placed their homes on the market with more to come....


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## Beej (8 February 2009)

nomore4s said:


> Beej, do you actually think this is a good thing though?
> 
> Maybe we are setting ourselves up for some problems in the future with the Government trying to prop up the property market at all costs?
> 
> If all these FHB are now buying due to the grants and low interest rates the thing that worries me is can these people really afford to buy? What happens when interest rates rise again, if they double can these FHB afford to keep up the payments? What happens if/when higher unemployment kicks in?




Good question. I guess my counter question is; would things be worse for those folks if house prices did collapse, or better? 

I know there are many here (especially the young folks) who are gleeful at the prospect of a large fall in house prices - but that's only because they see that as giving them the opportunity to buy in the future without what they consider to be a too large debt burden. The problem is, the economic conditions that are required to actually bring about such a price collapse would IMO mean that most of those same people would be screwed anyway (no job, income, savings wiped out, bankrupt government, economic opportunity down the toilet etc etc). I really do think that many are blind to the benefits that flow from a healthy growing economy, even if one of the consequences of that is higher house prices. 

Bottom line - as long as current FHBs have a decent deposit saved, are borrowing well within their means, and have assessed their job security and thought about contingencies etc, then I say good on them and I am certain buying now is the right decision for them. So yes it is a "good thing" with those caveats. These folks are setting themselves up for the long term financially, and buying at an historically opportune time. At the same time the conditions and policy bringing about this are also helping to stabalise the housing market. In real terms prices will still come down - slowly - but we avoid the total crash scenario and all the other bad things that would come along with that.

Case in point - this article suggests that in Sydney buying is for the moment cheaper than renting: http://www.smh.com.au/news/national...g-property-risk/2009/02/07/1233423560064.html



> With our economy only really starting to feel the effects from what is happening on a global scale I think we are in real danger of creating a larger problem for ourselves. If we continue to see unemployment rise (and we will) and then see inflation return causing rates to rise again we could start to see alot of problems imo.




This is possible, however, based on past experience the inflation genie re your housing debt is well covered by the "inflationary" (not real) wage increases that come along as well. Worse to be paying increasing rent and have cash invested in the bank losing real value in this environment than to own an inflationary asset like a house with a corresponding mortgage based on "yesterdays" prices.



> The rest of the world appears to be in the middle of a massive unwinding of credit and is paying the price in a big way. Yet here we are in Aust with very high household debt levels and high debt to income ratios but are still being encouraged to spend more money and take on more debt, doing everything possible to keep the bubble inflated. Are we totally stupid?




I'm not sure we are being asked to take on more debt?? Regardless, a few FHBs borrowing money to buy a house is not a bad thing per se - that money ultimately finds it's way back into the economy somewhere else, and in the meantime instead of paying rent the new owner now pays down that debt over time? It's one of the mechanisms by which money is injected into the system.

I don't buy some of the thinking around here about why parts of the world are having the credit/debt unwinding problems they are. In my mind, there is nothing actually wrong with credit/debt - it's the lifeblood of capitalism. In the past, credit was harder to get for "ordinary" people, making the system more unfair as it favours those with access to the capital. Now, credit is much more freely available, and over-all I think this has been a good thing - it has resulted in much improved living standards for everyone. I'd hate to see us go back to the way it use to be in the 50s/60s - that would be a backward step IMO.

Problems arise for an ECONOMY when a large amount of credit has been provided that has little to no chance of ever being repaid! This is made worse if the impact of this is delayed due to complex CDO type packaging and honeymoon repayment rates etc etc as in the US sub-prime example. Credit created that was never going to be  repaid is the disaster that has triggered the current global issues. The "unwinding" being talked about is only occurring due to the resulting lack of confidence that the whole initial crisis has brought about as far as knowing who it is that has actually lost all the money that is now never going to be repaid (and therefore never really existed in the first place, or rather no longer exists now, wherever it originally came from).



> There will come a time when we do have to repay our debt and pay for our excesses like the rest of the world is now doing, if we think this will never happen in Aust we are delusional. We could very well find ourselves in freefall while the rest of the world has bottomed out due to our refusal to take our medicine now.
> As I have stated before, I think we are in a unique position here in Aust due to the fact we have seen this play out overseas before really feeling the effects here due in part to our isolation and maybe the China factor but instead of preparing for the storm we appear to think we are going to be immune because we have been so far. Our Government seems intent on wasting all its reserves early on bullsh!t measures that will last for about 2min but will keep them popular with the general voting public. I wonder how popular they will be when the **** really hits the fan and the $950 handout is long ago spent and forgotten and the well is now dry.
> 
> Rant over




On this part all I will say is I think you are under-estimating the impact of the sort of money being talked about, and taking a bit of a partisan political stance. Remember $10B represents 1% of total annual GDP! If the sort of money being talked about ($40B + all the rest) finds it's way into the economy, it represents a SIGNIFICANT boost to GDP that can not do anything but provide a major cushioning effect to what would have otherwise occurred. This topic is for further discussion on another thread though!

Thanks for an interesting and thought provoking contribution to the thread!

Cheers,

Beej


----------



## sinner (8 February 2009)

Beej said:


> On this part all I will say is I think you are under-estimating the impact of the sort of money being talked about, and taking a bit of a partisan political stance. Remember $10B represents 1% of total annual GDP! If the sort of money being talked about ($40B + all the rest) finds it's way into the economy, it represents a SIGNIFICANT boost to GDP that can not do anything but provide a major cushioning effect to what would have otherwise occurred. This topic is for further discussion on another thread though!
> 
> Thanks for an interesting and thought provoking contribution to the thread!
> 
> ...




Unfortunately I disagree on this point.

Australia needs to generate 4% of GDP per annum to simply maintain its current household debt levels. I mentioned this as one of several points which required addressing by the housing bulls in the "rising for years" thread but none bothered to reply. 

Inflating $40bn (4% of GDP, coincidence I think not) through debt creation and pumping it into the economy is a shell game. Especially when you consider it only moves money from household debt and adds to the percentile required to maintain our net foreign debt levels.

Our household debt:GDP ratio is going to come down one way or another. This I can guarantee, it is inevitable. We have one of the worlds highest debt:GDP ratios. Our house prices are inflated in majority through household debt but also net foreign debt, both of which I expect to contract rapidly. As loan serviceability decreases due to rising unemployment and a lack of foreign support for our debt, I expect house prices to fall significantly.

Beej and kincella both seem to love accusing anyone who is bearish on housing of being jealous they "missed the boat" or pissed off they "picked shares instead", and this is idiocy. I was bearish on the share market from 2005 and have no issues watching people stick their heads up their **** after I warn them. I am not jealous of anyone who longed the SP500 in 2005 and made money while I didn't, just as I am not jealous of robots St Kilda property which I am sure all 3 of you think will be going another +14% this year


----------



## Beej (8 February 2009)

sinner said:


> Beej and kincella both seem to love accusing anyone who is bearish on housing of being jealous they "missed the boat" or pissed off they "picked shares instead", and this is idiocy.




Just to defend myself here - I don't think "anyone" who is bearish on property is "jealous" or missed the boat etc, and it's incorrect to suggest I have taken this stance. There are certainly some here who do fit into this category though - you have to admit that at least! Just look for all the smart-ass, bitter, and attacking bear posts and you will easily identify the posters that I am thinking of.

PS: I am invested in both property and shares, and don't say by any means that "property is better" etc etc. My motivation here is purely to try and counter some of the prevailing, and wrong IMO, views about inevitable 40%+ plus falls etc that might discourage many people who would be better off owning their PPOR at least from doing so. I've heard all this stuff before over 25 years and seen the differences that have resulted in the personal financial position of many people I know - so just trying to let others learn from my own experience, and point out the opportunities that exist right now.

Gotta go to a BBQ now - I'll respond to your other points later (I'll dig up your old posts to).

Cheers,

Beej


----------



## hotbmw (8 February 2009)

Trevor_S said:


> What ... Where did you get those numbers ?




my dad was a factory worker and unless his figures are off a bit he was on around 4-5k a year in the late 70's and bought a normal 3 bedroom house in newcastle for under $20,000

we went through a period of high inflation in the 70's and 8-'s and i think starting by late 2010 we will have years of high inflation again and this will have a similar effect as in the 70's/80's. cost of living will rise, wages and assets also.


----------



## Pommiegranite (8 February 2009)

Beej said:


> *I've heard all this stuff before over 25 years* and seen the differences that have resulted in the personal financial position of many people I know - so just trying to let others learn from my own experience, and point out the opportunities that exist right now.
> 
> 
> Beej




Beej, I'm afraid 25 years of experience is not nearly enough for a once in a lifetime economic downturn. I honestly hope, for your sake, that you are not relying on just your experience.


----------



## kincella (8 February 2009)

Sinner said........Beej and kincella both seem to love accusing anyone who is bearish on housing of being jealous they "missed the boat" or pissed off they "picked shares instead", and this is idiocy.
...............................................................................

Where have I ever said anything remotely like what you have accused me of.????
I know I have never said anything like that...its just not in my vocabulary.....

I am positive on property nothing else......and I dont like being accused of something I have not done.....
SO I demand an apology from sinner......


----------



## Trevor_S (8 February 2009)

hotbmw said:


> my dad was a factory worker and unless his figures are off a bit he was on around 4-5k a year in the late 70's and bought a normal 3 bedroom house in newcastle for under $20,000




I can't speak for you Dad but I had a job as a labourer in the early '80's (the time period you quote) so not exactly at the top of the wage pile, and I was on significantly more then that, so I guess, I call bull**** with those figures... 

I can't speak to the median price of housing at that time though.


----------



## lioness (8 February 2009)

kincella said:


> Sinner said........Beej and kincella both seem to love accusing anyone who is bearish on housing of being jealous they "missed the boat" or pissed off they "picked shares instead", and this is idiocy.
> ...............................................................................
> 
> Where have I ever said anything remotely like what you have accused me of.????
> ...




Demand an apology - get a life, sinner is writing good stuff here and is entitled to another view. Poo in the pot or get off.:flush:


----------



## singlefished (8 February 2009)

Beej said:


> Bottom line - as long as current FHBs have a decent deposit saved, are borrowing well within their means, and have assessed their job security and thought about contingencies etc, then I say good on them and I am certain buying now is the right decision for them. So yes it is a "good thing" with those caveats.




One addition to your list should also be the consideration of how other people in the same situation are likely to fare in the same recessionary environment. Not everybody will be able to service their debts (FHB's & existing OO/IP owners) if unemployment starts to rise and the impact across the board on real estate values would likely be detrimental. 




Beej said:


> These folks are setting themselves up for the long term financially, and buying at an historically opportune time. At the same time the conditions and policy bringing about this are also helping to stabalise the housing market. In real terms prices will still come down - slowly - but we avoid the total crash scenario and all the other bad things that would come along with that.




Again, unemployment is still rising and property prices are still (for the majority) slowly declining.... and we're still 6~24 months off the bottom of this downturn. Folks could be setting themselves up with a long term overpriced mortgage if the global economy fails to restart as governments around the world are hoping and asset values across the board will continue on their 1 year plus downtrend...

Bottom line - property values will not be trending up for some time so certainly no rush to get into the market at this stage. Better off saving and adding to your current deposit which will ultimately go a long way to reducing any mortgage that you may take out in the future. And in the meantime, the downtrend has shown no real signs reversing so the double whammy of further anticipated price falls combined with the larger saved deposit can only be good.


----------



## hotbmw (8 February 2009)

hotbmw said:


> my dad was a factory worker and unless his figures are off a bit he was on around 4-5k a year in the late 70's and bought a normal 3 bedroom house in newcastle for under $20,000
> 
> we went through a period of high inflation in the 70's and 8-'s and i think starting by late 2010 we will have years of high inflation again and this will have a similar effect as in the 70's/80's. cost of living will rise, wages and assets also.




ill ask him when i see him this arvo.
im sure im pretty close to the figures but i could be off a bit.
remember, sydney prices were/are more than newcastle.


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## nomore4s (8 February 2009)

Beej said:


> Good question. I guess my counter question is; would things be worse for those folks if house prices did collapse, or better?




Beej, I do agree if we see major falls across the board like in the US, alot of people will be in a worse position, that's generally what happens in major recessions.

If FHB have done the sums and can afford the repayments at a higher rate and can afford the houses and are just taking advantage of conditions - good on 'em. It's the ones who have jumped in purely because now they can afford it that worry me.

You have raised some very valid counter arguements and to be honest I don't have the time or ability to get into an in depth debate on some of the points raised.
I will admit that I'm factoring in the worst outcome but based on what we have seen overseas the flow on effect to Aust could be very bad, if it doesn't turn out that bad better for all of us. But we should be prepared.

My personal view is that the vast majority of the population have way too much debt and too little savings and the day is coming where that debt is to be repaid, there will be alot of people who struggle to continue to service this debt in the coming months imo. When banks are starting to admit there may be dividend cuts in the near future due to rising bad debt provisions and general economic conditions there are some serious problems on the way.

I agree with you about the easier access of debt being good for the economy but I feel we have gone too far the other way and have now abused it. Think of companies like CNP, CER, BNB, MFS, AFG, ABS etc, etc and our personal debts levels are no better. The problem now is there is no desire to work hard and save for anything, if you want something just go out and get it on credit - I personally know of plenty of people in this situation. It really is a false economy and we have now seen what happens when this false economy catches up with itself, it can't continue to grow without more debt and when credit dissappears the effect is devestating.


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## sinner (8 February 2009)

I have a couple of quotes, here is one by Beej:



> 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!




Of course Beej will say he mentioned "not all of course", meanwhile lambasting anyone who disagrees with him as one of these people.

We must be bitter.

There is also a post by kincella (damned if I can find it now) where I made some bearish comments on property and he claimed I sounded like I must have made some mistakes in the past and bitter now.

It's irrelevant now, I only brought it up to highlight that "most" (not all of course  ) property bears are not just bitter people who went long their life savings on the XAO in October.

Here are 3 charts by Steve Keen (admittedly from Oct 2008), can you say *bubble*?

The last chart is one I whipped up myself, it's a bit dodgy not adjusted or anything (the 100 for US and AUS data is 1987 but the 100 for UK data is 1993). For Australia we are using the ABS 8-capital weighted index, for the US we are using the SPCSUS National and for UK we are using the NationWide data. One datum is missing for Q4 08 SPCSUS but you can safely assume a drop.


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## Joe Blow (8 February 2009)

I'm just going to jump in here and remind people not to let this thread get too personal. Lets stick to discussing the topic at hand and not start running down others. Noticed a few posts a little further up the page had the potential to turn ugly.

I would like to point out that it's usually more constructive to ask someone to clarify their position on an issue rather than put words in their mouth. Nobody likes to have their views misrepresented so if you are unsure of what someone thinks, ask them to clarify rather than making an accusation.

This is one of the longest threads on ASF and it's good to read so many well articulated views but when things get personal the thread as a whole suffers. It's okay to disagree with people and not attack them in the process and sometimes, when you realise you are never going to agree with someone, sometimes the best thing you can do is to head off to another thread and have a discussion that is not going to be as frustrating.


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## kincella (8 February 2009)

quote from sinner....
Beej and kincella both seem to love accusing anyone who is bearish on housing of being jealous they "missed the boat" or pissed off they "picked shares instead", and this is idiocy.
.................................................. .............................
and now you admit you think I said....your qoute.....
There is also a post by kincella (damned if I can find it now) where I made some bearish comments on property and he claimed I sounded like I must have made some mistakes in the past and bitter now
.............................................................................................

there is no comparison.......between what you think was said....and your accusation today............
I know..because as previously stated....I do not use language like that....it is not part of my vocabulary.......


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## hotbmw (8 February 2009)

ok boys, here are the 100% figures, verified by my dad, and its even better than what i said initially.

in 1977 my dad bought a house in Waratah (5 mins drive from Newcastle beach) for $12,000.
he was earning $7000 a year with overtime in a factory.
In 1980 he bought a house in Elermore Vale for $26,000. Prices had doubled in 3 yrs.... wages almost also

so Trevor, how do these 100% accurate figures stack up for you???


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## Glen48 (8 February 2009)

House prices do nothing for years and then take of but over the long term say 70yrs they average about 3% PA. This credit bubble was the best chance for any home owner to make money in the last 60-70 yrs. BUT they had need to sold by now. Once the house prices start to drop it will be on for young and old.


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## Beej (8 February 2009)

Pommiegranite said:


> Beej, I'm afraid 25 years of experience is not nearly enough for a once in a lifetime economic downturn. I honestly hope, for your sake, that you are not relying on just your experience.




One thing I know is that during every recession I can recall - 80s, 90s, even dot com crash, was at the time touted as a "once in a lifetime/worse since great depression" downturn. I'm told by my dad that the same things were said during the early 70s oil shock and resulting downturn. So I guess I tend to take such extreme categorizations with a big grain of salt, and instead observe what is happening for myself.....

Relevant case in point - house prices - if you were to believe the headlines (and many of the extreme comments here) you would think the market was awful and prices really had totally crashed. Reality, after a massive increase in 2007, national median prices have pulled back 3.3% year/year, and in Sydney and Melbourne many lower priced suburbs recorded decent price growth through 2008, plus as we now know the government is fighting tooth and nail to put a floor under further falls, measures which seem to be working as far as the demonstrated increase in FHB activity that we now see.



sinner said:


> Unfortunately I disagree on this point.
> 
> Australia needs to generate 4% of GDP per annum to simply maintain its current household debt levels. I mentioned this as one of several points which required addressing by the housing bulls in the "rising for years" thread but none bothered to reply.
> 
> Inflating $40bn (4% of GDP, coincidence I think not) through debt creation and pumping it into the economy is a shell game. Especially when you consider it only moves money from household debt and adds to the percentile required to maintain our net foreign debt levels.




On this point - what exactly are you saying? Is it that 4% of our national GDP (ie approx $40B) is required to service the interest cost on the total residential mortgage value in the economy? 

I read your post on the other thread, and amongst some other points that I simply don't agree with (such as your negative opinion towards the concept of government going into deficit to provide fiscal stimulus to a slowing economy), I saw these two points:



> 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.




Re 2. - I don't think that ratio is climbing fast at all anymore is it? What's more the cost of servicing that debt is decreasing so I would expect we should see that ratio fall over the next couple of years.

Re 3. That sounds like the factor you were referring to in the post I am replying to here, but still can you clarify what you are saying there? I am guessing it is that 4% of our GDP has to "leak" o/s to service the foreign sourced component of residential debt - is that your point?

Cheers,

Beej


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## MrBurns (8 February 2009)

> One thing I know is that during every recession I can recall - 80s, 90s, even dot com crash, was at the time touted as a "once in a lifetime/worse since great depression" downturn. I'm told by my dad that the same things were said during the early 70s oil shock and resulting downturn. So I guess I tend to take such extreme categorizations with a big grain of salt, and instead observe what is happening for myself.....




Beej, I seriously think this is the big one, a friend of mine with "good" contacts has been saying for years that the US is a time bomb, well it's gone off.

And no matter what anyone says if the US goes heaven help us.


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## lioness (8 February 2009)

MrBurns said:


> Beej, I seriously think this is the big one, a friend of mine with "good" contacts has been saying for years that the US is a time bomb, well it's gone off.
> 
> And no matter what anyone says if the US goes heaven help us.




Agreed Burns, this is the big one, but don't tell anyone as we will end up getting 50-80% off house prices if you just be quiet.


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## MrBurns (8 February 2009)

lioness said:


> Agreed Burns, this is the big one, but don't tell anyone as we will end up getting 50-80% off house prices if you just be quiet.




Trouble is the banks wll have disappeared with our cash.


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## gfresh (8 February 2009)

How the lion has turned 

Here is a couple of spreadsheets I'm looking at indicating deflationary scenarios on "bad case" for properties purchased now.. One is for a 330k unit/apartment which rents for approximately $300/wk. This is Brisbane based on what prices that are quite common presently for both sale and rent prices. 

The second example assumes an entry level house at $400k, which presently rents for about $350/wk. 

Extra costs count in rates + body corp + 8% rental manager fee. For the house it is rates + rental management fee. Obviously these costs can vary by area, but within range. Negative gearing is not factored in. 

Both examples are small 10% deposit down. Interest rates are 6.3% which is close to what you can fix now for 3 years, or an average probably of what variable rates may be over the next 2-3 years. 

Green row is approximately where prices on a purely gross yield basis is cashflow neutral. Orange = negative equity position. Extra costs at that point in at under $100/wk to me is pretty piddly to hold a property. 

This assumes rent will stay constant. Thinking about things, I don't think rent will be coming down in the inner city or desirable areas anytime soon, and if so at worst maybe $10-$20/wk to keep them rented. 

Personally I think prices if they are to come down, will stabilise at CFN positions.. which for entry level may only be 15-20% fall from here. If we assume market has come down 5-10% already, that's 20-30% total.

Not sure how the numbers stack up for $500k+, I'm sure considerably higher risk of loses before cashflow neutral position.


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## CamKawa (9 February 2009)

Tonight on Four Corners Paul Barry looks at the financial crisis facing Australia. I think Australian property may get a fair mention.

Permabulls can watch re-runs of Hot Property instead.


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## kincella (9 February 2009)

house prices to drop 50-80% hahahahahahahaha

we need a humour thread...and thats where some of these posts should be
forget about serious discussion ........

you guys really crack me up....what are you smoking.or drinking...or what planet are you on.....who are you trying to kid......you are kidding yourselves...never heard anything more ridiculous

you will be waiting an awful long time......
by the time this thing is over...prices will be more expensive than they are...due to the inflation...hyperinflation bogey.....
govt printing money.....
but hey it makes for a really good laugh


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## hotbmw (9 February 2009)

Kincella, i think we might get another 10-15% lower which isnt the end of the world right?

but thats my best case scenario. there is no reason why we couldnt go another 30% lower.

dont discount this possibility mate.

50-80% is obviously not going to happen


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## kincella (9 February 2009)

hotbmw....not a chance...and I am talking about inner city homes and units...
prop I was looking at for someone....battler in regional town....probably worth 80 now listed at 95.....should been 120,000 before this mess....but there's a big drought out there and water is a worry....so its already down 30%....
if I had excess cash I would help out the battler....I think its a steal

other suburbs I watch...all the cheap places are gone...and they sold at a premium to what they were worth in an ordinary market.....

there is plenty of affordable stuff out there now.....its just not the prime real estate in the popular suburbs, or inner city

I wonder if you watch a particular suburb you are interested in ,,,on a regular say weekly basis ??? to check whats on the market, and the selling prices...
or are you just one of the many that believe all houses in every suburb will fall 30% ???
and do you have a deposit saved....are you intending to buy this year....or just hoping prices will crash anyway?
I am not being sarcastic...just asking a sensible question..


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## Glen48 (9 February 2009)

Mr. Burns
Time bomb going of in USA is a foregone conclusion what we don't know is how many Bombs there are.


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## Nosferatu (9 February 2009)

I think some people who believe Australian house prices will crash are living in a false reality. Some bears like to ignore the fundamentals of the Australian property market in favour of glib remarks such as 'we are just like the USA/Japan/UK' or 'this is just like 1929' or 'houses are just too expensive' etc. Let's have a quick reminder about the fundamentals here...

*Fundamentals of the Australian property market...*
- Record population growth driven by strong overseas immigration and natural population increase (mini baby boom in progress!).
- Trend towards fewer persons per household is also increasing demand for new housing.
- Massive pent-up/underlying/latent demand for housing. This is becoming entrenched in many cities.
- Huge shortage of housing - we are simply not building enough houses for the growing population.
- Australian median prices still very low compared to many other countries (no not the countries in the Demographia survey that only compares Australia with five other countries).
- Rapidly rising rents are driving investors back to property, and making buying more attractive than renting for FHBs. It is cheaper to buy than rent now in many places.
- Record low vacancy rates. Vacancy rates in Australia are at critical levels of around 1-2% in most cities (compare this with the 10% rental vacancy rate in the USA).
- Interest rates are falling and have a lot of scope to fall further (compared to other countries). Most IPs are now cashflow neutral or positive.
- The falling Australian dollar has made Australian property almost 40% more affordable for many foreign investors (hey, Steve Keen's 40% crash already happened!).
- The First Home Owners Grant has been doubled and tripled, further encouraging FHBs to buy.
- The disastrous stock market is driving investors back into the security of bricks and mortar.
- Prediction: Banks will start to promote Shared Equity Mortgages, 40-year Mortgages and Generational Mortgages
- Prediction: Super Funds will start investing more heavily into property, in preference to the more volatile and risky share market.

*Fundamental reasons why Sydney will the next city to boom...*
- Current Sydney prices are 20% lower (in real terms) than their previous peak.
- Prices in Sydney have moved backwards for half a decade, while the rest of Australia boomed.
- Increasing rents and rental yields
- Very strong international immigration. Most overseas migrants settle in Sydney.
- Extreme lack of supply of suitable and available properties in the locations where people actually want to live.
- The past domestic exodus from NSW to other states is reversing.
- The price gap between Sydney and other cities is now quite small by historical standards.

We will see moderate growth in Sydney for the next couple of years, followed by a strong price surge around 2011, leading to a massive boom around 2013.

Cheers,

Shadow.


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## Glen48 (9 February 2009)

_massive boom around 2013_.
Spot on fingers in your ears..


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## hotbmw (9 February 2009)

kincella said:


> hotbmw....not a chance...and I am talking about inner city homes and units...
> prop I was looking at for someone....battler in regional town....probably worth 80 now listed at 95.....should been 120,000 before this mess....but there's a big drought out there and water is a worry....so its already down 30%....
> if I had excess cash I would help out the battler....I think its a steal
> 
> ...




fair questions.
i have a 15-20% deposit
of course the lowest end will not be affected like the mid range
im not looking at the cheapest end as in yrs to come when property starts rising again the lowest end will lag and rise the least
the very lowest end may not go down in 2009, but my feeling is it may go down very slightly, maybe 5%

mid range is what im looking at. this i think will be hit another 10-12% in 2009.
the mid range will lead us out in the coming yrs as property rises. im not looking at the very cheapest end.

the top end has been smashed already and will probably keep getting smashed in 2009

i didnt say we will fall by 30% i just said anything is possible
we need lower interest rates and job security to ensure we dont see mass losses in property.

you mentioned what u r seeing now.
remember we wont see the worst until after people lose their jobs. 

i am interested to see your reply. u dont think the above is logically possible?


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## numbercruncher (9 February 2009)

/puke


Dont worry Shadow your house along with a handful of your permabull mates will continue to rise faster than any other asset class ......

But prices continue to fall virtually everywhere else ...


Congrats on your money tree ....


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## Nosferatu (9 February 2009)

numbercruncher said:


> /puke
> 
> Dont worry Shadow your house along with a handful of your permabull mates will continue to rise faster than any other asset class ......




Yes, certainly that has been that case over the past few years, and it's great to see house values holding up so well while everything else crashes in this climate. Can't say I've got any 'permabull' mates though. I myself was quite bearish on Sydney property in late 2002/2003, which is why I waited until 2005 before buying. Median prices in my area are up about 20% since then. The top-end is taking a bit of a hammering, although top-end only represents 5-10% of the overall market, so it's not having any significant impact on medians (although it does provide the media with a good excuse to print sensationalist D&G!).



numbercruncher said:


> But prices continue to fall virtually everywhere else ...




The Australian median price fell by 3% over 2008, which is an excellent result considering the economic climate, high interest rates, and of course the excellent capital growth achieved over the previous years. The falls during 2008 were worst in Q2 and Q3, but seem to have stabilised somewhat in Q4 with the lower interest rates and government stimulus just starting to kick in.



numbercruncher said:


> Congrats on your money tree ....




Cheers!


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## kincella (9 February 2009)

hotbmw...sounds more like it..but you did say 10-15 and 30 not impossible....
I dont care about the top end....that was all the bankers and financial, brokers etc....that will lose their jobs and the fancy houses....
and WA and QLD can also fall...due to the high wages of the miners..that are now dissapearing...but their prices were way over the top anyway...above syd and melb....
they are expecting 300,000 to lose jobs....but some are already keeping jobs..but with less hours and less money....
there will be competition for those mid range houses....from the cashed up  people,,now with low interest rates....they upgrade their houses in times like this...and the fhb buy the lower end
people like me see it as an opportunity ...prices have already come down...and rates too....
all the self funded retirees not happy with term deposit rates or the stock market....the oldies like the bricks and mortar and have the cash....not dependent on having a job or a deposit....
just need some to think from another side....not just their own position, regarding income and jobs to fund a home.... 
and if you think that we follow the us and uk...you may be wrong...some of us believe they follow us in housing...or we lead not follow...
think of other possibilities and affects to get the big picture....
if you seek you shall find....there will always be an opportunity to find what you want at the right price.....


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## kincella (9 February 2009)

shadow...that was an excellent post imo...clear concise etc....
what is this perma bull thingy from the others....??? 
I am a conservative investor,,,and I happen to prefer property over any other class...
If construed as bullish...well I am not..but not bearish either....just believe that as with 100 years history of property...it will recover in the long run...

I have cash and shares...but am overweight property....also the props can be used to house family if nothing else....
property gives me far more control over my assets, than that offered by the alternatives....
I have some dependent people to look after....so my needs might be a bit more than the average....


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## hotbmw (9 February 2009)

kincella said:


> hotbmw...sounds more like it..but you did say 10-15 and 30 not impossible....
> I dont care about the top end....that was all the bankers and financial, brokers etc....that will lose their jobs and the fancy houses....
> and WA and QLD can also fall...due to the high wages of the miners..that are now dissapearing...but their prices were way over the top anyway...above syd and melb....
> they are expecting 300,000 to lose jobs....but some are already keeping jobs..but with less hours and less money....
> ...




i cant disagree with your thoughts kincella.
thats why im going to wait till early next year when people are holidaying and ill try to pick up a property 10% or so lower from now together with a low fixed interest rate.


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## singlefished (9 February 2009)

Nosferatu said:


> *Fundamentals of the Australian property market...*
> - Record population growth driven by strong overseas immigration and natural population increase (mini baby boom in progress!).



don't expect this to be the case in a few months time ~ shouldn't be too long before Krudd slashes immigration once unemployment starts rising



Nosferatu said:


> - Trend towards fewer persons per household is also increasing demand for new housing.



didn't you say there a baby boom going on? I'm pretty sure the bubs won't be buying houses by themselves and am also pretty sure most bubs are planned for prior to the conception. With the last few years of price rises (purchase and rental) expect this trend to reverse... look how many bunk beds robots has been buying!!!



Nosferatu said:


> - Massive pent-up/underlying/latent demand for housing. This is becoming entrenched in many cities.



where? as far as I know, the vast majority of people in Australia have a roof over their head whether renting or owner occupier. Just have a look at the rental vacancies and for sales on RE dot com




Nosferatu said:


> - Huge shortage of housing - we are simply not building enough houses for the growing population.



see above



Nosferatu said:


> - Australian median prices still very low compared to many other countries (no not the countries in the Demographia survey that only compares Australia with five other countries).



why are you comparing apples with oranges????




Nosferatu said:


> - Rapidly rising rents are driving investors back to property, and making buying more attractive than renting for FHBs. It is cheaper to buy than rent now in many places.



a demographic shift from renting to owning cannot be good inverstors... less renters = lower prices, and Krudd wants to build more!



Nosferatu said:


> - Record low vacancy rates. Vacancy rates in Australia are at critical levels of around 1-2% in most cities (compare this with the 10% rental vacancy rate in the USA).



Whoops... what will happen if there are no vacancies anywhere in Australia? The doors will close and the economy will stall so I can only see vacancy rates improving in the future. That certainly won't be a factor in driving house prices up.



Nosferatu said:


> - Interest rates are falling and have a lot of scope to fall further (compared to other countries). Most IPs are now cashflow neutral or positive.



yup.... so? That is a statement, not a reason...




Nosferatu said:


> - The falling Australian dollar has made Australian property almost 40% more affordable for many foreign investors (hey, Steve Keen's 40% crash already happened!).



as far as I know, $1 still only buys $1... apples and oranges again. Foreign investors are not a fulcrum that the market swings on...




Nosferatu said:


> - The First Home Owners Grant has been doubled and tripled, further encouraging FHBs to buy..



yup - less renters on the market driving rents down



Nosferatu said:


> - The disastrous stock market is driving investors back into the security of bricks and mortar.



could be plausible but with the doom and gloom in the economy I doubt it. Stocks have been going down for over a year now so how can you explain the increasing number of properties on the market and the lack of interest from buyers???



Nosferatu said:


> - Prediction: Banks will start to promote Shared Equity Mortgages, 40-year Mortgages and Generational Mortgages



and 20% deposit also on the way too I believe



Nosferatu said:


> - Prediction: Super Funds will start investing more heavily into property, in preference to the more volatile and risky share market.



you appear to assume that the stock market is never going to recover... under your outlined scenario, what happens when global economies start recovering and money starts coming out the property market???



Nosferatu said:


> *Fundamental reasons why Sydney will the next city to boom...*



don't know the Sydney market as well as Brissy so can't really comment...


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## MrBurns (9 February 2009)

> Quote:
> Originally Posted by Nosferatu
> Fundamental reasons why Sydney will the next city to boom...




Boom ? Tell you what type that comment out, put it in an envelope and mail it to 2003 where it belongs.


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## knocker (9 February 2009)

Well some good news for robots beej et al. I've decided this thread is a waste of time effort and money. So I would just like to say, that any numbnut who thinks that property will boom within the next 5 years needs their head read.

thankyou

Good bye Good riddance.


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## nunthewiser (9 February 2009)

We miss you already


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## Lancelot (9 February 2009)

knocker said:


> Good bye Good riddance.




Hey, we're not going anywhere so good riddance back at you

Don't let the door hit you on the way out


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## MrBurns (9 February 2009)

knocker said:


> Good bye Good riddance.




Don't leave angry................just leave


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## Lancelot (9 February 2009)

MrBurns said:


> Boom ? Tell you what type that comment out, put it in an envelope and mail it to 2003 where it belongs.




Because house prices will never go up again?

Stop it, the laughter it hurts


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## Lancelot (9 February 2009)

Glen48 said:


> House prices do nothing for years and then take of but over the long term say 70yrs they average about 3% PA.




Have you got a link to that?  I thought it was double every 10 years or so


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## MrBurns (9 February 2009)

Lancelot said:


> Because house prices will never go up again?
> 
> Stop it, the laughter it hurts




Because it was booming then but not now and not for a long time to come but yes one day it will go back up. we are boom and bust here in AU just that at the moment it's going bust.


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## Lancelot (9 February 2009)

MrBurns said:


> Beej, I seriously think this is the big one, a friend of mine with "good" contacts has been saying for years that the US is a time bomb, well it's gone off.
> 
> .




Links please or it didnt happen and is speculation at best


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## Lancelot (9 February 2009)

MrBurns said:


> Because it was booming then but not now and not for a long time to come but yes one day it will go back up. we are boom and bust here in AU just that at the moment it's going bust.




So did you deliberatly choose to leave out this part of the quote from Nosferatu?


> We will see moderate growth in Sydney for the next couple of years, followed by a strong price surge around 2011, leading to a massive boom around 2013.


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## MrBurns (9 February 2009)

Lancelot said:


> Links please or it didnt happen and is speculation at best




Bulldust, you give me a link proving things will boom.
I want links and solid proof.


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## MrBurns (9 February 2009)

Lancelot said:


> So did you deliberatly choose to leave out this part of the quote from Nosferatu?




Didnt even see it i didnt have my BS glasses on.


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## hotbmw (9 February 2009)

i reckon a fair and balanced view would be that:
2009 will be lower for sure
2010 could stabilise at best
2011 + should see growth in line with inflation in a normal world

will we be back to normal by then???

what is normal anyway?  
what we saw the past decade or is it another world.........?


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## Lancelot (9 February 2009)

MrBurns said:


> Bulldust, you give me a link proving things will boom.
> I want links and solid proof.




You first, you made the statement


----------



## Beej (9 February 2009)

knocker said:


> Well some good news for robots beej et al. I've decided this thread is a waste of time effort and money. So I would just like to say, that any numbnut who thinks that property will boom within the next 5 years needs their head read.
> 
> thankyou
> 
> Good bye Good riddance.




I am certainly honoured to have been specially mentioned! I miss your reasoned analysis and rapier wit already......... 

Beej


----------



## robots (9 February 2009)

hello,

come on knocker, relax man its all debate and discussion

have a laugh bro, chill out man get the pushie out and cycle a few paths, look at the sky and the tree's man and euphoria will fill your mind

thankyou
robots


----------



## Junior (9 February 2009)

robots said:


> hello,
> 
> come on knocker, relax man its all debate and discussion
> 
> ...




That's all very reflective robots...are you still on a high after yesterday's st. kilda festival?


----------



## MrBurns (9 February 2009)

Lancelot said:


> You first, you made the statement




I make my statements from experience.

You insist everyone has links, so you must have them, so put up or shut up.

We need  links and proof from people who insist on links and proof.


----------



## MrBurns (9 February 2009)

Lancelot said:


> Links please or it didnt happen and is speculation at best





How can you have inks to a conversation with someone.
You're engaging in Scottish sports, specifically _tossing the caber._


----------



## robots (9 February 2009)

MrBurns said:


> How can you have inks to a conversation with someone.
> You're engaging in Scottish sports, specifically _tossing the caber._




hello,

hahahahahaha,

oh yeah Junior, its 24hr party people for the St kilda Festival, still flying through the sky man

thankyou
robots


----------



## MrBurns (9 February 2009)

robots said:


> hello,
> 
> hahahahahaha,
> 
> ...




Hey robots you'll love this - 

http://www.youtube.com/watch?v=067FMmyrXmQ


----------



## robots (9 February 2009)

hello,

awesome flick MrBurns, you rollin' em like that?

classic, keep them coming bro, ohm ohm ohm ohm ohm ohm

thankyou
robots


----------



## Lancelot (9 February 2009)

MrBurns said:


> I make my statements from experience.




What experience and for how long was this experience? Care to elaborate?


> You insist everyone has links, so you must have them, so put up or shut up.
> 
> We need  links and proof from people who insist on links and proof.




Demanding links as proof is a typical response from bears on Doom and Gloom forums, put up or shut up, no proof means it didn't happen.

I don't need to supply links, I never made the statement, you did, remember?


----------



## robots (9 February 2009)

hello,

great act at the St Kilda festival Junior were Koomurri, just on the street keeping the people moving

http://www.koomurri.com

got the latest CD: Koomurri Dreaming, big fan of the aboriginal group Yothu Yindi, with the all time classic Treaty becoming a massive rave/club/dancefloor hit in the UK believe it or not

paradise 

thankyou
robots


----------



## MrBurns (9 February 2009)

Lancelot said:


> Demanding links as proof is a typical response from bears on Doom and Gloom forums, put up or shut up, no proof means it didn't happen.
> I don't need to supply links, I never made the statement, you did, remember?




You are the one demanding links from me therefore you are 







> typical response from bears on Doom and Gloom forums,




Once again you want link to a conversation ? Sorry cant help you.

But if you disagree supply links or proof, put up or shutup.

I've seen booms and busts, sorry cant supply a link to where I was at the time


----------



## Lancelot (9 February 2009)

MrBurns said:


> But if you disagree supply links or proof, put up or shutup.






Thought as much, you've got nothing



And the first part of my question that you ignored?


> Quote:
> Originally Posted by MrBurns View Post
> I make my statements from experience.





> What experience and for how long was this experience? Care to elaborate?


----------



## MrBurns (9 February 2009)

Lancelot said:


> Thought as much, you've got nothing
> And the first part of my question that you ignored?




No. You have nothing, just an ability to bore, stop wasting peoples time.


----------



## MrBurns (9 February 2009)

robots said:


> hello,
> 
> awesome flick MrBurns, you rollin' em like that?
> 
> ...




A bit smaller in recession times robots, padded out with sawdust too ........ cough hack hack hack !


----------



## Nosferatu (9 February 2009)

singlefished said:


> don't expect this to be the case in a few months time ~ shouldn't be too long before Krudd slashes immigration once unemployment starts rising




Immigration will be cut to some degree, but not too much I wouldn't think. Even if our population growth falls from the current 1.7% right back to 1%, that's still higher than the UK (0.3%) USA (0.9%) and Japan (negative).



> didn't you say there a baby boom going on? I'm pretty sure the bubs won't be buying houses by themselves and am also pretty sure most bubs are planned for prior to the conception.




Increased family size often causes parents to look for larger accommodation.



> where? as far as I know, the vast majority of people in Australia have a roof over their head whether renting or owner occupier. Just have a look at the rental vacancies and for sales on RE dot com




Of course the vast majority have a roof over their heads, but still our caravan parks are overflowing, public housing and crisis shelter have waiting lists a mile long. Heaps of people are choosing to stay with their parents for longer than they would like, and plenty of people are house sharing beyond what is desirable - sleeping on mate's sofas etc.



> Why are you comparing apples with oranges????




I compared house prices in Australia with house prices in other countries. I don't see why you have a problem with that?



> a demographic shift from renting to owning cannot be good inverstors... less renters = lower prices!




No... less renters = lower rents / higher vacancy rates. It does not mean lower house prices.



> Whoops... what will happen if there are no vacancies anywhere in Australia? The doors will close and the economy will stall so I can only see vacancy rates improving in the future. That certainly won't be a factor in driving house prices up.




The low vacancy rates have been driving rents up. Eventually as rents move up and interest rates move down, property starts to become cash flow positive, which encourages investors to buy investment properties. This in turn pushes up the price of housing, but also increases the supply of rentals, which keeps a lid on rents. So the market is self balancing to a degree, however government policies such as ramping up immigration while stifling supply (though high taxes and poor land release) can cause price spikes such as we see today across much of Australia.



> as far as I know, $1 still only buys $1... apples and oranges again. Foreign investors are not a fulcrum that the market swings on...




No... just one point from the many I put forward. At the end of the day, they all add up. I'm not saying that any one of the points by itself is enough. No singular fulcrums.



> could be plausible but with the doom and gloom in the economy I doubt it. Stocks have been going down for over a year now so how can you explain the increasing number of properties on the market and the lack of interest from buyers???




Simple - fear, uncertainty and doubt (making this a great time to buy!). 



> and 20% deposit also on the way too I believe




Lenders are still doing 97% loans, including the big 4 banks. Perhaps this will change but for now credit is still available (to the right people).



> you appear to assume that the stock market is never going to recover... under your outlined scenario, what happens when global economies start recovering and money starts coming out the property market???




I don't think property will suffer when the global economies start to recover. Remember, I'm not expecting any strong growth for another couple of years. I think the next two years represent an excellent buying opportunity. A good time to pick up a bargain (especially at the top-end), lock in low interest rates, and wait for the inevitable boom in a few years time.

Cheers,

Shadow.


----------



## Lancelot (10 February 2009)

MrBurns said:


> No. You have nothing, just an ability to bore, stop wasting peoples time.




That's the ticket, make a comment, produce nothing to back it up and instead of admitting you are wrong just wriggle wriggle wriggle

And you accuse me of wasting peoples time LOL


----------



## singlefished (10 February 2009)

Nosferatu said:


> Immigration will be cut to some degree, but not too much I wouldn't think. Even if our population growth falls from the current 1.7% right back to 1%, that's still higher than the UK (0.3%) USA (0.9%) and Japan (negative).




Immigration over the last year hasn't stopped prices dropping so with even less immigration and more unemployment what shaky support there currently is will be gone.

Did you see ABC news tonight with Alan Kohler correlating unemployment with current advertised employment vacancies on the back of employment advertising figures falling for the 9th straight month in a row? It paints a nasty picture for the short term future....




> Increased family size often causes parents to look for larger accommodation.




re: The trend towards ppl/household....  you have countered this in your response below.... and as you note, families and friends will undoubtedly pull together during these tough times.... and i'm sorry to say but it will undoubtedly stay like this until the global economy starts seriously ticking up again and the debt bubble has somewhat deflated.





> Of course the vast majority have a roof over their heads, but still our caravan parks are overflowing, public housing and crisis shelter have waiting lists a mile long. Heaps of people are choosing to stay with their parents for longer than they would like, and plenty of people are house sharing beyond what is desirable - sleeping on mate's sofas etc.




...see above



> I compared house prices in Australia with house prices in other countries. I don't see why you have a problem with that?




You cannot really compare paying down a median property in Australia with paying down a median property elsewhere in the world. The median Aussie property is probably 99.9% paid for with Aussie $$$$ generated from the local market.... this is why *median Aussie house prices *are compared to *median Aussie salaries* and not median US/UK/Japan salaries... The only way your arguement stands is if every immigrant or overseas investor is FULLY cashed up and ready to buy without having to consider their Aussie $$$$ earning potential within the local workforce.




> No... less renters = lower rents / higher vacancy rates. It does not mean lower house prices.




sorry ~ I meant to say "lower returns"




> The low vacancy rates have been driving rents up. Eventually as rents move up and interest rates move down, property starts to become cash flow positive, which encourages investors to buy investment properties. This in turn pushes up the price of housing, but also increases the supply of rentals, which keeps a lid on rents. So the market is self balancing to a degree, however government policies such as ramping up immigration while stifling supply (though high taxes and poor land release) can cause price spikes such as we see today across much of Australia.




This analysis works when our commodities dependant economy works well... when our economy is stuffed because nobody wants to buy our coal or our iron ore then the reverse takes effect and your cash flow positive properties will decline in value.

Can you honestly see our economy shifting away from it's reliance on commodities anytime in the near future??? What's going to drive the Australian economy of the future ~ if you can work it out then that's where you should really be investing your hard earned $$$$ and forget about property as a safe haven investment in the short term.




> No... just one point from the many I put forward. At the end of the day, they all add up. I'm not saying that any one of the points by itself is enough. No singular fulcrums.




Fair enough, but you don't seem to hold much stock in the downside risks. How will property hold up if this downturn last for several years or even a decade? In 10 years time I'm sure you wont be patting yourself on the back like the property investors of old who, many of which, made hay while the sun shone during the years of economic expansion and cheap easy debt for the masses...





> Simple - fear, uncertainty and doubt (making this a great time to buy!).




Not such a smart move however if you lose your job and your primary source of income in 6 months time...




> I don't think property will suffer when the global economies start to recover. Remember, I'm not expecting any strong growth for another couple of years. I think the next two years represent an excellent buying opportunity. A good time to pick up a bargain (especially at the top-end), lock in low interest rates, and wait for the inevitable boom in a few years time.




The boom may not quite be as large as you believe it will be....

For the boom times of the past to return, you will need to see a substantial decrease in current property prices relative to income down to a ratio of say 4.5:1 over the medium term and then a subsequent increase in values in the long term back up to our current almost unservicable 7:1 ratio ~ that's the boat you're trying to buy a ticket for but this vessel is currently sinking and I don't think our government can bail fast enough to keep it afloat...


----------



## MrBurns (10 February 2009)

Lancelot said:


> That's the ticket, make a comment, produce nothing to back it up and instead of admitting you are wrong just wriggle wriggle wriggle
> And you accuse me of wasting peoples time LOL




I've made no comments that required links or any particular proof, but you just drone on ad nauseum.

You're living under an illusion that you're right but you're not so stop trying to engage me in pointless discussion about what you falsely believe to be correct.

You are wrong , you really are making a fool of yourself LOL


----------



## Nosferatu (10 February 2009)

singlefished said:


> Immigration over the last year hasn't stopped prices dropping so with even less immigration and more unemployment what shaky support there currently is will be gone.




I think the high immigration levels over the past few years have increased demand for property, meaning that prices grew more strongly than would be the case without high immigration.



> Did you see ABC news tonight with Alan Kohler correlating unemployment with current advertised employment vacancies on the back of employment advertising figures falling for the 9th straight month in a row? It paints a nasty picture for the short term future....




This is why I'm not expecting much growth in the short term. I expect it will be around 2011 before we see strong growth again. In the meantime I expect moderate growth in Sydney (where prices are already down 20% from the peak) however I expect those cities that grew by 20%+ in 2007 will continue to slide, probably down 15-20% in real terms over a few years. And Perth will fall of course.



> re: The trend towards ppl/household....  you have countered this in your response below.... and as you note, families and friends will undoubtedly pull together during these tough times.... and i'm sorry to say but it will undoubtedly stay like this until the global economy starts seriously ticking up again and the debt bubble has somewhat deflated.




I don't think we can say 'undoubtedly' about anything in this climate. I do know that a lot of FHBs are actually doing the reverse right now, and lowering their density due to the FHOG and low interest rates. FHBs are very active at the lower end of the market. How long before this filters through to the wider property market? As I say, probably around 2011.



> You cannot really compare paying down a median property in Australia with paying down a median property elsewhere in the world.




Median house price to median income is a very blunt tool. This is how the Demographia survey works, and this survey has been thoroughly debunked by many people on many occasions. There are massive flaws in the Demographia survey. It fails to consider the following factors:

- Disposable/discretionary income
- Employment rate
- General cost of living
- Interest rates
- Rental yield
- Marginal tax rates
- Tax incentives such as negative gearing and FHOG
- Land/Block size
- Dwelling size and quality
- Proximity to transport and infrastructure
- Currency exchange rates
- Economic and political stability
- Home ownership rates
- Urbanisation
- Demographics (quite amusing that the Demographia survey ignores demographics!)

Of course, no survey covers all these points, so all surveys are in some respects comparing apples with oranges. This is why it is a good idea to examine as many surveys as possible, since they all tackle the issue from a different angle.

The main issue with the Demographia survey, is that it only compares Australia with five other countries, yet the media proceeds to claim that Australia is the most expensive in the world. The survey conveniently ignores all the cities in the world with much higher house prices than Australia. For example Moscow, Tokyo, Oslo, Seoul, Hong Kong, Geneva, Zurich, Milan, Paris, Singapore, Monaco...

Here are some alternative studies...

*GlobalProperty Most Expensive Cities 2008* (apartment price per sqm):
http://www.globalpropertyguide.com/investm...-cities-in-2008
Sydney - Number 13: US$7,085 per sqm

*Mercer Most Expensive Cities* (cost of living, including housing)
http://www.mercer.com/costofliving
Sydney - Number 21

*CityMayors Expensive Cities*
http://www.citymayors.com/economics/expensive_cities2.html
Sydney - Number 24

*Knight Frank Survey* (prime residential property)
http://www.finfacts.com/irelandbusinessnew..._10010019.shtml
Sydney - Number 8: EU$13,100 per sqm

*Overseas Property Mall Survey*
http://www.overseaspropertymall.com/proper...tional-markets/
Average home values for select 2,200 square foot single-family dwellings with four bedrooms...
Tokyo - $785,818
Sydney - $683,109

*Aneki* (most expensive countries to live in)
http://www.aneki.com/expensive.html
Australia - Not shown in the top 20

*Most expensive countries in the world*
http://www.associatedcontent.com/article/1...the.html?page=2
Australia - Not in the list

*Most expensive rental markets*
http://www.forbes.com/2008/02/11/properties-world-rent-forbeslife-cx_mw_0212realestate.html
Australia - Not in the list



> Can you honestly see our economy shifting away from it's reliance on commodities anytime in the near future??? What's going to drive the Australian economy of the future ~ if you can work it out then that's where you should really be investing your hard earned $$$$ and forget about property as a safe haven investment in the short term.




There will always be demand for commodities, however I think the future for Australia may lie in alternative energy. I think this is where we will see the next global 'bubble' with Australia leading the way.



> Fair enough, but you don't seem to hold much stock in the downside risks. How will property hold up if this downturn last for several years or even a decade? In 10 years time I'm sure you wont be patting yourself on the back like the property investors of old who, many of which, made hay while the sun shone during the years of economic expansion and cheap easy debt for the masses...




I guess I'm just not that pessimistic. If we all approached investing with the mindset that the worst possible outcome is also the most likely one, then we'd never invest. If this downturn really does last 10 years, then we're all equally screwed!



> Not such a smart move however if you lose your job and your primary source of income in 6 months time...




I'll try not to.



> The boom may not quite be as large as you believe it will be....
> 
> For the boom times of the past to return, you will need to see a substantial decrease in current property prices relative to income down to a ratio of say 4.5:1 over the medium term and then a subsequent increase in values in the long term back up to our current almost unservicable 7:1 ratio ~ that's the boat you're trying to buy a ticket for but this vessel is currently sinking and I don't think our government can bail fast enough to keep it afloat...




The current ratio is not 'almost unservicable'. Most Australians are well ahead on loan repayments. Default rates are extremely low. As interest rates continue to fall, servicibility will improve even more. The RBA has some research that shows people today have *more* disposable income after loan repayments than at any time in the past! If debt really was so unservicable today we wouldn't see so many iPods, Plasmas and other discretionary consumables in every house. The vast majority are not struggling at all with a 7:1 ratio.

Cheers,

Shadow.


----------



## numbercruncher (10 February 2009)

> There will always be demand for commodities, however I _think_ the future for Australia may lie in alternative energy. I _think_ this is where we will see the next global 'bubble' with Australia leading the way.




Seriously .....


Australia leading the way 


This thread is getting more and more bizarre ....


And where did all you new permabulls come from, recruiting each other from somersoft ?

" House prices to keep falling for years " - yup seems unavoidable to me .....


----------



## Lancelot (10 February 2009)

MrBurns said:


> You are wrong , you really are making a fool of yourself LOL




Wrong?  I've said nothing to be wrong about.

I'm not the one who said I have a friend in the know who said the US has imploded and the world is ending and holding that up as some sort of statement of fact.

That was you



Your comment (made up, who knows?) shows who the real fool is.

Thats it, No more from me


----------



## nomore4s (10 February 2009)

> There will always be demand for commodities, however I think the future for Australia may lie in alternative energy. I think this is where we will see the next global 'bubble' with Australia leading the way.




lol, the current bubble hasn't finished bursting yet and we are yet to feel the full effects or even fully understand the consequences and you are already talking about the next bubble



> I guess I'm just not that pessimistic. If we all approached investing with the mindset that the worst possible outcome is also the most likely one, then we'd never invest. *If this downturn really does last 10 years, then we're all equally screwed!*




No people who ingore the risks will be screwed, people who prepared for the worst will be making money. Good investing is about managing risk and in the current environment the risks are higher than they have been in decades.



> Not such a smart move however if you lose your job and your primary source of income in 6 months time...
> 
> 
> > I'll try not to.




So will everyone else but unfortunately for many people they will lose thier jobs.


----------



## MrBurns (10 February 2009)

Lancelot said:


> Wrong?  I've said nothing to be wrong about.
> I'm not the one who said I have a friend in the know who said the US has imploded and the world is ending and holding that up as some sort of statement of fact.
> That was you
> 
> ...




I didnt say that at all, so who's the fool ???

You said I should back up a conversation I had with links and proof ............ROFL 

I said .............oh go back and read it or get someone to explain it to you.


----------



## gfresh (10 February 2009)

Nosferatu said:


> This is why I'm not expecting much growth in the short term. I expect it will be around 2011 before we see strong growth again. In the meantime I expect moderate growth in Sydney (where prices are already down 20% from the peak) however I expect those cities that grew by 20%+ in 2007 will continue to slide, probably down 15-20% in real terms over a few years. And Perth will fall of course.




So that includes Melbourne, Brisbane, Perth, Darwin.. which leaves Sydney which is nice for you  Look, there is always going to be a difference of opinion rooted in the area in which you live. It seems those in Sydney are more positive as they have had several years (in general terms, acknowledging some areas have still done well), of flat prices. This has probably given wages time to adjust to the large changes in prices they experienced at the start of the decade. It also has a large migrant population which is always growing. But to be honest, it's hard to know the feel of the place presently, not having lived there. 

I'm on the Goldcoast, and I can't see any signs of a turnaround at the moment, and it's taking a big hit from interstate investors pulling out optional investments and the locals not having enough earnings to take their place. That'll take a while to sort out, but yes, eventually it will. 




Nosferatu said:


> FHBs are very active at the lower end of the market. How long before this filters through to the wider property market? As I say, probably around 2011.




Hard to say definitively.. Doesn't seem to be much activity at the top of the market, and it may be several years, maybe a decade before that wealth is replaced by real corporate growth, expansion, and investment which that market feeds off to truly boom and make big bucks. 

What the uber-bulls maybe don't realise is there has been a monumental deleveraging of wealth that was generated on funny money built up over a decade (credit derivatives). But that sort of credit market has changed forever.. The way in which large credit is generated by financial institutions to fund such massive excesses out simply isn't there until the next invention is concocted, and dare I say it, we pay off the last one properly. 

We haven't even reached the true bottom of the economic cycle, and you're talking about the top of the market booming in 2011... and they're the ones that rely most on the economy booming, big bonuses, big company profits, and plenty of investment opportunities that are paying big returns. That's a way off IMO. 




Nosferatu said:


> Here are some alternative studies...




Most of these seem to be talking about adjusted dollars in different countries, and cost per sq.m. Whereas the other studies go on wealth of people that live in the cities, and what they earn (in local currency) vs what places cost to buy or rent. I am not sure which is the best, but the later seems like the more sensible measure to me. 



Nosferatu said:


> There will always be demand for commodities, however I think the future for Australia may lie in alternative energy. I think this is where we will see the next global 'bubble' with Australia leading the way.




Agreed.. in 5 years time everybody will be going nuts over every two-bob company that says they have some miracle cure for the world's problems 



Nosferatu said:


> I guess I'm just not that pessimistic. If we all approached investing with the mindset that the worst possible outcome is also the most likely one, then we'd never invest. If this downturn really does last 10 years, then we're all equally screwed!




I think it will simply be like the same as the any of the other major downturns throughout the decades. Worst is last year, this year, and possibly the start of next. Greatest risk for property investors. Beyond that it will simply be fairly flat growth in housing, possibly rises for those that pick the right segments, and some going backwards in real-terms for some 2-5 years. Then in 2015 we'll get the next big boom, house prices rising 10% a year or however much.. followed by 2020 the next big collapse, etc!


----------



## Beej (10 February 2009)

nomore4s said:


> So will everyone else but unfortunately for many people they will lose thier jobs.




But the vast majority of people will not! 

Long term, structural  unemployment, which is really the issue that would cause people to default on a mortgage and lose their house, is a problem (when it arises) that usually effects the young (lower and unskilled school leavers etc), and those close to retirement, in far greater proportions than the rest. The young don't tend to own houses at all, and the older workers are more likely to be in the 1/3 of households that are owned outright.

Look at what happened in 90/91/92 when unemployment rose quickly and peaked at over 10% - during that period house prices actually stabalised and started to rise again - especially in Sydney. Default rates were not that high (they were higher I believe during 89/90 when interest rates peaked at 17%). 

Bottom line, IMO you are significantly over-estimating the potential impact of rising unemployment on the property market. It has an impact, yes, but nowhere near as great as many here are suggesting.



			
				gfresh said:
			
		

> What the uber-bulls maybe don't realise is there has been a monumental deleveraging of wealth that was generated on funny money built up over a decade (credit derivatives). But that sort of credit market has changed forever.. The way in which large credit is generated by financial institutions to fund such massive excesses out simply isn't there until the next invention is concocted, and dare I say it, we pay off the last one properly.




This really sounds a bit out there! I remember a few weeks ago someone at a BBQ I was at said exactly the same thing - when I asked them to explain further they didn't even actualyl know what a credit derivative product was or one worked, let alone how this was actually effecting the australian financial system. To me a lot of these theories sound like internet generated urban myths akin with the stuff going around about Y2K that motivated some folks to stock-pile baked beans and shotgun ammo......

However, to give you the benefit of the doubt (as the rest of your post is fairly sensible), can you explain exactly how you see that the "funny money based credit derivatives market" drove profits, jobs, bonuses etc *directly* of players (individuals, corporations) based in say Sydney and Melbourne? 

My view: The de-leveraging you speak off is I believe more of an issue in the US and the UK, and less of an issue here in Australia - hence the reason we don't have the same credit market/banking issues here that they have right now, just the impacts of them with respect to *some* aspects of our finance markets which in the past have relied on foreign sources. Eg, companies now having trouble rolling over debt that was based on a lot of internationally sourced funding, plus higher cost of funding from such o/s sources. IMO This combined with the broader economic impact of slowing demand for our exports from trading partners are the root causes of the direct impact we are experiencing of the GFC here in Oz.

Cheers,

Beej


----------



## Beej (10 February 2009)

gfresh said:


> I'm on the Goldcoast, and I can't see any signs of a turnaround at the moment, and it's taking a big hit from interstate investors pulling out optional investments and the locals not having enough earnings to take their place. That'll take a while to sort out, but yes, eventually it will.




At the risk of undermining my "perma-bull" status here on the thread, I would add that it does seem to be the case that the Gold Coast market is under particular pressure. A guy I know is currently trying to sell a canal-side apartment up there, it's been on the market for months and really has had hardly anyone look at it, no offers etc, and he has reduced the price significantly and still no real action. 

This is a huge contrast to and the complete opposite to my experience selling 2 properties in Sydney in Nov/Dec last year. I would also add that based on the rent he is getting for the place vs the asking price, the rental return (at somewhere around 3/3.5%) is also way below typical rental returns in Sydney right now (which are more lile 4-5 and even up to 6%).

Cheers,

Beej


----------



## aleckara (10 February 2009)

Housebuyers have it quite hard now don't they? Here in Sydney the FHB grant has had a large effect on where I live. Beforehand there were some good blocks on the lower end for a person starting out (ie city fringes). Now if you look at any real estate site the quality of properties has gone for the <$300,000 mark.

The properties just aren't there for people buying under this category unless they are willing to settle for a villa or townhouse on the city fringes.

I used to be a bear with housing, but I have to admit Rudd is doing a good job of stuffing up the first home buyer. I think it would be better if they didn't have grants to prop up housing but maybe subsidies to the builders to build houses. Would give them an incentive to produce enough housing as well rather than just seeing it as a price increase.


----------



## gfresh (10 February 2009)

Beej said:


> This really sounds a bit out there! I remember a few weeks ago someone at a BBQ I was at said exactly the same thing - when I asked them to explain further they didn't even actualyl know what a credit derivative product was or one worked, let alone how this was actually effecting the australian financial system. To me a lot of these theories sound like internet generated urban myths akin with the stuff going around about Y2K that motivated some folks to stock-pile baked beans and shotgun ammo......




No tin foil hat required! The sort of commentary that implies the world is about to end as this huge wall of derivatives is going to come crashing down is _not the same_ as a basic understanding by which the wheels of the credit market have changed over the last few years. And the world "post GFC" in many ways will be quite to the one before. Not in an apocalyptic fashion, but one in which the rules and regulations are much different.  

What we saw from the early 2000's is the world's largest commercial investment banks shifting into the role of regular banking institutions. By packaging up the world's most common assets, mortgages (not just subprime, but AAA rated and Australian loans as well) into mortgage backed securities, banks were able to create massive number of these 'assets' on their books in this form. Then using other more exotic instruments such as CDO's, CDS, and other such derivatives *over* the top of these regular MBS, these could also be stored as further assets on the world's largest banks. So we got into the situation, where banks had a mass of assets on their books they could not generate so easily in say the 80's, even 90's using regular lending and borrowing... but only a fraction of these had real tangible backing, that is a borrower paying back that loan over the life of X years, etc. 

Now as you know, under the fractional reserve system, banks are able to lend a multiple of what they actually have listed as assets or capital on their books. This also allows them to borrow from other institutions (overseas or otherwise), and with such a supply of credit available, this has allowed them to lend out more freely then ever before. 

The way in which the credit markets have operated in this way in the last decade have led to greater risk, and greater leverage than ever before. This in turn has allowed fed back into larger asset prices rises, leading to large house prices rises, as well as many others, including true, real growth also, by stimulating demand in major economies.  

In going forward, because the exact form of this model has been seen to fail, banks are going to be (and made to be!) much much more cautious on how they rank these credit derivatives. No longer will banks be able to so easily claim these as rock hard "assets", and as a result the amount they can lend will not be the same as pre-GFC. Because of this, here will be placed a much greater amount of scrutiny placed on each and every loan, here, there, worldwide. 

This starts from the bottom up, and will mean that every tom cobly who wants a loan for their great business idea, an extension to their house, equity drawdown, or anything else will not find it as easy as they did just a couple of years ago. 

At the moment the world is in recession, and Australia is close to it, so lenders are naturally going to restrict credit based on greater risk profiles presently. Coming out of this, and *this is the key*, some aspects of this are going to become more permanent. 

We are not the US or the UK, and did not get so involved with these fancy derivatives being at the bottom of the chain, however we are very much dependent on the growth of these countries, for trade, general demand for our products, and some forms of credit. Now if the growth in those countries is slower in future years, then of course, we ourselves will be effected also. 

Maybe I am failing to illustrate things properly, but many greater minds than me are aware that things will not quite be the same as they have been leading up to the GFC, and some are even working towards making sure such a risky environment cannot so easily happen again. These are not your minor players, these are your major Governments, regulators, IMF, and others *worldwide*.

Anyhow, essay over, there is plenty of reading that can be done on this, without getting into the conspiracy side. It may take a long time, and a lot of trust to be built up before we return to a freer credit environment, forget the mistakes of the past, and do it all again in some slightly different form - which is of course part of the financial cycle.


----------



## Beej (10 February 2009)

Gfresh - thanks for the detailed explanation - I've removed my tin foil hat now  Mostly makes sense to me and I don't think I disagree with the your main points. Certainly it is true that many things will change post GFC, especially with respect to the level of regulation of credit markets overseas and the mechanisms by which credit is going to be made available, packaged etc.

Cheers,

Beej


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## kincella (10 February 2009)

beej, I have no confidence that things will change.....my main source of information, or what sticks in my mind, alan greenspans book, covering period 1987 to 2007....he noted many instances of problems in the finacial systems, and the havoc they caused....that should have been rectified, but raised its head in another similar form, creating another problem.....

once people become used to earning substantial amounts of money....they will continue to find ways and means to afford that lifestyle...
and they will continue to manipulate others into giving them money...

look at our current bailouts...most of it is going to the same people, banks, car manufacturers....that put us into this mess to begin with....looks like they are being rewarded to me...the US, Uk,ire, aus all seem to be doing the same....
I believe there should be new clean banks, started fresh, offer interest to depositors, and lend to finance home loans...simple, no derivatives, no bundling and sellin off the loans etc...like in the old days...when you could trust the banks...
in the meantime..let the high flyers with huge salaries implode..go bust..


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## robots (10 February 2009)

hello,

what a day, the discussion is huge brothers, 

i keep getting that tingly feeling through my body when I get home and read the great writings from all on ASF

spot on Kincella, all thats happening is people are losing money, got a draw full of certificates with the same outcome over the past 10yrs, some would have over 10yr old certificates

and some will sucker more money out of people, not much has changed was all happening over the last 100yrs

the good times keep rolling on and on

thankyou
robots


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## kincella (10 February 2009)

robots, no worries bro....as you may well know...less than 10% of the population own 90% of the worlds wealth...leaving the other 90% of the population with less than 10% of the wealth........
its too easy to figure out why?
and then to add to the stats....less than .001% of the population hold multiple investment properties.......
arhhh.... scaredy cats are apparently in control of the net communications on property as an investment atm......there is a gotcha clause, if ever I saw one....
me,. just a humble, stupid IP investor....and contrarian to almost anything I read, hear on the net
cheers


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## kotim (10 February 2009)

The gov't is absolutely crapping itself over the potential unemployment rate becasue they realise the implications.  It is as simplas this.  In the larger cities and larger regional areas, most people who have bought property since say 2004 need two wages to service the debt and live.  Now lets for a moment imagine that when unemployment goes from say 4.5% to say 7.5% and allow for one quarter of all those people sacked to be people who are paying into a mortgage.  Remember the current interest rates are not that much lower than what they were 12-18 months ago, so we are set up for an allmighty big nitghmare.

The reduction in interest rates only really helps those people who purchased in the last year or so.

There are going to be tens of thousands of porperties coming onto the market in the next two years simply from the increase in unmeployment when in real terms housing has been at extremely high levels realtive to income.


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## Julia (10 February 2009)

robots said:


> i keep getting that tingly feeling through my body when I get home and read the great writings from all on ASF




Wow!


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## Beej (11 February 2009)

kotim said:


> There are going to be tens of thousands of porperties coming onto the market in the next two years simply from the increase in unmeployment when in real terms housing has been at extremely high levels realtive to income.




And there are going to be hundreds of thousands of people who will still have jobs, who also want to buy their own first home, who will all compete for those tens of thousands of places that "might" hit the market over the next 2 years. Government assistance, low interest rates and lower (but stabalised) prices will make those sales the opportunity of a decade for those who keep their jobs, as was the case in 1991/92/93....

Cheers,

Beej


----------



## Dowdy (11 February 2009)

Beej said:


> And there are going to be hundreds of thousands of people who will still have jobs, who also want to buy their own first home, who will all compete for those tens of thousands of places that "might" hit the market over the next 2 years. Government assistance, low interest rates and lower (but stabalised) prices will make those sales the opportunity of a decade for those who keep their jobs, as was the case in 1991/92/93....
> 
> Cheers,
> 
> Beej





The opportunity of the century will come in a few years - for buyers. If your a seller you should get out now while prices are still inflated from the grants


----------



## Pommiegranite (11 February 2009)

Beej said:


> And there are going to be hundreds of thousands of people who will still have jobs, who also want to buy their own first home, who will all compete for those tens of thousands of places that "might" hit the market over the next 2 years. Government assistance, low interest rates and lower (but stabalised) prices will make those sales the opportunity of a decade for those who keep their jobs, as was the case in 1991/92/93....
> 
> Cheers,
> 
> Beej




In a perfect world maybe, and that's a big maybe. However we live a world where market sentiment is the biggest factor i.e greed and fear. We've had the greed. We all know what comes next.


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## kotim (11 February 2009)

Beej, I am not suggesting 50% falls in house prices in major centres, what I see though is larger falls to come and then a long time dilly dallying about.

We have in real terms still all time high house prices, the absolute lowest interest rates we have seen in many a decade.

We have unemployment almost doubling over thext 18 months and we have the government giving first home buyers big dollars to get in the market.  Mostly those who have the least ability to afford changes to the upside in interest rates etc.

Human nature to try and live to our means to the full or beyond, meaning that if people can borrow the max at say 4%, the vast majority of people will.

All valuations are based on perceptions looking into the future, not on what something or someone knows is the real value.  

The reason so few are financially super succesful in life is becasue it is endemic in people that we fear the downside more than we enjoy the upside, that is what causes people to stay ont he sidelines etc.

We have set ourselves up for an almighty property price crunch.  All time low interest rates, huge increase in unemployment and still historically extremely high house prices relative to history.

The world will not end, but there will be many places that experience 50% falls in property prices as there will be many areas that only see 5-10% falls.


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## CamKawa (12 February 2009)

Good to see the unemployment rate increase today. A bit hard to repay a mortgage or pay your rent without a job I would have thought.







Source: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6202.0Main+Features1Jan%202009?OpenDocument


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## Beej (12 February 2009)

CamKawa said:


> Good to see the unemployment rate increase today. A bit hard to repay a mortgage or pay your rent without a job I would have thought.
> 
> 
> 
> ...




A) Are you seriously "happy" to see rising unemployment?

B) There was actually a "surprise" increase in full time jobs, with losses coming from part time, so actually more income around than previous month (if we want to be pedantic about it).

C) The influence of rising unemployment on house prices has been discussed ad nauseum - we all know unemployment in AU is going to increase over the next year. The only thing we don't know for sure is by how much - but even the government forecasts an increase to 7% by mid 2010. 

D) To summarise the arguments - the bears are "now" saying that unemployment will be the trigger for the "great house price crash", as all the other triggers have failed to deliver the massive falls predicted (eg, high interest rates - gone, credit rationing/systemic banking crisis in AU - hasn't happened, etc). While the "bulls" are saying that the impact of rising unemployment on house prices is being over-played based on past history (early 80s, 91/92 etc when unemployment was 10%+) where we had both rising/high unemployment and rising house prices at the same time. 

Cheers,

Beej


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## Lancelot (12 February 2009)

http://business.smh.com.au/business/surprise-jobs-jump-20090212-85cg.html



> *Surprise jobs jump*
> Chris Zappone
> February 12, 2009 - 3:19PM
> Page 1 of 2 Single page view
> ...


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## BillyIdol (12 February 2009)

Not according to one FP that I saw present the other day....he asked if people would like to sell their house for 60c in the dollar (40% drop) and not many takers. 

I felt like explaining to him that if something is unaffordable (like the recent NATSEM report showed), how on earth can people buy it ?  As much as I'd like to buy something (e.g. house in Toorak), I can't, because I don't have (and can't borrow) enough money, simple as that !

But, at the risk of the crowd becoming hostile, I didn't bother.


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## Lancelot (12 February 2009)

Maybe you need to get a dose of reality and look in places you can afford.

Toorak is obviously not the place.

I cant afford a Maybach, but it doesn't stop me buying a Commodore.


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## gfresh (12 February 2009)

Unemployment was above 7% for *all* of the 90's... how we soon forget. 

As long as we don't see GDP dive negative by several percent (UK, US), Australia will get through.


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## Mofra (12 February 2009)

CamKawa said:


> Good to see the unemployment rate increase today.



Bet the bushfires had you in fits of laughter then


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## sinner (12 February 2009)

gfresh said:


> Unemployment was above 7% for *all* of the 90's... how we soon forget.
> 
> As long as we don't see GDP dive negative by several percent (UK, US), Australia will get through.




This has already begun though.

From CIA World factbook 
https://www.cia.gov/library/publications/the-world-factbook/print/as.html
GDP - composition by sector:
  agriculture: 2.5%
  industry: 26.4%
  services: 71.1% (2008 est.) 

Manufacturing makes up just under half of "industry" at 10% of GDP, but importantly also 10% of employment. 

http://www.abc.net.au/news/stories/2009/02/02/2479742.htm?section=justin

So manufacturing is still contracting. Anyone think we will see expansion soon? No? Then this will impact GDP negatively.

What about the rest of the economy? I saw on ABC news a few nights ago, Alan Kohler with his wonderful graph of internet job ads inverted and shifted seven months in advance, plotted against unemployment. The correlation was staggering. A decline in internet job ads was followed by a proportional increase in unemployment approx 7 months later.

Here is the article that inspired the chart

http://www.businessspectator.com.au/bs.nsf/Article/Job-ads-fall-for-9th-month-in-a-row-in-Jan-$pd20090209-P4365?OpenDocument

I am not looking forward to the corresponding spike in unemployment :/


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## numbercruncher (12 February 2009)

Work 1 hour or more per week and your " employed " - nation of high rollers we are


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## BillyIdol (12 February 2009)

Lancelot said:


> Maybe you need to get a dose of reality and look in places you can afford.
> 
> Toorak is obviously not the place.
> 
> I cant afford a Maybach, but it doesn't stop me buying a Commodore.




 hey, go easy now please !   Why so harsh straight away ?  

My point (although extrapolated somewhat) was that from the NATSEM report, the median house was considered 'unaffordable'.  I ask myself, if it is, how can prices increase ?  A second question is that if it is so affordable, why are we seeing increases in FHOGs, shared equity loans etc. ?  Surely, if we had an asset market 'at fair value', we would not need anyone to help buyers.

O.K., I might need to go a little lower in my expectations, but in relative and fairly clinical terms, the house 'the next rung down' probably does not represent fair value for what it is if the median price is so high (unaffordable).  I would be stretching to make it this far.

Although people may not want to lose money on their house / IPs (which is understandable) that they are potentially going to sell to a first homebuyer, if there is no market for it, something has to 'give' to 'meet the market' for a transaction to occur.  As tough as it sounds, it's reality - the FP in the seminar was basically saying that house prices can't possibly fall, essentially because "the will of the people who already own them is that they don't want them to", not because people who want to buy them, can't.

King Canute didn't do too well with that one.


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## Julia (12 February 2009)

Lancelot said:


> http://business.smh.com.au/business/surprise-jobs-jump-20090212-85cg.html






CamKawa said:


> Good to see the unemployment rate increase today. A bit hard to repay a mortgage or pay your rent without a job I would have thought.
> 
> 
> 
> ...






Beej said:


> A)
> 
> B) There was actually a "surprise" increase in full time jobs, with losses coming from part time, so actually more income around than previous month (if we want to be pedantic about it).



Sadly, this increase is not correct - a glitch from the ABS, suggested by Stephen Long from ABC Radio as being due to staffing cutbacks in the ABS due to the government's cost cutting.  Story from "PM" here:

http://www.abc.net.au/pm/content/2008/s2490008.htm

Let's hope not too much government policy is being determined on the basis of incorrect figures from the ABS! 
Sigh.


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## singlefished (13 February 2009)

Julia said:


> Sadly, this increase is not correct - a glitch from the ABS, suggested by Stephen Long from ABC Radio as being due to staffing cutbacks in the ABS due to the government's cost cutting.  Story from "PM" here:
> 
> http://www.abc.net.au/pm/content/2008/s2490008.htm
> 
> ...




Alan Kohler pointed this out on the news earlier this evening and according to the stats the economy could have lost upto 59,600 jobs or gained upto 62,000 jobs.... it sort of renders some of the rhetoric we hear from the spin doctors on this forum completely irrelevant (if we want to be pedantic about it).

I'm betting Krudd is now wishing Lindsay Tanner wasn't so brutal with the razor gangs last year... it would be nice to have a bit more confidence in the official ABS figures...


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## wayneL (13 February 2009)

"Damned lies and statistics" etc.

ABS = *A*bsolute *B*ull *S*##t

Nobody should ever ever ever EVER trust gu'mint stats.


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## numbercruncher (13 February 2009)

The unemployment rate jumped by over 12pc in a single month here in sunny QLD, and its just the beginning - we might have to start turning southerners back at the border eh ?



> Figures released by the Australian Bureau of Statistics on Thursday showed the jobless rate rose to 4.4 per cent in January from December's 3.9 per cent - the highest rise of any state.




http://news.ninemsn.com.au/article.aspx?id=751423


The property permabull fraternity will probably now argue that the ABS has been infiltrated by QLD realestate bears/realists and other disinformation specialists ?


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## numbercruncher (13 February 2009)

Our American brothers keep giving us sneek previews of our possible future ....




> NEW YORK (CNNMoney.com) -- Home prices fell 12.4% during the fourth quarter of 2008, the largest year-over-year decline since the National Association of Realtors began keeping comprehensive records in 1979.




http://money.cnn.com/2009/02/12/real_estate/Latest_median_prices/index.htm



> Cape Coral-Ft. Myers, Fla., which has the third highest rate of foreclosure filings in the nation, according to RealtyTrac, prices fell a devastating 50.8% for the year, to $110,900 from $225,300. That was the most precipitous plunge for any metro area.




Didnt one of the one eyed permabulls say 50pc was impossible anywhere ? and in a short year , wow ..... I bet many of our bubbly mining towns face this as a minimum ..... 190 a week dole wont service 600k mortgages on old white ant ridden Qlder's I heard .....


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## Aussiejeff (13 February 2009)

numbercruncher said:


> The unemployment rate jumped by over 12pc in a single month here in sunny QLD, and its just the beginning - we might have to start turning southerners back at the border eh ?
> 
> 
> 
> ...




Not to worry. The Absolute Bull Shyte department will simply rig the figures next month to show a "surprise" 50% leap in QLD full-time jobs. 

Should we expect less from loyal gummint plodders? I wonder if KRudd has promised 'em "surprise" secret bonuses if they can "make the figures look much better"?


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## Aussiejeff (13 February 2009)

numbercruncher said:


> Our American brothers keep giving us sneek previews of our possible future ....
> 
> 
> 
> ...




Not to worry.

The plucky Yank Shock Market rebounded a Zillion points in the last few minutes of trading on SPECULATION from an UN-NAMED source that the Obama-ites will "help mortgagees".

http://www.news.com.au/heraldsun/story/0,21985,25048292-5005961,00.html

See?

All the World really needs to prosper is SPECULATION, RUMOURS and INUENDO.

_"And the red red Robin keeps bob, bob, bobbin' along, along...."_ :bananasmi


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## Glen48 (13 February 2009)

The Kiwi's do have a clue about housing like we do:
[NZ HOUSE PRICES] REINZ's latest housing rpt painted a grim picture of NZ's housing market; with sales of NZ houses turning to plunge by 13.9% over Jan to a 17yr low of 3,706 houses following a 0.5% gain prior. The dismal result amounted to sales being down a hefty 28.5% on the year.


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## gfresh (13 February 2009)

Bring it on QLD  Although can't see I'm seeing too many signs of distressed sales at the moment, although a few seem sus..  If that changes in the next 6 months, going to be an interesting scenario. Can't really be put to auction now can they, with 20% or less auction clearance. Also, supposedly now it's illegal in QLD for the bank to sell the property "below market value".


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## professor_frink (13 February 2009)

gfresh said:


> Bring it on QLD  Although can't see I'm seeing too many signs of distressed sales..  If that changes in the next 6 months, going to be an interesting scenario. Can't really be put to auction now can they, with 20% or less auction clearance. Also, supposedly now it's illegal in QLD for the bank to sell the property "below market value".




dunno what the actual law is on that in NSW, but did go to a couple of mortgagee auctions in the 2nd half of 07 when I was looking for a house. Both times the bank involved expected a "market" price for the house being sold. On one house I was thinking of putting a bid in for, but was put off by the amount of people that went through it prior to auction. Knew it needed a lot of work, and with the amount of people going through it thought my chances of picking it up for a fair price were pretty slim. Turned out that the reserve put on it by the bank was 60K above what I would have been happy to pay(this is on a sub 300K house) The house ended up going above the reserve by 1K, and only after lengthy negotiations between the agent and the highest bidder.

Will be interesting to see how the banks start behaving in these types of situations if the sh!te really does hit the fan, you wouldn't think they would want large numbers of empty houses on their books doing nothing when they can't sell them for what they deem to be a "market' price


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## singlefished (13 February 2009)

professor_frink said:


> dunno what the actual law is on that in NSW, but did go to a couple of mortgagee auctions in the 2nd half of 07 when I was looking for a house. Both times the bank involved expected a "market" price for the house being sold. On one house I was thinking of putting a bid in for, but was put off by the amount of people that went through it prior to auction. Knew it needed a lot of work, and with the amount of people going through it thought my chances of picking it up for a fair price were pretty slim. Turned out that the reserve put on it by the bank was 60K above what I would have been happy to pay(this is on a sub 300K house) The house ended up going above the reserve by 1K, and only after lengthy negotiations between the agent and the highest bidder.
> 
> Will be interesting to see how the banks start behaving in these types of situations if the sh!te really does hit the fan, you wouldn't think they would want large numbers of empty houses on their books doing nothing when they can't sell them for what they deem to be a "market' price




better to preempt the spin doctors response that the high participation rate, property selling above reserve and massive turn out at auction (especially at the lower FHB end of the market) is the sign of a healthy market. This info pertains to market activity back in 2007, some 5 or 6 quaters ago and is not reflective of current conditions / sentiment / et al....


----------



## professor_frink (13 February 2009)

singlefished said:


> better to preempt the spin doctors response that the high participation rate, property selling above reserve and massive turn out at auction (especially at the lower FHB end of the market) is the sign of a healthy market. This info pertains to market activity back in 2007, some 5 or 6 quaters ago and is not reflective of current conditions / sentiment / et al....




The high interest in it prior to auction had nothing to do with the market being in a good state(it hasn't been in a "good" state here since early 2004), it was more like a pack of vultures that had found a corpse to feed on. Most of the interest was killed off when the auctioneer knocked back the opening bid of 200K and pushed for the bidding to start at 250. Out of a crowd of roughly 70-80 people, only 3 even bothered to bid, and one of them wouldn't go over 260!


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## investorpaul (13 February 2009)

At the moment the property market is being propped up by first home buyers, this is occurring for a number of reasons:

1. The first Home Buyer grant being increased.
2. Record Low Interest rates and most importantly
3. Most first home buyers would be too young to remember a full blown recession in this country, they dont realise how bad it will/could get and therefore jump into property because of the above two reasons.

The question needs to be asked though, what will happen once the first home buyer grant reverts to normal levels? and secondly once these young first home buyers realise how bad a recession can be will they still be willing to jump into property?

The answer to the first question is obvious, once the FHB grant goes, interest in the first home buyer market drops off. As a side note the month before the end of the grant will probably involve some "frenzied" buying by First home buyers before the grant is removed. 

The second question is a bit more indepth; Once unemployment kicks up and these younger peoples notice some of their peers losing their jobs they will take a more cautious approach the net result being a reduction in first home buyers.

Both of the above conditions will drive house prices down, how much will depend on the extend to which the RBA cuts rates, but the direction will be down.


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## MrBurns (13 February 2009)

investorpaul said:


> At the moment the property market is being propped up by first home buyers, this is occurring for a number of reasons:
> 
> 1. The first Home Buyer grant being increased.
> 2. Record Low Interest rates and most importantly
> ...




KRudd wil keep the grant going til we're broke and the housing bubble is out of control, also interest rates will be zero just to keep it all going and send savers broke. 
KRudd has got a plan for everybody.

It will all come down eventually, I dont believe KRudd can defy gravity forever.


----------



## investorpaul (13 February 2009)

MrBurns said:


> KRudd wil keep the grant going til we're broke and the housing bubble is out of control, also interest rates will be zero just to keep it all going and send savers broke.
> KRudd has got a plan for everybody.




The bigger the bubble the worst the burst and Ill be waiting at the bottom for a bargain.


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## MrBurns (13 February 2009)

investorpaul said:


> The bigger the bubble the worst the burst and Ill be waiting at the bottom for a bargain.




About 2 years will be the bottom so I'm told. 
A long time to wait.


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## investorpaul (13 February 2009)

MrBurns said:


> About 2 years will be the bottom so I'm told.
> A long time to wait.




I hope it is about 24-30 months to be honest. 

At the moment i am concentrating on my Stocks & CFD trading. 

In 12 months I get married and we already have accommodation (inlaws flat) which we can we for as long as we want, but Ideally I only want to be there 12-18 months. So during that time the plan is to save like crazy.


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## MrBurns (13 February 2009)

investorpaul said:


> I hope it is about 24-30 months to be honest.
> 
> At the moment i am concentrating on my Stocks & CFD trading.
> 
> In 12 months I get married and we already have accommodation (inlaws flat) which we can we for as long as we want, but Ideally I only want to be there 12-18 months. So during that time the plan is to save like crazy.




Just watch the market with interest rates so low anything can happen although I still wouldnt jump in if the market spikes I still think it will tank but that process will be distorted by the grants and low rates.

Your time frame is about perfect.


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## nomore4s (13 February 2009)

MrBurns said:


> KRudd wil keep the grant going til we're broke and the housing bubble is out of control, also interest rates will be zero just to keep it all going and send savers broke.
> KRudd has got a plan for everybody.
> 
> It will all come down eventually, I dont believe KRudd can defy gravity forever.




I'm more worried about what will happen to these FHB when rates rise again.


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## MrBurns (13 February 2009)

nomore4s said:


> I'm more worried about what will happen to these FHB when rates rise again.




Well it will be a disaster, I'm not sure under what circumstances rates will rise again though, I thought they'd stay down for years while the rolling recession/depression is still with us.


----------



## investorpaul (13 February 2009)

nomore4s said:


> I'm more worried about what will happen to these FHB when rates rise again.




Alot of them will get smashed - maybe not immediately - But I imagine alot of FHB will lock in rates for 3 to 5 years while there low. However when they move from their fixed rate to a variable rate, they could see the interest component payable double and unless they prepare for it well..... they will face a worrying future.

Hopefully in 2 years when I decide to buy interest rates will still be low. Basically my plan will be to work out what is affordable at a realistic interest rate of say 7.5 to 8.5%. After I know how much I can afford at that rate I will lock in for 5 years at the lower rates (that will hopefully still be available in 2 years)

Once i come off my fixed rate, even if interest rates are 7.5 - 8.5% I will still be able to afford my loan.

In addition, because most fixed loans dont allow extra repayments I will start a savings account on the side for additional payments (aim for maybe 5 to 10K per year). After the 5 year fixed rate I will have $25 to 50k savings to put straight onto the mortgage to reduce my exposure to the higher rates that may be around.


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## MrBurns (13 February 2009)

investorpaul said:


> Alot of them will get smashed - maybe not immediately - But I imagine alot of FHB will lock in rates for 3 to 5 years while there low. However when they move from their fixed rate to a variable rate, they could see the interest component payable double and unless they prepare for it well..... they will face a worrying future.
> 
> Hopefully in 2 years when I decide to buy interest rates will still be low. Basically my plan will be to work out what is affordable at a realistic interest rate of say 7.5 to 8.5%. After I know how much I can afford at that rate I will lock in for 5 years at the lower rates (that will hopefully still be available in 2 years)
> 
> ...




Good thinking and good luck


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## pacestick (13 February 2009)

At the moment people on fixed rates  locked in before the  rate fall are trying to get out  but my understanding is that it costs  a lot of money simply because the mortgage providers locked in the money from their sources at the higher rates. Thankfully mine is variable and nearly finished.
I am also informed that many on variable rates are reducing their repayments to the full amount each time. This I would consider bad planning as they will only be screaming again when the rates rise . Myself I crank up each time  they rise and freeze  the repayments at the same level when they fall


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## gfresh (13 February 2009)

Difference on a "typical" FHB loan of $300k would be going from $392 @ 5.5% to $532/wk @ 8.5%. I am sure a couple can cope with that extra $140/wk.. 

If they go stupid and borrow $400/500k right now then good luck to them. I don't think that is the typical scenario, and I doubt the banks will lend that much without factoring at least a 2% rise in rates for each applicant. 

Where it would drive a lot under is if the rates went up to 9/10%+, but can't see that happen until a good few years, if ever. 9% seemed to be the limit last time where everybody nearly died of rate shock.


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## nomore4s (13 February 2009)

MrBurns said:


> Well it will be a disaster, I'm not sure under what circumstances rates will rise again though, I thought they'd stay down for years while the rolling recession/depression is still with us.




I generally agree, but this is where we could find ourselves in trouble. As the economy starts to level out and rates start to rise again alot of people could find themselves in mortgage stress especially if we see any sort of collapse in house prices in the next few years - even if it is only a 15-20% decline, this could then drag out our recovery.



investorpaul said:


> In addition, because most fixed loans dont allow extra repayments I will start a savings account on the side for additional payments (aim for maybe 5 to 10K per year). After the 5 year fixed rate I will have $25 to 50k savings to put straight onto the mortgage to reduce my exposure to the higher rates that may be around.




Paul most fixed loans allow about an extra $10,000 per year in repayments - mine did at least.

You have obviously given alot of thought to this and have planned accordingly, I just wonder how many other FHB have done the same.


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## gfresh (13 February 2009)

Three developments go t1ts up on the goldcoast.. owing $145M. 

http://www.brisbanetimes.com.au/articles/2009/02/12/1234028198391.html

Guess the fancy website and slick marketing wasn't quite enough: http://www.ilanahaqua.net.au/index2.html


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## CamKawa (13 February 2009)

gfresh said:


> Three developments go t1ts up on the goldcoast.. owing $145M.
> 
> http://www.brisbanetimes.com.au/articles/2009/02/12/1234028198391.html
> 
> Guess the fancy website and slick marketing wasn't quite enough: http://www.ilanahaqua.net.au/index2.html



I wonder who the bank was that financed it.


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## Glen48 (13 February 2009)

This is the way to control debt:
I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.”

With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.

The government says the real number is much lower. But the stories contain at least a grain of truth: jobless people here lose their work visas and then must leave the country within a month. That in turn reduces spending, creates housing vacancies and lowers real estate prices, in a downward spiral that has left parts of Dubai ”” once hailed as the economic superpower of the Middle East ”” looking like a ghost town. 
From Patrick.net


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## roofa (13 February 2009)

investorpaul said:


> Alot of them will get smashed - maybe not immediately - But I imagine alot of FHB will lock in rates for 3 to 5 years while there low. However when they move from their fixed rate to a variable rate, they could see the interest component payable double and unless they prepare for it well..... they will face a worrying future.
> 
> Hopefully in 2 years when I decide to buy interest rates will still be low. Basically my plan will be to work out what is affordable at a realistic interest rate of say 7.5 to 8.5%. After I know how much I can afford at that rate I will lock in for 5 years at the lower rates (that will hopefully still be available in 2 years)
> 
> ...





You may wish to consider fixing half of the loan and instead of having a savings account you could put that extra cash into paying off the variable loan. This option gives you a little flexibility.


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## gfresh (13 February 2009)

Canadian employment punched in the knackers... http://www.cbc.ca/money/story/2009/02/06/januaryjobs.html

Good one to keep an eye on, as we have a similar economy to theirs in many ways..

And their housing market now coming under pressure.. "we've never seen this many foreclosures"

http://www.calgaryherald.com/Homes/...+mortgage+defaults+Calgary/1279897/story.html

3 months ago Canada was actually holding up (based on articles I was reading at the time)... how things have changed quickly!

I've been thinking today.. one reason I think for the relatively boyancy in our employment figures so far is that it's going to take a while for those laid off in the last quarter to spend all their redudancy payments. A large percentage will have left with such payments, most especially full-time employees!

Most probably won't even be listed on the unemployment register until their cash has run dry. Some employers (especially banks and larger co's) pay several months of salary to those retrenched. Worth keeping in mind, even those out of work may have it fairly easy until mid this year. After then.... ?


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## Trevor_S (13 February 2009)

gfresh said:


> I've been thinking today.. one reason I think for the relatively boyancy in our employment figures so far is that it's going to take a while for those laid off in the last quarter to spend all their redudancy payments. A large percentage will have left with such payments, most especially full-time employees!
> 
> Most probably won't even be listed on the unemployment register until their cash has run dry. Some employers (especially banks and larger co's) pay several months of salary to those retrenched. Worth keeping in mind, even those out of work may have it fairly easy until mid this year. After then.... ?




Does the official "unemployment" figure include those people  who are unemployed, looking for work and not on the dole (Newstart) or only those being paid the dole (Newstart) ?


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## Beej (13 February 2009)

Trevor_S said:


> Does the official "unemployment" figure include those people  who are unemployed, looking for work and not on the dole (Newstart) or only those being paid the dole (Newstart) ?




So many people misunderstand how ABS unemployment stats are determined. They periodically sample a larg-ish number if people, chosen using statistical techniques, and ask them questions like" did you work in the last week", "were you employed full time in the last week", "were you seeking employment in the last week" etc etc. Based on the results they extrapolate to estimate the total employment picture nationally. So it's not in any way based on whether people have registered for the dole etc etc.

Part of the current "controversy" (if you want to call it that) with ABS employment stats is that due to budget cut backs the SIZE of the sample used for these figures each month has been reduced, therefore increasing the standard deviation in the results - that's why the bears here all jumped on the "positive full time employment rise" aspect of the latest figures. Equally, the same variability/error would exist in any negative figures (when they come) as well. That's why the important part of the stats to look as is the TREND. 

Cheers,

Beej


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## numbercruncher (14 February 2009)

gfresh said:


> Three developments go t1ts up on the goldcoast.. owing $145M.
> 
> http://www.brisbanetimes.com.au/articles/2009/02/12/1234028198391.html
> 
> Guess the fancy website and slick marketing wasn't quite enough: http://www.ilanahaqua.net.au/index2.html





More fantastic news ....

Foolish banks for lending so much money to these glorified gamblers .....

I see in the article there was a 900 hectare development planned for Canungra, lovely quiet hinterland area - really doesnt need a development of that scale - not to mention the loclas would of been cringing, half the town turned out to protest coles wanting to open shop.


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## Mofra (14 February 2009)

investorpaul said:


> Hopefully in 2 years when I decide to buy interest rates will still be low. Basically my plan will be to work out what is affordable at a realistic interest rate of say 7.5 to 8.5%. After I know how much I can afford at that rate I will lock in for 5 years at the lower rates (that will hopefully still be available in 2 years)



When banks work out your borrowing capacity, they add 2% onto their standard variable rate to determine repayments at the higher rate so you should get a reasonable guide from some of the online calculators.


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## Wysiwyg (15 February 2009)

There is some point, if not now, where a) interpreted present house prices in your district cease to be interpreted lower (i.e. demand for houses has started to return) and b) mortgage interest rates go no lower.

It would be perfect to lock in a fixed rate at the low AND house prices at interpreted levels have stagnated or begin increasing in demand (value).

I mean one will only drop the price until buyers interest returns which would coincide with a market bottom.

Good indicators are what I wonder?A chat with your local real estate agent about sales over recent months or closely monitoring advertised prices in the local newspaper.Even attending auctions to gauge buyer interest.


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## kincella (15 February 2009)

this might give you the clues...clearance rates at auction of 89%

****properties below $600,000 the figure was 89 per cent, according to Australian Property Monitors

The first-home buyer market has become Sydney's strong point, estate agents reporting demand for property priced up to $600,000.

Last weekend's auction clearance rate averaged 75 per cent - but on properties below $600,000 the figure was 89 per cent, according to Australian Property Monitors. 

little by little...bit by bit...hey
http://www.smh.com.au/national/slow-then-steady-on-housi ... 

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


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## Beej (15 February 2009)

kincella said:


> this might give you the clues...clearance rates at auction of 89%
> 
> ****properties below $600,000 the figure was 89 per cent, according to Australian Property Monitors
> 
> ...




Just re-posting your link which seems to be broken: http://www.smh.com.au/national/slow-then-steady-on-housing-20090213-8769.html

It's a good article which as well as price info also talks about total sales volumes etc.

Cheers,

Beej


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## kincella (15 February 2009)

thank  you Beej,
it might also be a clue for those posters who suggest they can wait a couple of years to get the cheaper homes...I doubt the combination of cheaper interest rates and low priced homes will be available.....but interest rates around 7% is not bad..but loans at 4-5% is a bargain IMO

am also of the opinion that there are always bargain houses out there...at anytime....and the young ones may be only using the median price as a guide for buying.....when there are properties below 250,000 if they care to look

the 600,000 price suggests to me that people are upgrading from the first home to the next bigger home with these low rates....
cheers


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## Lucky_Country (15 February 2009)

Now that the big intrest rate cuts are over and any futher intrest rate cuts will not be passed on in full to the consumer from the banks this should put pressure on the housing market.

Rising unemployment and an increase in defaults will drive house prices down as forced sellers look to recover what they can.

Early 2010 should see low house prices high unemployment and low intrest rates 

Easy pickings !!!!


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## kincella (17 February 2009)

Lucky_Country....I would not bet on your chances.... unless you are into the 1 million plus market....but if you are like most, or a FHB then I think there might be a floor on the prices in the 300-500k bracket
you will get a lot of competition from cashed up investors, dyo superfunds and former fhb now upgrading....
some people will never go back to the stockmarket,  the term deposit rates are not attractive....bricks and mortar is still the safest...if you are prudent and conservative about it... 
the low interest rates make props very attractive
apart from that...there are plenty of affordable props out there now, and I can always find one when I am looking, regardless if the market is high or low

good luck anyway....whether a buyer or renter


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## Glen48 (17 February 2009)

Why St. Kilda is worth more than Mayfair London:
From Fat Prophets
Debt, the great leveller

Aristocratic lineage and prestigious titles may afford a certain level of privilege for the so endowed. But such intangibles are no defense for the excessively geared in a deleveraging environment, where all are treated equally. This point is aptly illustrated by the experience of the Duke of Westminster, reported below.

Britain's wealthiest landowner, the Duke of Westminster, is in advanced talks with his bankers to prevent his £2bn property fund business breaching bank covenants. Pressure on the multibillionaire duke has intensified with investors in his funds suggesting that his property managers failed to heed advice to reduce borrowings 18 months ago, ahead of the collapse in property values.

The developments mark a serious threat to the duke's private investment company, Grosvenor, and underline how the property downturn is embroiling the country's wealthiest aristocrats.

The duke inherited one of the most valuable portfolios of property holdings on Earth, centred on Mayfair in London. He has maintained the family tradition of never selling any buildings. But 10 years ago, Grosvenor started borrowing money and invited international institutions and wealthy families to co-invest in shopping centres, London offices and residential assets.

"Will the duke go bust? No," said one property insider. "Is he in trouble? Yes. He has borrowed money and bought badly. Anyone running funds is having a terrible time."

A measure of how Grosvenor is suffering through the downturn is that it was recently outbid in its own backyard, when Qatari money won the race to buy the United States Embassy building on Grosvenor Square.


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## UBIQUITOUS (17 February 2009)

kincella said:


> Lucky_Country....I would not bet on your chances.... unless you are into the 1 million plus market....but if you are like most, or a FHB then I think there might be a floor on the prices in the 300-500k bracket
> you will get a lot of competition from cashed up investors, dyo superfunds and former fhb now upgrading....
> some people will never go back to the stockmarket, the term deposit rates are not attractive....bricks and mortar is still the safest...if you are prudent and conservative about it...
> the low interest rates make props very attractive
> ...





Meanwhile....outside of your dreamworld and in reality, from the front page of 'The Age':


*Japan plunges into depression*
*Peter Martin *
February 17, 2009
AUSTRALIA'S biggest and most reliable customer, Japan, has plunged into depression, with federal Treasurer Wayne Swan now warning of the worst global downturn "in our lifetimes".

Japan's economy shrank an annualised 12.7 per cent over the December quarter, its worst result since the 1974 oil shock.

*Japan is by far Australia's biggest export customer,* accounting for one in every five container ships that leave Australia's shores.

The new figures put it among the worst-hit casualties of the global crisis.
The annualised contraction of 12.7 per cent, or 3.3 per cent in quarterly terms, dwarfs those of the United States and Europe and is much worse than anything that happened to Japan during its so-called "lost decade" of recession in the 1990s.

The collapse in growth fits the profile of a depression ”” a deep recession in which annual GDP falls by 10 per cent or more.

Australia's other big customer, China, has had its growth rate almost halved from 13 to 6.8 per cent.
"These figures reveal just how serious the global recession is becoming," Mr Swan said. "They follow on the heels of the worst contraction in the euro area since records began in 1980.
"The last three months of 2008 are likely to have seen the sharpest synchronised downturn in the global economy in our lifetimes.
"It's is a sobering backdrop for Australia as we seek to do everything we can to cushion the impact the global downturn will have here," Mr Swan said.
A 14 per cent collapse in exports in the December quarter led Japan's plunge.
Toyota, Sony and Hitachi are forecasting losses and have begun firing thousands of workers, heightening the risk that a slump in domestic spending will deepen the downturn.
"At one time, it looked like Japan had escaped the brunt of the financial crisis," said Hideo Kumano, chief economist for the Dai-Ichi Life Research Institute. "This shows how feeble Japan's economic fundamentals were in the first place."
*Access Economics director Chris Richardson said Japan's plight showed there was "no place for Australia to hide".*
"It is true that Japan's statistics are more dodgy and more volatile than those of other large nations, but this fits what know about the reach of the crisis," Mr Richardson said. "It is very big and very nasty.
"It is impossible for Australia to avoid a recession; perhaps not absolutely impossible, but it is incredibly hard for Australia to hold against the tide, and the tide pulling us down is getting stronger every day.
"This is confirmation of what's facing us," said ANZ chief economist Saul Eslake. *"Japan is a more important and more diversified export market than China.*
"Australian GDP per person is already running backwards. What happens over the next few months will determine how bad things get."
*The impact of the downturn in Asia was felt in Albury yesterday when 400 workers at cars parts company Drivetrain Systems International were stood down without pay.*
The business was hit hard by last month's collapse of South Korean vehicle manufacturer SsangYong, a major customer.
Finance figures released on Monday suggest that Australians resumed borrowing in December in the wake of a further interest rate cut and the Government's $8.7 billion fiscal stimulus hand-outs.
New lending commitments climbed 3.5 per cent. All forms of personal lending increased, including a solid 24 per cent lift in loans to buy new cars. *But the bulk of the new loans were for refinancing or for debt consolidation. Lending remains 27 per cent down over the year.*
    .adSpot-textBox {clear:both;background:#fff;margin:0;padding:0;border:none;width:420px;float:right;}    .adSpot-textBox h5 {background-color:#ffff;border:1px solid #ffff;color:#A1A1A1;font-size:9px;margin:0;padding:0}[/quote]


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## kincella (17 February 2009)

ubiquitous....Japan has been a basket case since the 90's.....the worst economic performer for the past 2 decades....is anyone surprised Japan is taking a bigger hit now ??? or performing in line with the rest of the world...and starting from a lower base.....

I am not a dreamer...but a realist........lets see in a few years time... then look back on hindsight 
ps ....I do not take much notice of the media


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## investorpaul (17 February 2009)

People are jumping into the house market now (mainly FHB) but they risk being burnt and burnt badly.

A few months ago people were saying we had seen the worst of it, then a few months later they were proven wrong but said Now we have really seen the worst of it, then a few months later it was even worse and most of those people have kept their mouths shut this time. The fact of the matter it no one knows how bad the economy will get. Japan has been smashed and that has huge repercussions for Australia given their status as a major trading partner.

How does this affect FHB? Well there is no point getting a a FHB bonus of up to $24k if in12 months time your property is worth $50k less. I believe many FHB are jumping in now because if you look at the figures as they are printed:

Interest rates for borrowing: 5-6%
Unemployment: Under 5%

It looks like an ideal time to borrow and buy. But if the scenario changes and unemployment hits 10%, it doesnt matter how low interest rates are people are going to be in trouble and by then the government will have run out of handouts and they will be left on their own.


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## kincella (17 February 2009)

housing for 7000 people required now...or 1800 houses..for those displaced ... lost their homes in the fires...I would be guessing it will take more than a year to find out what the new building requirements will be, securing a builder, and then having it completed....
most are wanting to stay within a close proximity to the old place.....
in the meantime it will put a strain on the rental market....
anyone with a vacant house, or house nearing completion to help out ???

think they were offered army barracks for temp accommodation..but declined


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## gfresh (20 February 2009)

Time for some bad news to even things up a little:

Bad debts not a problem for individuals? even ANZ thinks it's only a matter of time. When does the FHB effect end? mid-year eh...



> Bad debts are spreading from companies to ''higher-risk'' individuals, Smith said. In the second half of this year and into 2010, personal customers will begin defaulting as unemployment rises, he added.




http://business.theage.com.au/business/bad-debts-to-spread-anzs-smith-says-20090220-8del.html

What was it? Mining only plays a small part in our economy? Try this.. 



> "The lost export revenue from cutting iron ore prices by a third and coal prices by a half *would be equivalent to 3.8 per cent of GDP,*" said an ABN Amro economist, Kieran Davies.




http://www.brisbanetimes.com.au/articles/2009/02/18/1234632930104.html

but of course house prices and the economy are not connected :

QLD to slip into large deficit.. go QLD! fingers really on the pulse there...



> Treasurer Andrew Fraser today announced the Queensland budget would have a $1.6 billion deficit in June 2009 - a $2 billion drop since the last estimate in December 2008, when he predicted the economy would have a slim surplus of $54 million.




http://www.brisbanetimes.com.au/new...-hit-7-per-cent/2009/02/20/1234633031856.html

House prices to boom... anytime now .. sure.


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## Temjin (20 February 2009)

kincella said:


> ps ....I do not take much notice of the media




Well, it just happens that the news on Japan on technical depression has been out among the investment communities for weeks. The mainstream media took a while to pass along the message. In fact, they haven't even reported HOW BAD some of the Euro countries are and how close some of them are to national bankruptcy. A few of them are in similar situation, that is, in "technical depression".


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## numbercruncher (21 February 2009)

> RUTHLESS property investors are swooping on Victoria fires victims to buy their devastated land.
> 
> Disgusted real estate agents are fielding calls from predators seeking cheap "scorched land for sale".




http://www.news.com.au/story/0,27574,25081068-1243,00.html


Just another piece of not surprising news ..... must take a bit to disgust a RE agent hey ?


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## Aussiejeff (21 February 2009)

Temjin said:


> Well, it just happens that the news on Japan on technical depression has been out among the investment communities for weeks. The mainstream media took a while to pass along the message. In fact, they haven't even reported HOW BAD some of the Euro countries are and how close some of them are to national bankruptcy. A few of them are in similar situation, that is, in "technical depression".




As far as world economics is concerned, I would class the greater % of Oz media as a pig-ignorant bunch of NIMBY's. 

IMO we are at a tipping point. The news out of the US, Europe, Japan et all just keeps snowballing down the slippery slope. At the first hint that the euphoria & confidence in BO's Grande Rescue Package has vaporised, just watch the panic REALLY set in to stock and housing markets.

We ain't seen nuttin' yet, ASF'ers.


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## kincella (21 February 2009)

reply to Aussiejeff....just wondering are you a home owner or not ??? 
I find it unusual for homeowners to look forward to the price of their home going down.....on the other hand..if they are would be investors in an IP, or a fhb then I can understand, wanting the price to go down..
just wondering where you are coming from....I may have wrongly asumed you were a home owner


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## explod (21 February 2009)

kincella said:


> reply to Aussiejeff....just wondering are you a home owner or not ???
> I find it unusual for homeowners to look forward to the price of their home going down.....on the other hand..if they are would be investors in an IP, or a fhb then I can understand, wanting the price to go down..
> just wondering where you are coming from....I may have wrongly asumed you were a home owner




Wanting the price to go up or down will make not an iota of difference.   Aussie is just pointing out the facts from his take.   
I agree with his stance.   One lives in a home for the longer term but on investments one ignores the facts at ones peril.   It is indeed time to beware for awhile IMVHO.

The news everyday is flooded with Stimulas packages and re packages just to make us feel ok.   What is the peril the scares the bejesus out of them.

Well worth serious contemplation.


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## Aussiejeff (21 February 2009)

kincella said:


> reply to Aussiejeff....just wondering are you a home owner or not ???
> I find it unusual for homeowners to look forward to the price of their home going down.....on the other hand..if they are would be investors in an IP, or a fhb then I can understand, wanting the price to go down..
> just wondering where you are coming from....I may have wrongly asumed you were a home owner




We are renting a small house from my wife's brother. He bought it for us when we moved from another rental house in Sydney in 2004. 

We are luckier than most renters in that he has never raised the rent from day one and he has stated he has no intention of doing so in the foreseeable future (my wife helps out in his local business).

We have owned a PPOR house on three occasions since 1979.

Rochedale, Brisbane, 1979-1984
Westfield, Perth 1984-1996
Roleystone, Perth 1996-2004

BTW, I don't look forward to the price falling, either. My son in Perth owns an investment unit he can't sell - at a significantly reduced price - and owes around $400,000 on his PPOR. That said, I can only call it how I see it and based on how my son & mates in Perth, south Sydney and Brisbane are coping with their NO sales at ever reducing prices.

For anyone who is experiencing the exact opposite and is selling easily at higher profits, making a motza - I say well, good luck to ya's (chiz, Robots  )! 

But my overall impression is that the initial flood of FHB's into the market WILL subside. After all, once they have bought their first home, that's it. They will no longer be FHB'ers. Also, they will likely not be in any hurry at all to sell in 12 months time. So while the OZ housing market is just barely holding on by the fingertips of FHB'ers atm, what is going to happen in 12 mths time when the number of FHB applications will have dropped back to a relative trickle yet the % of homes still on the market for sale will likely be climbing?

How can prices stay up under those conditions?


Chiz,

aj


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## Beej (21 February 2009)

If I worried too much and reacted continually to bad economic news out of Japan I would never have invested in any Aussie properties or shares since the early 90s!!! Gee that would have worked out well wouldn't it???   Same even for the US - imagine if you had dumped all your aussie share-holdings during 2001 when they had their last technical recession? Of course the internet (well the web anyway) was not around in the early 90s so there was no easy vehicle for the common folk to rapidly spread fear and economic voo-doo around and scare each other....

So not ignorant of economic goings on around the world - but I pay far more attention to the local economy that I am actually investing in. Of course the situation in many western economies is very serious right now - but still, how are we fairing here in AU? Whilst we will of course be impacted, it is not a certainty that we have to suffer all the same woes for the same reasons......

Take subprime lending in the US for example - the cause of this whole current mess - we don't have that problem locally in our economy - phew! (And at the end of the day that is why US house prices have crashed - just check out their mortgage default rate - CAUSING there recession, not because of it). Given that even through recession our house prices will hold up OK just as they have in the past IMO. Add to this the fact that our government and central bank are hell bent on cushioning the local economy as much as they possibly can, and they have been able to react here ahead of the curve rather than after it as in the US and UK, this also means there is a good chance that things will not get as bad here as they have in other countries- but we shall see - place your bets!! 



			
				Aussiejeff said:
			
		

> But my overall impression is that the initial flood of FHB's into the market WILL subside. After all, once they have bought their first home, that's it. They will no longer be FHB'ers. Also, they will likely not be in any hurry at all to sell in 12 months time. So while the OZ housing market is just barely holding on by the fingertips of FHB'ers atm, what is going to happen in 12 mths time when the number of FHB applications will have dropped back to a relative trickle yet the % of homes still on the market for sale will likely be climbing?




FHBs are always around - it's only a question of numbers. There is so much pent up demand that when things look good (as now) they are flooding into the market. The effects of this runs for YEARS! It's not fleeting - it set's off a whole chain reaction that starts at the FHB end of the market and then flows all the way through. You are kidding yourself if you think the current FHB activity will have no other effects through the entire market.

Cheers,

Beej


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## kincella (21 February 2009)

its not just fhb...imo...unless they can really afford 600,000 in Sydney....

I am sorry but I doubt it....thought 300,000 was about the average or limit....

I believe its the other people upgrading in the 600.000 range and selling their old fhb houses   (other people being....formerly fhb's..10 years ago...now kids entering teen years and need their own bedrooms)

Aussiejeff....ok so I can see where you are coming from...but didnt the kids buy the property to hold for at least 10 years...in order to ride the cycles??
why are they trying to sell now.....its the worst possible time to sell...unless its within fhb range....perth will come back and recover...give it a year or so


----------



## singlefished (21 February 2009)

kincella said:
			
		

> its not just fhb...imo...unless they can really afford 600,000 in Sydney....
> 
> I am sorry but I doubt it....thought 300,000 was about the average or limit....
> 
> ...






			
				Beej said:
			
		

> FHBs are always around - it's only a question of numbers. There is so much pent up demand that when things look good (as now) they are flooding into the market. The effects of this runs for YEARS! It's not fleeting - it set's off a whole chain reaction that starts at the FHB end of the market and then flows all the way through. You are kidding yourself if you think the current FHB activity will have no other effects through the entire market.




Hmmm...



> Perth property prices continue to fall
> 
> Property prices in Perth have fallen for the fourth consecutive quarter, for the first time in more than 15 years.
> 
> ...






What a lot of people are blind to on this forum are that *prices are and still dropping* and the it's the impact on "current" property owners having to deal with the lower than anticipated valuations that will ripple through from the busier FHB end of the market up through the middle and upper price brackets. This ripple will obviously be felt more more accutely in the higher price brackets where for obvious reasons there is a lot less market activity.

People feeling the pressure now may well be financially screwed for years and if they are required to sell for whatever reason then they have to note that the majority of transactions are currently taking place in the lower and lower-middle sectors of the market.... and prices are dropping to meet the market.

Any drops in valuations on property above the median price will not reflect in the city wide median prices that the REI's like to quote (ie: $900K dropped to $800K will not effect the median price... and if more of these sellers drop their prices to meet the market then the median will actually rise as a consequence of increased activity at that higher end of the spectrum ~ this is why you really need to read between the lines, even bad news can be made to look like good!!!)

FHB's have not been sitting watching their prized asset drop in value and to be honest probably wont worry about it too much unless the downturn continues, the only noticable consequence they have felt so far from this GFC is the halving of the interest the bank provides on their FHB deposit (and still no end in sight to the financial issues plagueing the market.... state budget surplaces are turning massively negative and will continue to be revised downwards over the coming months IMO).

For every buyer there has to be a seller who is selling under the pressure of the current downturn ~ not easy to upgrade in these circumstances or draw on equity for IP purchase. Some will be selling at a loss, some will be breaking even and some will be coming out on top depending on the circumstances of the specific transaction.


----------



## Beej (21 February 2009)

singlefished said:


> Hmmm...



And how much did Perth prices go up by during 2006/2007??? Perth  (and SEQ) markets are currently where Sydney was in 2005 - have a look at Sydney prices 2004 - present if you want a good indication of what will happen in Perth.

And to back this up, here is a quote from the same article that you quoted: 


> "REIWA's Rob Druitt says it is the slump WA had to have after the boom of 2006 and 2007.
> 
> Mr Druitt says the market should stabilise this year due to lower interest rates and an increase in consumer confidence.
> 
> He says the market will also be buoyed by the return of property investors."






singlefished said:


> What a lot of people are blind to on this forum are that *prices are and still dropping* and the it's the impact on "current" property owners having to deal with the lower than anticipated valuations that will ripple through from the busier FHB end of the market up through the middle and upper price brackets. This ripple will obviously be felt more more accutely in the higher price brackets where for obvious reasons there is a lot less market activity.




Prices are not falling across much of Sydney at the moment - last quarter they actually rose in many lower priced area's, and even year/year the median is down only a tiny amount, most of which occurred in the early part of 2007 when interest rates were still high and rising. The FHB activity is by all accounts very high in Sydney, and this is starting to flow through the rest of the market here. 

Just for one first hand example, I was just at my parents house for lunch and the house across the road from theirs just sold this week for a street record price after only 2 weeks on the market..... This a northern suburb where median prices are around the $550k mark. 



> For every buyer there has to be a seller who is selling under the pressure of the current downturn ~ *not easy to upgrade in these circumstances or draw on equity for IP purchase*.




Why do you presume all sellers are under pressure? I sold 2 places late last year without any financial pressure forcing me to do so at all? Upgrading a PPOR was easy by the way as well, and I have significant cash available via equity manager type facilities with the flick of a pen over my cheque book or the push of a button on the banks web site. So if I found a good investment opportunity there is nothing stopping me from moving on it at all using equity redraw if I so choose. I am sure I am not completely alone!

So really I don't know where you get some of these idea's from?

Cheers,

Beej


----------



## kincella (21 February 2009)

beej..good reply as usual...just spent another hour looking at one of my suburbs....am very pleased with what I have seen..think one of my props might have grown 10% or more compared to whats out there....there are the more expensive houses on the market now....I have not seen them for over a year, and anything under 300k is snapped up very quickly....this is a regional area....the very cheap ones have all sold....that cheapie period ended in Nov...
and re singlefished and the 30% number.....of course there are less houses on the market......compared to last year...aka Dec 07..that was boom times,
the lower number of houses on the market is in contradiction of what you are saying,,,about everyone selling etc....
I have set aside sufficient cash to cover my all my  costs for at least 4 years, or 5 years if I cut some costs.....imagine most people like me are in at least a similar or better situation....so there is no forced selling.....in fact I will be a buyer if I can find a bargain...believe I missed those in Oct 08...
so plenty of time for the market to recover...and then I may sell one at or near the top...to top up my cash account....but expecting to buy a cheapie in the meantime to replace it
just to remind you I am a baby boomer...its like we live on another planet


----------



## singlefished (21 February 2009)

Beej said:


> Why do you presume all sellers are under pressure? I sold 2 places late last year without any financial pressure forcing me to do so at all? Upgrading a PPOR was easy by the way as well, and I have significant cash available via equity manager type facilities with the flick of a pen over my cheque book or the push of a button on the banks web site. So if I found a good investment opportunity there is nothing stopping me from moving on it at all using equity redraw if I so choose. I am sure I am not completely alone!
> 
> So really I don't know where you get some of these idea's from?
> 
> ...




Maybe I worded it wrong or maybe you just read it wrong, but I certainly didn't state that ALL sellers are under financial pressure....

Lets try re-wording for clarity since your knee jerk reaction to ALL negative viewpoints consistantly leads you to believe that all "bears" are getting their facts wrong.



> For every buyer there has to be a seller _*who is trying to sell into a contracting market brought on by the economic downturn....*_




Didn't you mention somewhere previously that you had to accept 5% off your reserve (or something along thoese lines) for your sale last year? Certainly a profit at the end of the day for yourself but a lot of sellers are not in your financial position and will definately feel the pinch selling at a discount to what they personally believe is fair market value....


----------



## kincella (21 February 2009)

one reason people may sell in this current climate is....they found their next property, the one they will upgrade to....hence sell the old one....
buying and selling in the same market is a good idea...whether the market is high or low


----------



## singlefished (21 February 2009)

kincella said:


> one reason people may sell in this current climate is....they found their next property, the one they will upgrade to....hence sell the old one....
> buying and selling in the same market is a good idea...whether the market is high or low




so with the amount of lower end properties (typically in the FHB and IP price range) fuelling the majority of current market activity, what makes you assume that the vendor is selling to upgrade or purchase elsewhere?

it would be easy to argue that a lot of the properties coming on the market are investors getting out... trying to clear their debts in the view that their principal income may not be quite as secure as it was 6 months ago.


----------



## robots (21 February 2009)

hello,

strange, rents have been surging, interest rates have been dropping and now down to 5.23% on basic variable loan

many things neutral now, fantastic

sorry sorry i know i know no-one will have a job by 2010 

thankyou
robots


----------



## kincella (21 February 2009)

singlefish...of course there will be some scaredy cats..who sell at the wrong time...but the big drop in interest rates will make it easier to hold onto the property.... 
I met a woman once...she was not a saver nor an investor...but she got caught up in the hype in 2003/04 and bought a rental prop....she sold it within 12 months for about  the same price....she had it with an agent....but she found it all too stressful...it was rented the whole time....I could not believe her reason for selling.....but some people just get too emotional  ...about the wrong things
in her case, she was looking to supplement her income for retirement in 10-15 years...there was not enough in super,  she had a steady job etc....but could not hack it
it takes all types....but I believe you need a bit more stamina than the rest, and to believe in the plans /goals you set for yourself


----------



## kincella (21 February 2009)

robots, 
seems all of us  positive property  types have a happier disposition, and or attitude to the current doom....and look forward to the future....

I have a brother....always sees the gloomy side of anything...a pessimist, and I am the opposite..well usually....its human nature or something
cheers


----------



## Beej (21 February 2009)

singlefished said:


> Maybe I worded it wrong or maybe you just read it wrong, but I certainly didn't state that ALL sellers are under financial pressure....
> 
> Lets try re-wording for clarity since your knee jerk reaction to ALL negative viewpoints consistantly leads you to believe that all "bears" are getting their facts wrong.




Thanks for clarifying. However it sounds to me that all you are saying is for every successful _transaction_ there must have been a buyer and a seller willing to meet/make the market. Right now the scales are tipped in favour of the buyers in many/most market segments, so yes to sell it's more the seller that has to meet the market it seems. This results in a fairly stable market where buyers (collectively) determine a base-line price determined mainly from past sales that have occurred of similar property in the last couple of years, and sellers meet this, rather than the boom time situation where buyer competition forces prices ever upwards. However, the current situation is not forcing prices down from what I have seen, as there are still enough buyers around to keep the price baseline in-line, meaning sellers are not forced to take the real "low ball" offers.



> Didn't you mention somewhere previously that you had to accept 5% off your reserve (or something along thoese lines) for your sale last year? Certainly a profit at the end of the day for yourself but a lot of sellers are not in your financial position and will definately feel the pinch selling at a discount to what they personally believe is fair market value....





As Kincella stated - many people may be selling because this type of market provides a good opportunity to upgrade - especially if prices are at least stable, providing a level of certainty around the cost of upgrading that in boom markets isn't there and actually adds quite a risk to the equation. If prices have fallen, but have fallen more in higher price ranges, then upgrading makes even more sense in such a market.

As for my sale - yes I sold my PPOR for probably 5% less (which on a $1M property is $50k) than I would have expected at the peak of the market (which was about mid 07 -> Feb 08 where I live). However, as with anything trying to pick the very top or the very bottom of a market is a black art and few (be they bulls or bears) can do this, unless they get lucky. It takes a few months just to get a property ready for sale and onto the market, then 6-8 weeks to sell, so you can't just respond immediately to a change in the market. Despite this we think we "saved" far more than we "lost" through the upgrade process as compared to trying to do it in a booming market.

Cheers,

Beej


----------



## robots (21 February 2009)

hello,

yes Kincella, you can see it as we walking tall down the street man

as their eyes hit us though the heads of the doom brigade lift, their step gets a little more upbeat and fingers crossed life begins a new path 

the sun shine's bright on us all day long for helping out society and following the philantropist way 

thankyou
robots


----------



## nunthewiser (21 February 2009)

:band    Sunshine and lollipops...................:band


----------



## singlefished (21 February 2009)

kincella said:


> singlefish...of course there will be some scaredy cats..who sell at the wrong time...but the big drop in interest rates will make it easier to hold onto the property....
> I met a woman once...she was not a saver nor an investor...but she got caught up in the hype in 2003/04 and bought a rental prop....she sold it within 12 months for about  the same price....she had it with an agent....but she found it all too stressful...it was rented the whole time....I could not believe her reason for selling.....but some people just get too emotional  ...about the wrong things
> in her case, she was looking to supplement her income for retirement in 10-15 years...there was not enough in super,  she had a steady job etc....but could not hack it
> it takes all types....but I believe you need a bit more stamina than the rest, and to believe in the plans /goals you set for yourself




With the amount of unsold properties currently on the market and the amount of buyers participating then I guess the masses just don't have your appetite for risk. 

I'm sure there are plenty of "cashed up buyers" just waiting on the sidelines however ~ just wish that somebody would post a factual link or an ABS statistic telling the masses this instead of hear-say from REA's.... and if that statistic about sitting on the sidelines is true, what message is it sending to current vendors? Why aren't the buyers jumping into the market with their ears pulled back when it's supposedly such a great time to buy???


----------



## singlefished (21 February 2009)

Beej said:


> Thanks for clarifying. However it sounds to me that all you are saying is for every successful _transaction_ there must have been a buyer and a seller willing to meet/make the market. Right now the scales are tipped in favour of the buyers in many/most market segments, so yes to sell it's more the seller that has to meet the market it seems. This results in a fairly stable market where buyers (collectively) determine a base-line price determined mainly from past sales that have occurred of similar property in the last couple of years, and sellers meet this, rather than the boom time situation where buyer competition forces prices ever upwards. However, the current situation is not forcing prices down from what I have seen, as there are still enough buyers around to keep the price baseline in-line, meaning sellers are not forced to take the real "low ball" offers.




Yes ~ agree with this in respect to the lower end of the market currently being in a relative state of equilibrium....  still not seeing anywhere near equilibrium in middle-upper middle-upper end of the market, and what may now be considered "low-balling" is probably not far off the mark for where the vendors need to be setting their prices to see anything near the turnover the market is used to.





Beej said:


> As Kincella stated - many people may be selling because this type of market provides a good opportunity to upgrade - especially if prices are at least stable, providing a level of certainty around the cost of upgrading that in boom markets isn't there and actually adds quite a risk to the equation. If prices have fallen, but have fallen more in higher price ranges, then upgrading makes even more sense in such a market.




Makes sense - yes, but... as mentioned above, if the middle-upper middle-etc is not yet in a state of equilibrium, it would explain why buyers are not yet jumping in at this particular point in time. I would interpret this lack of activity in these sectors as a signal that prices have overcooked significantly in the last few years and are yet to come back down to sustainable growth levels. If there is no confidence in the economy in it's current state then there is no floor under these inflated prices in the short term.




Beej said:


> As for my sale - yes I sold my PPOR for probably 5% less (which on a $1M property is $50k) than I would have expected at the peak of the market (which was about mid 07 -> Feb 08 where I live). However, as with anything trying to pick the very top or the very bottom of a market is a black art and few (be they bulls or bears) can do this, unless they get lucky. It takes a few months just to get a property ready for sale and onto the market, then 6-8 weeks to sell, so you can't just respond immediately to a change in the market. Despite this we think we "saved" far more than we "lost" through the upgrade process as compared to trying to do it in a booming market.




It's good you have done well and I have no doubt that you are in a financially secure position regardless what happens to the economy.

Hypothetically, how do you think "Joe/Jane Somebody" would fare though with a rather large mortgage on the PPOR, IP loan, car loan, credit card debt, school fees, rates, insurance, cost of living, etc, etc and then either Joe or Jane lose their job and then have to deal with selling either the IP or the PPOR at a loss. It may not have been an issue for yourself but there are a lot of people out there who will feel the pinch if they are selling into this environment and don't achieve the prices they were expecting.


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## Beej (22 February 2009)

singlefished said:


> Hypothetically, how do you think "Joe/Jane Somebody" would fare though with a rather large mortgage on the PPOR, IP loan, car loan, credit card debt, school fees, rates, insurance, cost of living, etc, etc and then either Joe or Jane lose their job and then have to deal with selling either the IP or the PPOR at a loss. It may not have been an issue for yourself but there are a lot of people out there who will feel the pinch if they are selling into this environment and don't achieve the prices they were expecting.




Well of course a hypothetical couple in the situation you describe could be in trouble if one of them lost their jobs. However, a few points:

* Presuming that most of these commitments were made (or survived) while interest rates were much higher, the cost servicing said debts is now 40% less than at this same time last year. That would have left quite a bit of scope for an unplanned reduction in income without going under.

* There are many actions they could take - including pulling kids out of private school and putting them in public, selling the car that has a loan on it (although why you would have a mortgage with some equity and a separate car loan at a higher interest rate I don't know - same goes for CC debt - see the other thread here in that topic!). Cut back on discretionary spending (eating out, holidays etc etc). These actions, combined with the lower servicing costs due to lowered interest rates, plus the dole, the remaining income, and the family welfare assistance they would now get as well, might enable existing commitments to be met.

* Worse case if the above still see's them going backwards, then they sell either their investment property, or perhaps the PPOR if the mortgage is really that large (as it's interest is non tax deductible and it doesn't have the rental income to support it). If they had bought in the last year, then they may well sell at a loss, but if they bought 2 years or longer ago, and even if that was in Perth or SEQ, even at today's prices they could sell at a profit, eliminate the associated debt, use the profit to pay down the other property mortgage and probably be able to get by.

So your hypothetical sounds bad if you imagine a large number of people in that situation, but the reality is that not many people, as a proportion of existing property owners, would be in the worse case scenario at all (Ie everything else + bought the IP or PPOR in the last year). And then of that very small proportion, only another very small proportion are likely to be impacted by rising unemployment directly (95.2% of people who want one currently still have their job - probably even higher ratio amongst property owners). So you have a hypothetical worse case set of circumstances that apply to a small proportion of a small proportion of the property owning population - and then even that tiny group can take all the actions I described above to get by meaning only a proportion of those will actually be forced to sell or get foreclosed on.

So therefore the implication that there is (or will be) this massive flood of desperate, forced property sales just because unemployment ticks up a couple of % is IMO a false one. And in Sydney and Melbourne at least all the evidence do date is that is not happening at all.

Cheers,

Beej


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## robots (22 February 2009)

hello,

yes spot on Beej, the RBA has also noted that people are not adjusting their weekly/monthly mortgage payment *down* to take advantage of the interest rate declines

but instead keeping the payments the same and as such the big meany mortgage is being cleared out earlier, 

some are calling for legislation for compulsory payment change,

i know i know i know, everyone is under mortgage stress and no one will have a job in 2010

thankyou
robots


----------



## joeyr46 (22 February 2009)

robots said:


> hello,
> 
> yes spot on Beej, the RBA has also noted that people are not adjusting their weekly/monthly mortgage payment *down* to take advantage of the interest rate declines
> 
> ...




What they want you to pay less by legislation is that what you Robots


----------



## joeyr46 (22 February 2009)

Flys in the face of all advise I've ever seen about paying your mortgage down as quickly as you can


----------



## robots (22 February 2009)

hello,

some economists (not sure what they do) are calling for the compulsory reduction so the savings are placed/spent in society

some advisors and I know many here from the rent crew promoted placing as much funds into Super and paying out mortgage when funds can be taken out at retirement (hahahaha)

i am just plodding along

thankyou
robots


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## Largesse (22 February 2009)

am i stupid to go and buy my first house in the next month or so?
i have a job

if i buy a little 1br for 250k, is it just going to cost 233k after the FHOG expires? 

that would be a sizeable drop off in price....


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## Beej (22 February 2009)

Largesse said:


> am i stupid to go and buy my first house in the next month or so?
> i have a job
> 
> if i buy a little 1br for 250k, is it just going to cost 233k after the FHOG expires?
> ...




How much rent would you otherwise be paying for a little 1 br place? Is it more or less than the interest on the $233k you would have as a mortgage? In 10 years, how much rent do you think you would be paying if you didn't buy, and how much do you think your 1 bedder would be worth then if you did? What would it cost you (if anything) to wait and buy in 6 months? Factor in different scenarios - falling prices, flat prices, and rising prices.

Do some sums and the answer should become clear to you (whatever it is - everyones circumstances are different).

Cheers,

Beej


----------



## robots (22 February 2009)

hello,

the fhog has been around for years, and does not just end on that date the extra's are scheduled to end

and yes sinner RE industry should get just as much propping as any other, dont many want fairness and equality for all

thankyou
robots


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## kincella (22 February 2009)

the average mortgage is 240,000....at 10% interest thats 24,000 pa , at 5% interest its 12,000....whats the big deal/ noise about people losing jobs and therefor their house ??? the cost has reduced...made it cheaper to stay in the home....how much to go out and rent the same thing ???? it would probably cost you more to rent....

I could be wrong..but gained the impression some on here just read headlines...and the media pick out the bad parts for the headlines..and ignore the positive news in the story
aarrhh traps for players


----------



## Largesse (22 February 2009)

well 1br apts around where I want to buy seem to be yielding around the 6% mark, so prob better I buy, i'm reckoning, maybe we even get a sneaky rate cut next month to really tip me over the edge


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## UBIQUITOUS (22 February 2009)

kincella said:


> the average mortgage is 240,000....at 10% interest thats 24,000 pa , at 5% interest its 12,000....whats the big deal/ noise about people losing jobs and therefor their house ??? the cost has reduced...made it cheaper to stay in the home....*how much to go out and rent the same thing ???? it would probably cost you more to rent....*
> 
> I could be wrong..but gained the impression some on here just read headlines...and the media pick out the bad parts for the headlines..and ignore the positive news in the story
> aarrhh traps for players





NOT TRUE!!

I could be wrong (doubt it though), but gained the impression some on here (and the media) like to throw about figures, conveniently ignoring some very important house ownership costs i.e :

1.council rates
2.maintenance costs
3.mortgage insurance
4.mortage costs
5.buildings insurance
6.stamp duty

AND MOST IMPORTANTLY

7.borrowing cost over the FULL TERM of the loan (not just this month's interest rate) during an asset deflationary environment!!

THE GRIM REAPER IS SHARPENING HIS BLADE!!!


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## prawn_86 (22 February 2009)

^^ I agree with most of the above.

What i dont get is if you buy say a $400k house you actually pay a hell of a lot more than that if you pay the whole thing off over say 20 years, so your house value has to rise A LOT for you to even break even. If it was worth sya 500k when you retired you have still lost out as you have paid more than 500k if you take into account the mortgage and all other yearly fees.

That is of course from a purely financial perspective, not taking into account the emotonal benefits...


----------



## So_Cynical (22 February 2009)

prawn_86 said:


> ^^ I agree with most of the above.
> 
> What i dont get is if you buy say a $400k house you actually pay a hell of a lot more than that if you pay the whole thing off over say 20 years, so your house value has to rise A LOT for you to even break even. If it was worth sya 500k when you retired you have still lost out as you have paid more than 500k if you take into account the mortgage and all other yearly fees.
> 
> That is of course from a purely financial perspective, not taking into account the emotonal benefits...




This is where inflation works in your favor...that's the bit ive only recently come 
to understand....over the first 10 years of your loan, if inflation is reasonably high 
the asset value rises over 100% while the debt (principle) stays the same....this is 
how it worked in Aust during the 70 > 90's.


----------



## prawn_86 (22 February 2009)

So_Cynical said:


> This is where inflation works in your favor...that's the bit ive only recently come
> to understand....over the first 10 years of your loan, if inflation is reasonably high
> the asset value rises over 100% while the debt (principle) stays the same....this is
> how it worked in Aust during the 70 > 90's.




True, but if people bought in the last 18 months they wont have the same benefits, in fact the value of thier homes will be falling while they pay off a huge mortgage. Like any asset class it comes back to timing really


----------



## kincella (22 February 2009)

median house price in 1986 was 80,000....in 2006 it 396400...lets say 400,000
so increased 5 times or 500%....
have a look at what inflation does for you...look at the disposable incomes all those years....note fhb prices were lower but still managed to go from 67400 to 350,000

the house price rise over the years sure out strips the balance on the mortgage...
friend that bought the house for 12,000 in 1970...lets say borrowed 10,000
then sold by 1986 for 80,000 would be quite happy with the result
or if still holding until 2006....
so lets see  cost 12,000 in 1970....mv 400,000 in 2006.....an increase of 388.000...would they care what the loan and interest cost them...

in a few years time..when things get back to normal...that 400k loan today
will dwarf the house price of say 1 mill....only 2.5 times growth instead of the 5 times growth...in real prices of the 20 years noted....
if prices continued at 5 times over 20 years...you are looking at mv for a house of 2 mill.....

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


----------



## Beej (22 February 2009)

UBIQUITOUS said:


> NOT TRUE!!
> 
> I could be wrong (doubt it though), but gained the impression some on here (and the media) like to throw about figures, conveniently ignoring some very important house ownership costs i.e :
> 
> ...




Some on here like to throw figures around related to the financial benefits/pitfalls of PPOR ownership, but ignore the RENT that would otherwise be paid, plus the impact that INFLATION over the LONG TERM will have on both rents, and house prices, even ignoring all other variables, market timing etc etc.

Plus some of your costs like stamp duty is zero for FHB, and mortgage costs (other than interest which you list separately) should be zero also. The rest are minor - just noise in the scheme of things.

And by the way, the easiest way to avoid the interest cost over the loans full term is pay it down as soon as you can. My first mortgage was paid of completely in 7 years. That's when I started living rent AND mortgage free. It's not rocket science......



prawn_86 said:


> ^^ I agree with most of the above.
> 
> What i dont get is if you buy say a $400k house you actually pay a hell of a lot more than that if you pay the whole thing off over say 20 years, so your house value has to rise A LOT for you to even break even. If it was worth sya 500k when you retired you have still lost out as you have paid more than 500k if you take into account the mortgage and all other yearly fees.
> 
> That is of course from a purely financial perspective, not taking into account the emotonal benefits...




Ah grasshopper have you learnt nothing???  How much RENT would you otherwise be paying? Subtract that from the interest you pay on the mortgage, and that is all the increase in absolute capital value you need to be getting ahead. This difference is usually a lot less than just the inflation rate....

Eg, an inflation rate of just 3%pa over 20 years will turn your $400k house into a $725k one, ignoring all other factors that can and do push property values up ahead of inflation. At the same time, your rent of say $400/week would after 20 years be $725/week. Even if you had only paid interest on your mortgage over that 20 years, you would now be paying heaps less than what it would cost to rent the same house, plus if you sold it you would pocket $325k (less selling costs) to boot.

Another rule of thumb, you can effectively cancel out interest rate movements/variability in your calcs as well because rising interest rates = rising inflation, meaning your interest payments are higher but at the same time your absolute house price increases at a higher rate as well. On average over the long term it always works out this way.

And as So_Cynical points out below understanding the impact of inflation over the long term on both rents and house prices (plus prevailing interest rates) here is the key to unlocking your future financial freedom:



So_Cynical said:


> This is where inflation works in your favor...that's the bit ive only recently come
> to understand....over the first 10 years of your loan, if inflation is reasonably high
> the asset value rises over 100% while the debt (principle) stays the same....this is
> how it worked in Aust during the 70 > 90's.




At last someone is starting to get it!

Cheers,

Beej


----------



## kincella (22 February 2009)

should have added in my last post...that friends house was actually worth 1 mill in 2006....remember it cost 12,000 in 1970.....the land alone is worth about 800.000...they just tore down the old house and built a new one...cost 700,000 to build the house....its in a nice suburb

I know of another example...same cost, very different location...in 2006 this house only 240,000...a fhb suburb..with some problems

very different results for very different locations...


----------



## UBIQUITOUS (22 February 2009)

Beej said:


> Some on here like to throw figures around related to the financial benefits/pitfalls of PPOR ownership, but ignore the RENT that would otherwise be paid, plus the impact that INFLATION over the LONG TERM will have on both rents, and house prices, even ignoring all other variables, market timing etc etc.




Some like to use *recent* history as a guide to future performance. If only things were that easy. What guarantees do you have that there will be enough inflation over the long term to negate any benefits of renting. Let me guess.....recent performance over a timescale to suit your pov?



Beej said:


> Plus some of your costs like stamp duty is zero for FHB, and mortgage costs (other than interest which you list separately) should be zero also. The rest are minor - just noise in the scheme of things.




Oh, so its 'noise' when it suits you. Try telling someone who has to pay, that these costs are just noise. Looking down your nose again Beej? 



> And by the way, the easiest way to avoid the interest cost over the loans full term is pay it down as soon as you can. *My first mortgage was paid of completely in 7 years. That's when I started living rent AND mortgage free. It's not rocket science......*




You're right, its not rocket science, but it cetainly is someone who 'accidently' timed the market right, once again giving their own example as a 'crystal ball' to the future.



> Ah grasshopper have you learnt nothing???  How much RENT would you otherwise be paying? Subtract that from the interest you pay on the mortgage, and that is all the increase in absolute capital value you need to be getting ahead. This difference is usually a lot less than just the inflation rate....




As someone who has made a tidy some from investing in property over the years (and has now sold out), I know a LOT more about financial modelling then your simple arithmetic bold above. 

Infact, I am very surprised at your obvious lack of understanding, as I thought you had a level of understanding that your average property investors does not. 

Beej, if only maths were as simple as your, 'subtract dot from dash = guaranteed profits', way of thinking.



> Eg, an inflation rate of just 3%pa over 20 years will turn your $400k house into a $725k one, ignoring all other factors that can and do push property values up ahead of inflation. At the same time, your rent of say $400/week would after 20 years be $725/week. Even if you had only paid interest on your mortgage over that 20 years, you would now be paying heaps less than what it would cost to rent the same house, plus if you sold it you would pocket $325k (less selling costs) to boot.




IF..if...if. Hello, do you pay attention to anything happening which doesn't suit your own point of view. 

What are your views on the deflation? Why do you think the governemnt, RBA are battling deflation of asset values. Do you know something that they do not?

It seems as though inflation is what your entire investment decision hinge on. If you've had your head in the sand for the last few months, you are going to be in for a big, big shock.



> Another rule of thumb, you can effectively cancel out interest rate movements/variability in your calcs as well because *rising interest rates = rising inflation,* meaning your interest payments are higher but at the same time your absolute house price increases at a higher rate as well. On average over the long term it always works out this way.




and falling interest rates = deflationary pressures (I cannot believe that you don't 'get' this part of the equation!).

Also, what do you have to say to those FHBs whose new home payments are dependent on them keeping their jobs? Let me guess, in Beej world unemployment is decreasing, so they'll have no problems in paying of their homeloans.



> And as So_Cynical points out below understanding the impact of inflation over the long term on both rents and house prices (plus prevailing interest rates) here is the key to unlocking your future financial freedom:




Not understanding the other side of the inflation argument (deflation) is the key to unlocking financial ruin 



> At last someone is starting to get it!




...but its not you. I'll give you some help - Property *can and will be* a great investment, and agree that it usually is 'time in the market and not 'timing the market'. 

However, there sometimes are times when you should *NEVER *buy. *This is one of them.*


----------



## UBIQUITOUS (22 February 2009)

kincella said:


> should have added in my last post...that friends house was actually worth 1 mill in 2006....remember it cost 12,000 in 1970.....the land alone is worth about 800.000...they just tore down the old house and built a new one...cost 700,000 to build the house....its in a nice suburb
> 
> I know of another example...same cost, very different location...in 2006 this house only 240,000...a fhb suburb..with some problems
> 
> very different results for very different locations...





Roll up..roll up!!! Past performance = Future performance

Oh how easy life is. 

If your shares double in price, buy twice as many!!

 for you.


----------



## joeyr46 (22 February 2009)

kincella said:


> should have added in my last post...that friends house was actually worth 1 mill in 2006....remember it cost 12,000 in 1970.....the land alone is worth about 800.000...they just tore down the old house and built a new one...cost 700,000 to build the house....its in a nice suburb
> 
> I know of another example...same cost, very different location...in 2006 this house only 240,000...a fhb suburb..with some problems
> 
> very different results for very different locations...




Ah yes house prices to fall for years and years It's the land value that appreciates that is why location location location is so important the actual house is second hand as soon as someone moves in probably also why as Beej says top end is so much more volatile


----------



## robots (22 February 2009)

UBIQUITOUS said:


> Roll up..roll up!!! Past performance = Future performance
> 
> *Oh how easy life is. *
> 
> ...




hello,

spot on there ubiquitous, life is the best thing going around, easy as man for most who put in

all the more reason to concentrate on your income and anything else a bonus

sunshine and lollipops

thankyou
robots


----------



## Beej (22 February 2009)

UBIQUITOUS said:


> As someone who has made a tidy some from investing in property over the years (and has now sold out), I know a LOT more about financial modelling then your simple arithmetic bold above.
> 
> Infact, I am very surprised at your obvious lack of understanding, as I thought you had a level of understanding that your average property investors does not.
> 
> Beej, if only maths were as simple as your, 'subtract dot from dash = guaranteed profits', way of thinking.




I never said anything about guaranteed profits. Simply showing that to be getting ahead you don't require massive capital gains, only enough to offset the difference between the interest, (plus other costs if it makes you feel better that I put this here, although interest is the major one), and the rent you otherwise would have to pay. We are talking about PPORs here remember - not pure investment.

You can build as complex a financial model as you like, but the MAJOR factors that impact the outcome are those I am pointing out. Certainly good enough for a back-of-the-envelope explanation on an internet forum!



> IF..if...if. Hello, do you pay attention to anything happening which doesn't suit your own point of view.




Ummmmm it was a simple EXAMPLE - hence the 'ifs'. How else do you work up a simple example scenario?



> What are your views on the deflation? Why do you think the governemnt, RBA are battling deflation of asset values. Do you know something that they do not?
> 
> It seems as though inflation is what your entire investment decision hinge on. If you've had your head in the sand for the last few months, you are going to be in for a big, big shock.
> 
> and falling interest rates = deflationary pressures (I cannot believe that you don't 'get' this part of the equation!).




Inflation is the natural order of things. Deflation is rare and economically damaging, hence unlikely to occur and if it does will be short lived due to government and central bank intervention. Also I don't see over-all deflation occurring in the AU economy at the moment? Deflationary pressures yes - resulting in economic growth slowing/contracting, but still moderate underlying inflation over-all. As you point out both fiscal and monetary policy levers are being yanked hard at the moment to avoid deflation and restore the "natural inflationary order" of things.

I think one the problems of the last 10 years is we are victims of our own economic success - 10 years if historically LOW inflation has unmasked non-inflationary asset price inflation more obviously than has been the case in the past, causing a lot of the current angst.



> Also, what do you have to say to those FHBs whose new home payments are dependent on them keeping their jobs? Let me guess, in Beej world unemployment is decreasing, so they'll have no problems in paying of their homeloans.




At the moment their cost of interest vs rent would be about the same, so what difference does it make? At least by buying they have a chance of future financial security and their own roof over their heads.



> Not understanding the other side of the inflation argument (deflation) is the key to unlocking financial ruin
> 
> ...but its not you. I'll give you some help - Property *can and will be* a great investment, and agree that it usually is 'time in the market and not 'timing the market'.
> 
> However, there sometimes are times when you should *NEVER *buy. *This is one of them.*




The things you argue are exactly what some people were saying to me back in the early 90s when I bought my first house.....So I guess we have to agree to disagree on that one!

Cheers,

Beej


----------



## robots (22 February 2009)

UBIQUITOUS said:


> *As someone who has made a tidy some from investing in property over the years (and has now sold out),* I know a LOT more about financial modelling then your simple arithmetic bold above.
> 
> However, there sometimes are times when you should *NEVER *buy. *This is one of them.*




hello,

you were lucky as well Ubiquitous, well done

thankyou
robots


----------



## lioness (22 February 2009)

UBIQUITOUS said:


> Some like to use *recent* history as a guide to future performance. If only things were that easy. What guarantees do you have that there will be enough inflation over the long term to negate any benefits of renting. Let me guess.....recent performance over a timescale to suit your pov?
> 
> 
> 
> ...




Ubquitous, You are one of the few here who get it.

I woke up to deflation happening and changed my mind on property and got killed for it on here. I stated deflation is happening now so why worry about inflation in 3 years time when property falls 50% in the meantime.

I am now selling my rental property to FHB in the 550K bracket and they are swarming over it as I write, good luck they can have it.

I will have my PPOR paid off and no debt ready for bargains in 3 years time.

People like beej and kincella never will get it as their argument soley relies on inflation which is yesterday's news.


----------



## cwamit (22 February 2009)

a good investing moto for houses is to buy the worse house in the best street...


----------



## Beej (22 February 2009)

lioness said:


> I am now selling my rental property to FHB in the 550K bracket and they are swarming over it as I write, good luck they can have it.




And you still think asset prices will somehow magically deflate in an environment like that?



> I will have my PPOR paid off and no debt ready for bargains in 3 years time.




Really our positions are actually not that different then, as I notice you are not rushing to sell your PPOR as many here using the deflation argument would advocate. It's interesting you are so certain 3 years will be the time for the bargains - how do you know it won't be in 2 years? Maybe 1 year? Maybe 6 months? Perhaps even right now?? The real problem is, nobody knows.....

Cheers,

Beej


----------



## robots (22 February 2009)

hello,

6mths ago could of been the time to buy, who knows

look at Sunshine on Saturday, record sale price for the suburb, not much of a collapse there fellow ASF members

thankyou
robots


----------



## gav (22 February 2009)

UBIQUITOUS said:


> However, there sometimes are times when you should *NEVER *buy. *This is one of them.*




Really?  Even for FHB's?  After settlement my repayments will be on par with rent!  Rents have gone up 20% in the past 2 yrs and rising.  In less than 10yrs I'll have it paid off and own my own property with no debt, whilst those who continue to rent will have nothing to show for their money.  And they will still be renting...


----------



## numbercruncher (22 February 2009)

> Rents have gone up 20% in the past 2 yrs and rising





Rents arnt rising ... the economy is going to Sh**.


----------



## gav (22 February 2009)

I was wrong with the 20% increase. Rents have recorded their highest increase in 20yrs. (i knew there was a 20 in there somewhere 

Looks like its going to get worse too.

http://www.news.com.au/business/story/0,27753,24977706-462,00.html

Keep renting and pay off someone elses mortgage?  No thanks...


----------



## nunthewiser (22 February 2009)

rents falling in geraldton wa .lock them tenants in


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## lioness (22 February 2009)

Beej said:


> And you still think asset prices will somehow magically deflate in an environment like that?
> 
> 
> 
> ...




Asset prices will deflate when unemployment suddenly explodes and all rental properties hit the market at the same time and no credit is available to take up the slack.

If you still see inflation taking your 7 X incomes away to 10X then keep investing and I will wait with 'I told you so' in 12 months time.

Yes, I will never sell my PPOR as it is purely a lifestyle choice of where I have decided to live and nothing more due to family reasons.


----------



## MrBurns (22 February 2009)

I wonder what will happen when inflation takes off, ok I'll tell you, the RBA will have no choice but to up interest rates, watch KRudd and Swan dive for cover then.


----------



## Julia (22 February 2009)

MrBurns said:


> I wonder what will happen when inflation takes off, ok I'll tell you, the RBA will have no choice but to up interest rates, watch KRudd and Swan dive for cover then.



It's pretty sad that such a picture makes me smile in anticipation.


----------



## MrBurns (22 February 2009)

Julia said:


> It's pretty sad that such a picture makes me smile in anticipation.




It's a certainty and all the FHB that jumped on the KRudd bribe wagon will be caught.

Even those who didnt lock in the low rates will find their houses are worth 30 or 40% less so if they go to sell ????


----------



## singlefished (23 February 2009)

> *Sales dry up unless the price is right*
> 
> THE property market has slowed to a whimper, with sales crashing to less than a third of last year's levels, despite a surge in first-home buyers capitalising on low interest rates and grants.
> 
> ...




http://www.theaustralian.news.com.au/story/0,25197,25092065-2702,00.html


I don't really expect this situation to change in the short/medium term until either :

a) we start seeing signs that the economy is improving or 
b) middle and upper price brackets lower their expectations


----------



## Broadside (24 February 2009)

kincella I tried to PM you but it says I can't, about that property I mentioned somewhere else.  Doesn't matter.


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## kincella (24 February 2009)

Broadside...I have listed you as a buddy now....and been distracted...so your message should come thru now
cheers


----------



## explod (24 February 2009)

Julia said:


> It's pretty sad that such a picture makes me smile in anticipation.




I hope that comment is in jest Julia.   The situation facing new home buyers with a large mortgage will, unless they have secure incomes, be very dire within the next 12 months or so.

Cheers explod


----------



## aleckara (24 February 2009)

Everyone here in this forum advocating that you should sell the house you live in because of deflation - that would be good advice under certainity however very bad investment advice. It exposes you to a lot more risk and not just financial - stability in where you live is important to a lot of people.

The magic of portfolio allocation is that you don't have to have all your eggs in one basket. If you want to prepare for deflation by all means sell the investment property however for most people the house you live in provides much more than just financial benefit. In bad times I think the idea would be to hedge the risk, not profit from it. You can take a punt, or you can simply prepare for the case if the market goes either way.


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## Glen48 (24 February 2009)

Most people try to pick the top of the market in any thing and sell..except houses they like to ride them all the way down and then sit there for years waiting for them to go back to were, they not knowing houses appreciate about 1-3% PA over 50 years.


----------



## Beej (24 February 2009)

Glen48 said:


> Most people try to pick the top of the market in any thing and sell..except houses they like to ride them all the way down and then sit there for years waiting for them to go back to were, they not knowing houses appreciate about 1-3% PA over 50 years.





That's 1-3%pa ABOVE INFLATION I think you will find Glen48 - ie that's the "real" capital return. And for PPORs, both the inflationary and the real growth are TAX FREE. Any other investment class around that you can say that about?? On top of that, you don't have to pay rent! That's another 4%+ return pa AFTER TAX. Of course if you buy well (like in good area's of Sydney etc that will only gain in exclusivity as the population grows), your capital return will be even greater again.

The numbers stack up incredibly well if you take your blinkers off and think about it a little more than you seem to have.....

Cheers,

Beej


----------



## Glen48 (24 February 2009)

That's the trouble with R E it's all hearsay 1-3% but take out rates, insurance repairs etc. etc and what is the real cost, now with prices crashing to 90's level  if you can get 1% for 15 years on reduced rents  you are doing well.


----------



## nunthewiser (24 February 2009)

Glen48 said:


> That's the trouble with R E it's all hearsay 1-3% but take out rates, insurance repairs etc. etc and what is the real cost, now with prices crashing to 90's level  if you can get 1% for 15 years on reduced rents  you are doing well.






wheres real estate crashing to 90,s levels ??

i paid 54k for a triplex block with ok 3 brm house on it in the early 90,s in perth ....... cant see any real estate guides showing me the same deals yet bud


----------



## satanoperca (24 February 2009)

Beej,

You are quite correct with your figures based on past history, but we are entering a different time where CG may not be there and in this case renting can be an advantage over owning a PPOR.

Example:
Current interest rates are starting to come in line with rents of a similar property. Why would you not own. Still have other costs associated with owning, rates, insurances, maintenance etc
We enter a deflationery period of several years, asset prices drop at 2% p.a. On a $400,000 property that $8000 p.a. If the rent was say $400 pw and interest rates we 5% then we are neutral. Add in an addition $50 p.w for rates, insurances etc plus the -CG of $153 per week that is an additional $203pw over renting or a %50 increase over renting. I think my figure of 2% over several years is quite conservation, but never the less illustrates the situation.

It does not take much to change the situation, 0 growth and your down $50 a week, small price to pay for security of your own home but you are still in debt, 3% growth and you are almost equal with inflation, fantastic, -%5 growth for two years and you have to catch up $40K, renting sounds good. 

I hope that eventually property will become less speculative (growth based on doing nothing just going into debt), more consistent in growth (inflation +1-2% on average) allowing everyone to have the opportunity to own at least their own home and get on with building a clever country not one dependant on the stuff that is in the ground and the hope that assets will keep on rising without being productive.

Benjamin


----------



## Glen48 (24 February 2009)

From Patrick.net

Downtown apartment rent falls by most in 7 years
By: Alby Gallun Feb. 23, 2009

(Crain) ”” Rents at top-tier downtown apartment buildings last year fell the most since 2001 as a development boom and deepening recession gave tenants the upper hand over landlords.

Effective rents at Class A downtown buildings fell to $2.11 a square foot in the fourth quarter, down 6.2% from $2.25 in the year-earlier period, according to Appraisal Research Counselors, a Chicago-based real estate consulting firm. It was the first annual drop since 2003 and the biggest decline since 2001, when effective rents slid 7.7%.

In a case of bad timing, rising unemployment is depressing demand for apartments amid a surge in supply of both apartments and unsold condominiums that are being rented out. Many landlords are still holding the line on face rental rates, but a growing number are offering one or two months free, driving down so-called effective rents.

“I think this next year is going to be really tough,” says Appraisal Research Vice-president Ron DeVries. “We’ve just been having lots of ugly conversations lately.”

Effective rents fell 6.6% between the third and fourth quarters, the biggest quarterly drop since Appraisal Research began surveying the downtown market in 1997. The fourth quarter is typically slow for most landlords, with rent declines even in strong markets.

The downtown Class A occupancy rate, meanwhile, fell to 90.6%, from 92.8% in the third quarter and its lowest level in six years, according to Appraisal Research. While Mr. DeVries expects the occupancy rate to slip further, he doesn’t see effective rents dropping as low as they did in the last downturn, when they bottomed out at $1.83 in 2003.

The depressed for-sale residential market initially benefited apartment landlords, as many would-be buyers rented instead, either because they couldn’t qualify for a mortgage or didn’t want to buy a house or condo that could fall in value.

But the worsening economy now is depressing demand, forcing some renters to save money by doubling up or moving back home with their parents. The job market, which drives demand for apartments, continues to shrink: Moody’s Economy.com forecasts that the Chicago area will lose 133,000 jobs in 2009 ”” about the same number lost during the last recession ”” and won’t start adding them until after 2010.

Still, an oversupply of apartments is the larger problem for landlords right now, especially in the South Loop. Developers completed three buildings comprising 1,016 apartments in the South Loop last year, according to Appraisal Research.

And condo rentals are becoming a bigger competitive threat, with developers adding nearly 3,200 condos to the South Loop in 2008 and 2009. Unwilling or unable to sell their units in a lousy market, many condo owners are renting them out for the time being.

Some are offering good deals on rent, one reason new apartment high-rises in the South Loop have been slow to fill up. A 278-unit building at 1401 S. State St. developed by Chicago-based Equity Residential and Dallas-based Lincoln Property Co. is only 60% leased 10 months after opening, according to Appraisal Research. Under normal market conditions, a similar building would be at least 90% full at this point.

The new South Loop projects “have hit the market at the worst time,” Mr. DeVries says. “If you want to live in the South Loop, you have lots of options. That has really slowed down the leasing.”

Lincoln and Equity Residential representatives did not return calls for comment.

Some landlords are trying to address the competitive threat posed by condo rentals by playing up the advantages of living in an apartment building, which usually have on-site customer service staff.

“We talk about the benefits of being in a professionally managed building,” says Mark Segal, president and CEO of Chicago-based Habitat Co., whose downtown properties include Kingsbury Plaza, a 420-unit apartment tower at 520 N. Kingsbury St. When tenants have a problem, they “can go directly to our management staff as opposed to going to a unit owner.” 

With houses being repo'ed every 13 second in USA and getting worse things are still going down
Dr. Kenn is quoting 40% drop but claims there could be a over shoot.

And to answer your questions, we were suppose to de- couple from USA but we didn't, we were suppose to be saved by China and Japan but were not, we owe more per person then USa but less than UK so prices have a long way to go and 90 prices are on the cards.


----------



## kincella (25 February 2009)

nunthewiser said:


> wheres real estate crashing to 90,s levels ??
> 
> i paid 54k for a triplex block with ok 3 brm house on it in the early 90,s in perth ....... cant see any real estate guides showing me the same deals yet bud




spot on...
and after rising 300% or more..who cares if it drops 10%...you are still  290% in front


----------



## numbercruncher (25 February 2009)

kincella said:


> spot on...
> and after rising 300% or more..who cares if it drops 10%...you are still  290% in front




For someone who _claims_ to own a multimillion dollar property portfolio your maths is pathetic.


----------



## kincella (25 February 2009)

huh ???   300 - 10 = 290   you think differently

about the multimillion dollar props.....no skills required there...just buy low and they go high...simple...no maths required...plain old arithmetic

being sarcastic ....why bother.....you lose the points


----------



## Glen48 (25 February 2009)

Maybe he means $10 not 10%?


----------



## UBIQUITOUS (25 February 2009)

kincella said:


> spot on...
> and after rising 300% or more..who cares if it drops 10%...you are still  290% in front




Your cred has just gone into negative equity, just like your imaginary multi-million dollar portfolio.

Thanks for the laugh though...keep it up!!!


----------



## Beej (25 February 2009)

kincella said:


> huh ???   300 - 10 = 290   you think differently
> 
> about the multimillion dollar props.....no skills required there...just buy low and they go high...simple...no maths required...plain old arithmetic
> 
> being sarcastic ....why bother.....you lose the points




Rather than just point out a mis-understanding with sarcasm and derision, I'll show you the correct calculation.

You buy something for $10 and it appreciates 300%. This makes the asset now worth 3 x $10 = $30. If it then depreciates by 10% (of it's current value = $3), it's now worth $27. That means your original 300% gain has now been reduced to 270%. Still way ahead though regardless!

But of course this also works the other way - if the value went UP by 10% then you would now be at 330% gain from your original purchase price! 

Cheers,

Beej


----------



## Junior (25 February 2009)

Beej said:


> Rather than just point out a mis-understanding with sarcasm and derision, I'll show you the correct calculation.
> 
> You buy something for $10 and it appreciates 300%. This makes the asset now worth 3 x $10 = $30. If it then depreciates by 10% (of it's current value = $3), it's now worth $27. That means your original 300% gain has now been reduced to 270%. Still way ahead though regardless!
> 
> ...




Wouldn't a 300% return mean an asset value of $40 in this case?  Then a 10% drop would reduce the value to $36.


----------



## Beej (25 February 2009)

Junior said:


> Wouldn't a 300% return mean an asset value of $40 in this case?  Then a 10% drop would reduce the value to $36.




Woops, Junior yes you are correct! so result of a 10% drop would be 260% gain on initial price.

PS: My calcs would be right if we were using a 200% original gain.

Cheers,

Beej


----------



## gfresh (25 February 2009)

Word on one of the property investment forums is that Westpac LMI will now no longer insure any "country" area... so that is at least a 20% deposit required for anything other than the major towns. 

I know a few of the investors have been big on the country towns (esp close to mining areas) as it's provided some good yields in past years, but wouldn't surprise me to see them running for the exits soon. Mining down the shaft so to speak, and now going to be very difficult to finance into these areas. 

Should be some good bargains for those looking to move out of the rat-race in the next few years however.


----------



## Aussiejeff (25 February 2009)

gfresh said:


> Word on one of the property investment forums is that Westpac LMI will now no longer insure any "country" area... so that is at least a 20% deposit required for anything other than the major towns.
> 
> I know a few of the investors have been big on the country towns (esp close to mining areas) as it's provided some good yields in past years, but wouldn't surprise me to see them running for the exits soon. Mining down the shaft so to speak, and now going to be very difficult to finance into these areas.
> 
> *Should be some good bargains for those looking to move out of the rat-race in the next few years however.*




You mean, like, eco-hermits will be moving back into the ghost towns?

Spooky!


----------



## singlefished (25 February 2009)

kincella said:


> huh ???   300 - 10 = 290   you think differently
> 
> about the multimillion dollar props.....no skills required there...just buy low and they go high...simple...no maths required...plain old arithmetic
> 
> being sarcastic ....why bother.....you lose the points






Little bit of insight into the mentality of a seasoned hard-nosed property investor here...

Could be a good time to reassess your position on the state of the property market since this mornings awakening...

According to the cycle of market emotions, fear-desperation-panic follow on from the denial stage...

http://www.momentonmoney.com/2008/01/the-cycle-of-ma.html


----------



## UBIQUITOUS (25 February 2009)

Beej said:


> Rather than just point out a mis-understanding with sarcasm and derision, I'll show you the correct calculation.




Anyone who incessently spruiks the benefits of investing in a particular asset, but cannot understand maths an 11year old could manage, deserves all the derision they get. 



> You buy something for $10 and it appreciates 300%. This makes the asset now worth 3 x $10 = $30. If it then depreciates by 10% (of it's current value = $3), it's now worth $27. That means your original 300% gain has now been reduced to 270%. Still way ahead though regardless!




Wrong!!



> But of course this also works the other way - if the value went UP by 10% then you would now be at 330% gain from your original purchase price!
> 
> Cheers,
> 
> Beej




Don't you mean that if some buys now and their portfolio goes down 70% and then up 100%, then you would still be way behind?


----------



## dhukka (25 February 2009)

Beej said:


> Woops, Junior yes you are correct! so result of a 10% drop would be 260% gain on initial price.
> 
> PS: My calcs would be right if we were using a 200% original gain.
> 
> ...




Absolutely hilarious, ergo, if you told someone that the capital of N.S.W was Melbourne, you would have been right if you actually said it was the capital of Victoria. Brilliant stuff.

btw: If after a 300% gain your asset goes up another 10%, you would be up 340% not 330%.  

On the bright side, you might want to go back and check your real estate gains over the last few years, you might be up more than you think!


----------



## Beej (25 February 2009)

dhukka said:


> On the bright side, you might want to go back and check your real estate gains over the last few years, you might be up more than you think!




You could well be right! 

As for Ubiquitous - at least I tried to point out how something was incorrect rather than take his approach which was just to deride someone for their mistake, and then not even bother to show that he necessarily had any idea either.....

Cheers,

Beej


----------



## numbercruncher (25 February 2009)

Good news for the property permabulls, less properties being built = increased demand for existing stock and prices/rents through the stratosphere ?? 




> Tradies beg for work
> *Tanya Westthorp, GC Bulletin February 24th, 2009*
> 
> OUT-of-work tradespeople are pleading with major developers for jobs.
> ...




http://www.goldcoast.com.au/article/2009/02/24/52461_gold-coast-top-story.html


Premo time for Gold Coast grannies to get their dunnies fixed, wont cost them a weeks pension just for the call out fee ?


----------



## gfresh (25 February 2009)

You mean those wankers that cut you off? drive utes at 40km/hr over the limit? get pissed during the week while you're trying to sleep?  throw cigarette butts and bottles out of moving cars? ...are hard up for work? _I feel so sorry for them_

And in other news all of Broadbeach, Southport, Labrador and Hope Island is for sale! quick get in fast.. prices going up. 

"Motivated Vendor Will Consider All Offers!! "

"We are in too deep..... HELP us out!!The sign is up, the owners are committed and it must sell! "

"Price Reduced, Urgent Sale Required "

"Priced Slashed, Centrally Located Duplex! "

"Reduced by $11,000 to sell straight away"

"SOUTHPORT- REDUCED $25,000 TO $250,000"

"Just Reduced 10k Pefect For First Home Owner "

"Interstate Seller Has Priced This Unit To Sell Quickly!! "

"Investor Quits, Price Slashed, Moving Interstate! "

"OVERSEAS OWNER WANTS IT SOLD. Reduced to $259,000 "

"Urgent Liquidation, This Must Be Sold! "

"OWNER DEMANDS OFFERS!"

.. and I really can't be bothered finding more, this is all in the space of 5 minutes searching


----------



## Glen48 (25 February 2009)

Wrong:
You actually said it was the capital of Victoria. Brilliant stuff.
the Capital is about 2 bucks


----------



## kincella (25 February 2009)

I was going to say it was an alziemers moment this morning....felt quite dizzy and  alarmed..at one stage was going to call triple O....took lots of deep breaths and took my asthma medication........
anyway...

I know the difference...but at the time it looked silly saying 300 -10 = 270...cause that looks just as silly..


----------



## MrBurns (25 February 2009)

kincella said:


> I was going to say it was an alziemers moment this morning....felt quite dizzy and  alarmed..at one stage was going to call triple O....took lots of deep breaths and took my asthma medication........
> anyway...
> 
> I know the difference...but at the time it looked silly saying 300 -10 = 270...cause that looks just as silly..




Dont sign up for any more commercial property without your doctor present


----------



## Glen48 (25 February 2009)

Here is a good laugh to take your mind of it all and it won't happen here......will it?
http://intuitiveblogger-intuition.blogspot.com/2009/02/world-financial-collapse.html?ref=patrick.net


----------



## MrBurns (25 February 2009)

Glen48 said:


> Here is a good laugh to take your mind of it all and it won't happen here......will it?
> http://intuitiveblogger-intuition.blogspot.com/2009/02/world-financial-collapse.html?ref=patrick.net




Very good, I've sent it on.


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## Glen48 (25 February 2009)

Thank you Mr. B. I wanted to send it to Robots but was not game.


----------



## singlefished (25 February 2009)

Glen48 said:


> Here is a good laugh to take your mind of it all and it won't happen here......will it?
> http://intuitiveblogger-intuition.blogspot.com/2009/02/world-financial-collapse.html?ref=patrick.net




Thanks Glen, very informative...


----------



## Glen48 (26 February 2009)

Makes you wonder how the whole World and Uni trained bankers could get sucked into this mess.


----------



## sinner (26 February 2009)

Glen48 said:


> Makes you wonder how the whole World and Uni trained bankers could get sucked into this mess.




Thankyou S&P as well as Moodys for AAA ratings against any old paper which just so happened to yield excellent money every month without fail.


----------



## singlefished (26 February 2009)

Glen48 said:


> Makes you wonder how the whole World and Uni trained bankers could get sucked into this mess.




maybe they had kincella running the numbers for them?


----------



## nunthewiser (26 February 2009)

singlefished said:


> maybe they had kincella running the numbers for them?




LOL


----------



## knocker (26 February 2009)

Yes very funny, pity it reflects the truth


----------



## numbercruncher (26 February 2009)

singlefished said:


> maybe they had kincella running the numbers for them?





And Beej auditing ?


----------



## numbercruncher (26 February 2009)

I see realestate.com.a is even letting folks run ads about Australias property bubble .... so much for " no bubble exists " ....


----------



## singlefished (26 February 2009)

> *Rental crisis eases as investors return: REINSW*
> Thursday February 26, 2009, 10:50 am
> 
> 
> ...





http://au.biz.yahoo.com/090225/31/24uy9.html

great news - buy more IP's to put further downward pressure on rentals whilst prices in the middle and upper sectors continue to head south...

nirvana


----------



## CamKawa (26 February 2009)

Lend Lease to cut 1700 jobs after $600m profit hit

"AUSTRALIA'S largest property developer Lend Lease said it will cut 1700 jobs over the next six months, after it posted a loss of almost $600 million for the first half. "

Did this come about because house price are going up? I don't think so.


----------



## Trevor_S (26 February 2009)

CamKawa said:


> "AUSTRALIA'S largest property developer Lend Lease said it will cut 1700 jobs over the next six months, after it posted a loss of almost $600 million for the first half. "




The headline is a little misleading at first glance...



> Geographically I'd say about 20% of that is in Australia, the balance is offshore.





numbercruncher said:


> I see realestate.com.a is even letting folks run ads about Australias property bubble .... so much for " no bubble exists " ....




from, here I take it ? 

http://forum.globalhousepricecrash.com/index.php?showtopic=48041


----------



## knocker (26 February 2009)

More good news for our recession proof economy. Go Kruddy!!

http://business.theage.com.au/business/5000-jobs-go-as-crisis-bites-20090226-8ioh.html


----------



## numbercruncher (26 February 2009)

knocker said:


> More good news for our recession proof economy. Go Kruddy!!
> 
> http://business.theage.com.au/business/5000-jobs-go-as-crisis-bites-20090226-8ioh.html





From the article .....



> Mr Trujillo confirmed today that 10,143 jobs had been cut since he arrived and more were to come as people working on the company's transformation completed their tasks.





Capatalism self canabalising ...... fancy having a job thats end goal is to sack you !


----------



## knocker (27 February 2009)

Yipeeeeeeeeeeee:

http://www.theage.com.au/national/outcry-at-no-job-safe-blunder-20090226-8j7e.html


----------



## robots (27 February 2009)

hello,

its fantastic Knocker, companies have got the best reason going around to get rid of all the slackers in there work force,

the guy/girl who constantly late, packs up early, 50 smoke breaks

on our sites all the contractors attitudes have massively improved whereby things get done, fixed or sorted easy

paradise

thankyou
robots


----------



## GumbyLearner (27 February 2009)

robots said:


> hello,
> 
> its fantastic Knocker, companies have got the best reason going around to get rid of all the slackers in there work force,
> 
> ...





One dimensional stuff yet again
Relishing other peoples misery
You must be a member of the Liberal (Ban the Poor) Party of Australia

thankyou
Gumby


----------



## numbercruncher (27 February 2009)

robots said:


> hello,
> 
> its fantastic Knocker, companies have got the best reason going around to get rid of all the slackers in there work force,
> 
> ...





Any of your co-workers been told to skidaddle yet Robi-one-kinobi ?

Or is it still nirvana in the building industry in Melb ?


----------



## knocker (27 February 2009)

robots said:


> hello,
> 
> its fantastic Knocker, companies have got the best reason going around to get rid of all the slackers in there work force,
> 
> ...



 Yes those union thugs are hard yakker type blokes aren't they robi lol Never sit around in the site shed planning their next walk out.


----------



## robots (27 February 2009)

numbercruncher said:


> Any of your co-workers been told to skidaddle yet Robi-one-kinobi ?
> 
> Or is it still nirvana in the building industry in Melb ?




hello,

two

as mentioned, the slackers, the ones who dont care, 100 smokes a day and they exist in most workplaces, 

i am not in the union scene, yes still nirvana for our crew with work all year round 7 days a week if I wanted it (serious here)

my work is in "business" building, like restaurants, cafe's, facilities and small amount of residential

thankyou
robots


----------



## Trevor_S (27 February 2009)

knocker said:


> Yipeeeeeeeeeeee:
> 
> http://www.theage.com.au/national/outcry-at-no-job-safe-blunder-20090226-8j7e.html





It's unfortunate frankness is classified as a blunder... never mind, best to have an obfuscating politician I guess 

back on topic 

http://business.watoday.com.au/business/house-prices-will-drop-10pc-20080903-488l.html



> WA homeowners should brace for a house price fall of up to 10 per cent as the state bears the brunt of an economic slowdown, one of the country's leading economists has warned.




and then of course you have this

http://www.watoday.com.au/wa-news/perth-housing-slump-a-myth-forecaster-20080919-4jx1.html



> Perth homeowners should relax - the property market will not slump and the worst is probably behind them, according to a leading forecaster.


----------



## Glen48 (27 February 2009)

This won't happen here because we are not part of the WFC ...

http://news.bbc.co.uk/2/hi/business/7910329.stm?ref=patrick.net


----------



## robots (27 February 2009)

hello,

its already happened here Glen48

thankyou
robots


----------



## knocker (27 February 2009)

Glen48 said:


> This won't happen here because we are not part of the WFC ...
> 
> http://news.bbc.co.uk/2/hi/business/7910329.stm?ref=patrick.net




Yes lots of cheap places up north here. Nearer to London drops not as dramatic but still evident, mostly units. Houses are less but if one is on variable rate things are not so bad only about 4% repayment. Those on fixed are stuffed. And as always the council taxes are on the rise, about 120 quid a month for the lower end of the scale.


----------



## gfresh (27 February 2009)

What's the IR to get an average loan there at present?


----------



## knocker (27 February 2009)

gfresh said:


> What's the IR to get an average loan there at present?




Check this link out.

http://www.fairinvestment.co.uk/mortgage.aspx?cmpid=24

Fairly cheap. Also any house under 170 thousand is exempt from stamp duty.

Not that I recommend buying just yet.


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## Temjin (28 February 2009)

robots said:


> hello,
> 
> its already happened here Glen48
> 
> ...




No it's not, rent never falls in Australia. We aren't UK and we never had a credit boom.


----------



## gfresh (28 February 2009)

knocker said:


> Check this link out.
> 
> http://www.fairinvestment.co.uk/mortgage.aspx?cmpid=24
> 
> ...




Although the LTV (LVR?) is 60%.. interesting how in Australia we do not have better rates for lower LVR, at least not formally advertised. 



> YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.




I love this bit  really?


----------



## knocker (28 February 2009)

gfresh said:


> Although the LTV (LVR?) is 60%.. interesting how in Australia we do not have better rates for lower LVR, at least not formally advertised.
> 
> 
> 
> I love this bit  really?




Does not matter that much here, very few people read and write english anyway lol


----------



## nunthewiser (28 February 2009)

knocker said:


> Check this link out.
> 
> http://www.fairinvestment.co.uk/mortgage.aspx?cmpid=24
> 
> ...


----------



## Beej (28 February 2009)

Temjin said:


> No it's not, rent never falls in Australia. We aren't UK and we never had a credit boom.




Yea except did you notice what the average rent in London is? Try just under 1700 pounds per month (from the article posted)! That's 392 pounds/week = over $AU800 per week, which is just about DOUBLE the average rent paid in Sydney. This in a country where there national average/median wage is somewhere around 25k pounds/year. So rents would have to fall a LONG way in London before they even approached the incredibly low levels we have here.... 

I think that stat takes quite a bit of wind out of the "if rents fall there they must fall here" arguments.

Beej


----------



## UBIQUITOUS (28 February 2009)

Beej said:


> Yea except *did you notice what the average rent in London is?* Try just under 1700 pounds per month (from the article posted)! That's 392 pounds/week = over $AU800 per week, which is just about DOUBLE the average rent paid in Sydney. *This in a country where there national average/median wage is somewhere around 25k pounds/year*. So rents would have to fall a LONG way in London before they even approached the incredibly low levels we have here....
> 
> I think that stat takes quite a bit of wind out of the "if rents fall there they must fall here" arguments.
> 
> Beej




Naughty naughty Beej. At least give the BS a rest at the weekend. 

Would you be so kind as to compare London's average rent to London's average wage?

Here, I've made it easy for you:

http://news.bbc.co.uk/1/hi/england/london/7802792.stm



> Workers in London earn 50% more than employees in other parts of the UK on average, the GMB union has found. Full-time workers in London earn an average of £46,000, compared to the UK average of £31,300, the GMB found.


----------



## Beej (28 February 2009)

UBIQUITOUS said:


> Naughty naughty Beej. At least give the BS a rest at the weekend.
> 
> Would you be so kind as to compare London's average rent to London's average wage?
> 
> ...




Not BS at all - unless all the stuff you bears come out with is BS when you compare a median house prices to average wages, average wages to average rents etc for Australia as well. Of course the average wage in London is higher - that's the case in all big cities, just like people in Sydney earn more on average than in other parts of AU. Even so the average rent in London still takes HALF the average gross wage estimated by the article you linked to - average rents in Australia are nowhere near this level even in our biggest cities.

Beej


----------



## knocker (28 February 2009)

nunthewiser said:


> knocker said:
> 
> 
> > Check this link out.
> ...


----------



## knocker (28 February 2009)

Beej said:


> Not BS at all - unless all the stuff you bears come out with is BS when you compare a median house prices to average wages, average wages to average rents etc for Australia as well. Of course the average wage in London is higher - that's the case in all big cities, just like people in Sydney earn more on average than in other parts of AU. Even so the average rent in London still takes HALF the average gross wage estimated by the article you linked to - average rents in Australia are nowhere near this level even in our biggest cities.
> 
> Beej




Well forget about averages, most I know who live in London are in the 50K+ bracket, understandably. Why else would you want to live there?


----------



## noirua (28 February 2009)

Beej said:


> Not BS at all - unless all the stuff you bears come out with is BS when you compare a median house prices to average wages, average wages to average rents etc for Australia as well. Of course the average wage in London is higher - that's the case in all big cities, just like people in Sydney earn more on average than in other parts of AU. Even so the average rent in London still takes HALF the average gross wage estimated by the article you linked to - average rents in Australia are nowhere near this level even in our biggest cities.
> 
> Beej



London and the outer suburbs are reporting an increasing number of houses for rent and a softening of rental prices.
This follows an official notification by the UK Land Registry that house prices fell in England and Wales by 15.1% in the year to January, the 17th straight monthly fall in prices.
Refer BBC2 Ceefax, London and ITV1 Oracle.


----------



## robots (28 February 2009)

Temjin said:


> No it's not, rent never falls in Australia. We aren't UK and we never had a credit boom.




hello,

and during 03-04 when we had similar glut of high rise, this affected units in most inner city suburbs

free dvd's, months rent for free, rents reduced, rents stayed same for many many years (a high % of this affected new BTL properties)

you wouldnt have any idea because you have never held a title

exactly we not uk, US or anything we the leaders of the free world

thankyou
robots


----------



## Trevor_S (28 February 2009)

robots said:


> exactly we not uk, US or anything we the leaders of the free world




from our old mate 

http://www.crikey.com.au/Business/20090223-Keen-Neoliberalism-and-economic-breakdown.html



> I expect that the belief that the Australian banking system is immune from the problems that have beset the rest of the world will be sorely tested in the next year or two, as the macroeconomic crisis caused by financial deregulation strikes at the heart of Australian home ownership. The level of household debt in Australia is as high as in America (when measured in terms of each country's GDP), and though all the focus has been on the USA's irresponsible lending to the subprimes, in fact household debt in Australia grew three times as fast as it did in America in the last twenty years.
> 
> The Australian financial system is thus dependent on all Australian mortgage holders being able to service their debts, when the only source most of them now have to do that is their jobs. As jobs go as the crisis deepens, the solvency of the Australian financial system will be sorely tested.


----------



## robots (28 February 2009)

hello,

another great opinion piece just like everyone here at ASF TevorS, nothing else 

many still waiting to pick a place for 3x average income, but isnt that our right as Australians (hahahaha)

thankyou
robots


----------



## knocker (28 February 2009)

robots said:


> hello,
> 
> another great opinion piece just like everyone here at ASF TevorS, nothing else
> 
> ...




Well yes robi Australia is a special place in the world, especially with people such as yourself so prevalent in its society. lol

Thankyou


----------



## robots (28 February 2009)

hello,

spot on Knocker, always offering the hand of help to those putting in and contributing in society,

sit down with people at work and assist with all things financial to make sure their life travels an easy path

thankyou
robots


----------



## kincella (28 February 2009)

interest rates down, tax down, petrol down....most have more cash available than we did last year....and wonder how many know what disposable income is  ??? just had some fun with a bear who thought it was not wages

so the ratio has dropped to an estimated 5.1%...no wonder the fhb's club is out there doing their bit

have alook at the chart at the bottom of the article
bit different to all the gloomy stats reported here
but with all the job losses now...we may as well all jump off a cliff
..........................
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.

The next chart compares Australia’s long-term house price-to-income ratio with other countries. A few things are clear from this data. Observe that since 1985 the Australian ratio has always been higher than the other countries included in the analysis. This is because Australia has always experienced rates of capital growth that have been higher than most other nations since 1971 (according to IMF analysis) for idiosyncratic reasons related to the demand and supply drivers of housing in this country. 

The other thing that you notice about these long-term ratios is that they do not appear to be stable; that is to say, in contrast to Cox’s claims, there is no evidence that a house price-to-income ratio of three can be classified as a “maximum historic norm”.


http://www.businessspectator.com.au/bs.nsf/Article/Demographia-Dogma-$pd20090129-NQTPP?OpenDocument&src=mp 

--------------------------------------------------------------------------------
.
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.


----------



## satanoperca (28 February 2009)

kincella said:


> interest rates down, tax down, petrol down....most have more cash available than we did last year....and wonder how many know what disposable income is  ??? just had some fun with a bear who thought it was not wages
> 
> so the ratio has dropped to an estimated 5.1%...no wonder the fhb's club is out there doing their bit




Yes, the only market segment that is moving is the one given government assistance FHBG, given the above, all segments should be booming, why are we not seeing this?

Could it be we have spent more than we have earned, or the fact that our major trading partners are in recession or going into recession.

Gee, it would seem logically that if interest rates are so low and possibly going low (march) , unemployment is still at a healthy level, then the next boom is only months away. Can't what, cashed up and ready for the next ride.


----------



## kincella (28 February 2009)

I am not saying we are heading for another boom...and the housing industry is not the only one...trying to stem job losses....hello banks have the biggest handouts...car industry...etc
the bottom of the housing market is going along ok...anyone working has more money...the gist of the post is the house to income ratio has been dropping...hence more disposable income available....
the young ones have been whinging about house prices...and how unaffordable they are....yet the truth is different.....
some of us show a different side of the argument.....thats all...
does not mean we are saying its going to boom this year or next......
but it will eventually....
bring on nationalising the banks...then we can get some sense out of this 'fraud based nightmare'...and get on with our lives....


----------



## satanoperca (28 February 2009)

Kincella,

So would you agree  that the bottom end of the housing market is showing signs of growth due to government grants and historically low interest rates, the middle and top end of the market are falling and have not started to stabilize yet. 

How is the affordability ratio calculated ? Median House Price $430,000 / Median Income $60,000 = 7.1. This was my understanding, while I now that low IR helps affordability, is it part of the calculation and if so then unaffordability must have been extremely high at the peak with high IR.

I believe strongly that no industry should recieve government handouts, the government should be building better schools, better healthcare, increase the pension, public transport infrastructure (can't do that who would buy the cars the government pays for) etc.

If I look at why housing prices can fall :

If public sentiment changes so that the vast majority believe that the property boom has completed this cycle and that CG will be non existent or small over the next few years, why would you go into a lot of debt to own an asset thats returns just cover the costs of ownership. 
Or, remove the FHBG and NG and prices will fall. Increase IR, a must in the future if the economy is to grow again and property prices fall.

People will be more content with purchasing something smaller and cheaper and look at other ways of increasing their wealth without going into excessive debt.

Benjamin


----------



## kincella (28 February 2009)

Benjamin...the average mortgage is 240,000...as per rba / abs...fhb range 200- 300k's....at 5% interest thats 10.000- 15000 pa interest only....must be comparable with paying rent....housing in au peaked in 2003/04  a ratio of 15went flat for 2 years and climbed to a ratio of 10 in o7.....its since gone below the zero line to negative 3....lots of fhb purchasing now...its affordable and rates are low... ..probably by the end of this year that will be the bottom...and then interest rates will creep up again....
most fhb view the trade off rent versus buy..and buy at low IR....
others can afford to pay more off their loans ...most just want to say in their homes....70% of the population are home owners......
I want the govt to stop wasting money and throwing it around....who needs the 900 bonus from tax now...it would be better spent on rail etc...but thats just a ploy anyway...qld going to election...and probably the fed after that this year... 
at some stage after this starts to recover....rates will go up again....none of us knows the future...
anyway..there are houses out there around 200-240k that are affordable, near freeways...doubt you will see massive falls....and if many sold ...where would they rent ???  rentals usually the first to go...and probably to fhb's
its a merry go round...and lots of perceived panic going on out there


----------



## satanoperca (28 February 2009)

Kincella,

So your are basing housing afford ability on the average mortgage?

Do you have a formula? How affordability is calculated seems to be a much debated topic and some formulas around are quite complicated.

If we were to return to the old banking rules to calculate how much you can borrow, 30% of main income earner in the household, I think you would find that most FHB could not afford to purchase a home. Most of the first home buyers need two incomes to own a home today, no good once you start a family. No kids, no population growth, no increase in property prices. Viscous circle.

I thank-you for your response, I did not think that there would be any houses in Melbourne under $300K but you are right there are. My target areas are in the bayside suburbs which are above this figure. Based on current IR rates, a $300K home, average income, yes it would seem to meet the criteria for being affordable, 30% of income on mortgage but interest rates would only need to go up 2% or more and it would become unaffordable again.

Benjamin


----------



## kincella (28 February 2009)

why bayside, it used to be more expensive...maybe not ? are you planning on the first home being your dream home...my generation bought what we could afford, if that meant the outer suburbs..thats what we felt we had to do...forget the dream home while raising the family...at least until they went to school...then the spouse could go to work part time...we needed 2 incomes in the old days too....spouses going to work started during ww2...

then as your children are nearing teenage years...most couples upgrade to the dream home...or closer to it..have the mortgage well and truly under control...and off you go
I suggested north of Melb...where ever the freeways are that take you into the city in a half hour or so....but Frankston's getting another freeway...so down that way or Dandenong should be cheaper...
when I looked there were typical 3 bdr 1 bath homes for around 200-240...much more affordable than 300 +

you lock in fixed rates for 5 years or more....or 10 if you are planning on staying that long...I notice CBA says the loan is portable now..you take it with you to the next house....
in the meantime how much do you pay on rent ???
old days they used to say you could afford 30% of your income to service the loan....you need to budget....should budget all your life

heres the link to 20 years of house prices..
look at the disposable income...thats money left net after tax..or your take home pay, less rent, food clothing basic living costs........explanation

Discretionary income is income after subtracting taxes and normal expenses (such as rent or mortgage and food) to maintain a certain standard of living.[2] It is the amount of an individual's income available for spending after the essentials (such as food, clothing, and shelter) have been taken care of:

Discretionary income = Gross income - taxes - necessities 
Despite the formal definitions above, disposable income is commonly used to denote Discretionary income. The meaning should therefore be interpreted from context.
................................................................................................

 ...and note fhb prices slightly less than established houses

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


----------



## knocker (28 February 2009)

robots said:


> hello,
> 
> spot on Knocker, always offering the hand of help to those putting in and contributing in society,
> 
> ...




How nice. So you are a construction worker and a finance planner. Do you have tea and biscuits whilst discussing your monetary policies as well lol


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## satanoperca (28 February 2009)

Kincella, thanks for the link, some interesting statistics, need time to digest.

But at quick glance on the issue of affordability this standards out :

Extract from Parliament of Australia
Department of Parliamentary Services - House Prices above link.

However, because households often consist of two income earners, and because house purchases are made from after tax income, a better indicator is the ratio of house prices to household disposable income. On this basis, the number of years of household disposable income needed to purchase a house has increased from 2.5 to 5.4 between 1986 and 2006. The current figure is somewhat down on the figure for 2004 when a peak of 5.7 years of household disposable income were needed to purchase a house.

Wouldn't this be an agreement for housing being move unafforable than 20 years ago.

On the assumption of my situation. Bayside, as I have lived and owned here most of my life. Our family, yes I have a child, my wife and I earn above the average household income, we both choose to work. 

Again, thank-you for the link.

Cheers

Benjamin


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## robots (28 February 2009)

knocker said:


> How nice. So you are a construction worker and a finance planner. Do you have tea and biscuits whilst discussing your monetary policies as well lol




hello,

no, just a cafe latte with fellow man and hope I can assist individuals with financial situations and taxation matters, its all fun nothing to serious

general things which most need to understand, savings, debt, risk & return, derivative products, bicycle insurance, life insurance, income protection etc etc

thankyou
robots


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## knocker (28 February 2009)

robots said:


> hello,
> 
> no, just a cafe latte with fellow man and hope I can assist individuals with financial situations and taxation matters, its all fun nothing to serious
> 
> ...




So you admit to giving financial advice correct robots.


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## singlefished (1 March 2009)

even Mother Nature is on the side of Doom & Gloomers conspiring for a drop in property prices....



> *Humans facing huge population cull if global temperatures rise 4C in next 100 years*
> http://www.news.com.au/story/0,27574,25114359-5009760,00.html
> 
> Climate experts told New Scientist they were optimistic that humans would survive but would have to adapt.
> ...


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## robots (1 March 2009)

knocker said:


> So you admit to giving financial advice correct robots.




hello,

of course Knocker, free of charge to, philantrophy 

in most cases its like I am a surrogate parent to a lot of these people

thankyou
robots


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## Aussiejeff (1 March 2009)

REIV 5yr comparisons (2003-2008) out today. It's not all beer and skittles with many suburbs showing <+40% rise in median price over 5 years. 

I would think that rising median home values in the order of +45% (or +9% p.a.) would be the minimum growth required over 5 years in order to barely maintain par value of a PPOR "investment" for your average mortgagee (after accounting for value losses of interest paid, council rates, running repairs, cpi inflation every year etc...).

With regard to the published 5yr median house price growth, of the 297 suburbs listed by REIV today in the Sunday Herald,

*31 (or 10.4%)* were below +20%. These included the suburbs of Ocean Grove -22.7%, Frankston Sth +1.1%, Invermay Park +3.6%, Kennington +4.7%, Mount Martha +5.6%, South Morang +4.7%, Strathdale +4.8% and Warrandyte +7.5%. In "real value" terms, many homeowners who retained homes in these suburbs over the past 5 years would have lost a significant amount on their capital investment value, since +20% growth would only represent a base +4% rise per year - nowhere near enough to compensate for the many p.a. capital value losses.   

A further *108 (or 36.4%)* had base growth from 20% up to +40%. Again in  "real value" terms, many homeowners who retained homes in these suburbs over the past 5 years would still have lost a considerable amount on their capital investment value, since  +20% to 40% growth would only represent a base +4% to +8% rise per year - still not enough to compensate most homeowners for the many p.a. capital value losses incurred in home ownership.   

So almost half of the suburbs have been going backwards in today's dollars as far as "real value" is concerned. Of course, many of those affected would still be willing to pay the price in any case to have "ownership" rather than be renting. Horses for courses.

Good luck to the rest who managed +50% or more.....!



aj


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## noirua (1 March 2009)

Try as I might, there appears no where in the World where property prices are rising. Being caught in what looks like a Worldwide slide could be courting disaster.


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## MrBurns (1 March 2009)

noirua said:


> Try as I might, there appears no where in the World where property prices are rising. Being caught in what looks like a Worldwide slide could be courting disaster.




Can't link to this but this guy reckons we now have a crisis of negative sentiment.



> Stephen Long interviews Robert Shiller, an economics professor at Yale University who has a knack of predicting economic trends. Shiller also says the world has seen the bursting of the biggest housing market bubble in history.




If you want to hear the interview go here 

http://www.abc.net.au/news/audio/ 

and scroll down till you get to this heading - 

Yale economist 'predicted global crash'

It's 4 up from the bottom of the page.


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## Beej (1 March 2009)

Aussiejeff said:


> REIV 5yr comparisons (2003-2008) out today. It's not all beer and skittles with many suburbs showing <+40% rise in median price over 5 years.
> 
> I would think that rising median home values in the order of +45% (or +9% p.a.) would be the minimum growth required over 5 years in order to barely maintain par value of a PPOR "investment" for your average mortgagee (after accounting for value losses of interest paid, council rates, running repairs, cpi inflation every year etc...).
> 
> ...




Do those figures account for the rent that would otherwise have to be paid? The "required" return seems way too high to me if it does. I've got spreadsheets with these types of calcs in them (so does gfresh from memory and he has posted them) and the return you need to stay ahead is nowhere near 9% - it was more like 1-2% once you account for rent, inflationary effects, and tax payable on investment returns.

Cheers,

Beej


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## kincella (1 March 2009)

aussiejeff...
if you compare the growth rates with a similar investment in the stockmarket..assumed to return 5% pa on blue chips....the aussie homeowners have done very nicely....seems as good a bet to me...on comparison for income
as for a capital comparison....its done even better....
the stockmarket has lost 50% capital and 90% on the penny dreadfuls...

take out interest expense....assuming investors borrowed for the shares

then whats left in the cost of housing....insurance and some rates....no big deal
no wonder they like their bricks and mortar


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## singlefished (2 March 2009)

kincella said:


> aussiejeff...
> if you compare the growth rates with a similar investment in the stockmarket..assumed to return 5% pa on blue chips....the aussie homeowners have done very nicely....seems as good a bet to me...on comparison for income
> as for a capital comparison....its done even better....
> the stockmarket has lost 50% capital and 90% on the penny dreadfuls...
> ...






Alan Kohler on Inside Business this morning stated that over the last 10 year period (*even with the big 50% drops of the last year*) stocks have returned just below 6% per annum when you include divvies, blah, blah... (I'm going to trust his numbers on this one...)

http://www.abc.net.au/insidebusiness/
(right at the start of the Robert Buckland Interview)


Some numbers from APM website http://www.homepriceguide.com.au/media_release/Home%20Price%20Guide%20Media%20Release%200506.pdf and using Sydney prices (since some people believe that anywhere else is not the real world)

Sydney Median Dec 1998 = approx $290K (interpolated from graph in above document)
Sydney Median Dec 2008 = approx $536K

represents growth of approx 6.3% per annum *before* deducting rates, insurance, maintenance, etc, etc....

*Pretty much on par with property growth it appears even after the doo-dad hit the fan for the share market.*

And then considering that property still hasn't really had the big declines of the stock market, stocks must have been in a much better position prior to the 50% falls of the last 16 months.

Can't really tell what the stock market will do these days as the liquidity of the asset fuels it's volatility, but what I can tell you is that job losses and negative sentiment are still driving property prices down and will contine to do so until sentiment reverses and the stock market starts it's recovery....

These wild assumptions of yours really need to be backed up with something a bit more meaty than this mornings bacon and eggs....

Cheers....


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## aleckara (2 March 2009)

Affordability is easy to calculate IMO. Any capital growth on your asset means that you have gained and someone in the future has lost because most markets follow the "money-in, money-out". Of course if it is an investment it gets concessions, rent, etc but this is for your primary residence. Someone has to pay more for the same for you to have capital growth; meaning it is less affordable for them than for you.

If income's have risen you simply take into account, but I know for a fact that house prices has risen much faster than incomes particuarly in the last decade. Otherwise people wouldn't think they can get rich simply by investing in property during the boom. Also take into account location, sqm, etc.

Anything with IR, or any other monetary statistic is wrong. I refuse to believe that housing that be more "affordable" just because some bank (RBA) waives a pen. Just means the money is worth less meaning the prices go up to compensate normally. Eventually this extra money finds itself in wages as well. Hence there is a lag between hose prices rising and wages rising but more cerdit in the system is inflationary - just affects housing prices first because well that's where most of the debt is spent first.


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## Beej (2 March 2009)

singlefished said:


> Alan Kohler on Inside Business this morning stated that over the last 10 year period (*even with the big 50% drops of the last year*) stocks have returned just below 6% per annum when you include divvies, blah, blah... (I'm going to trust his numbers on this one...)
> 
> ...
> 
> ...




Nope - again if you are going to count dividends on the total share market return (as you should) you also have to count the rental return from property when comparing (which will represent rent received for an investor or rent SAVED for a PPOR owner).

So - try adding another 4%pa to your property figure for Sydney there, figure out how to include it in the compounding return to do it properly, but even with out calculating that properly you end up with *at least a 10.3%pa growth/return from the Sydney property* - which way trumps the sharemarket - for that period of time up to the present anyway. Deduct costs (which from my experience for a house amounts to <1%pa including allowance for a kitchen/bathroom reno every 10-15 years or so), and still looking pretty good. Now account for the tax benefits of the PPOR and it looks REALLY good.

By the way I'm not saying the above would always be the case, but given the current share crash it certainly is over the last 10 years.

Cheers,

Beej


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## singlefished (2 March 2009)

Beej said:


> Nope - again if you are going to count dividends on the total share market return (as you should) you also have to count the rental return from property when comparing (which will represent rent received for an investor or rent SAVED for a PPOR owner).




Incorrect....

You are assuming that is how the property "could" be used to maximise your return or minimise your outgoings.

Why can't the property be a weekender that is neither used for rental return nor PPOR?

Why can't the property just be a vacant block of land?

I didn't specify how many shares I had.... I could be a fund manager receiving payments for renting out the portfolio to clients wanting to short the market....

Please, apples with apples ~ book value with book value (divies being reinvested *at no cost *as new share purchases)

Cheers....


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## kincella (2 March 2009)

alan kohler is a prop bear...so what else do we expect from him...we dont expect him to talk up property...he talks it down....and makes out shares are better....
I wonder if he actually owns any shares yet...he does not have to own anything ..to make comment on it...
pretty certain I posted a ref to him at the weekend..about him being surprised that the prop market has stood up well so far....

I used to see the graphs that showed shares or prop...almost identically matched..dips and troughs at different times...but ended up the same...

it seems if shares tanked...then property must tank also....
it will be interesting to see if the alternate theory pans out...ie that the US and UK follow us in property..not the other way around,,,we peaked 03/04..the US did not peak until 05/06..Uk peaked 03/04 highest to scale 25

http://www.globalpropertyguide.com/real-estate-house-prices/A


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## singlefished (2 March 2009)

kincella said:


> alan kohler is a prop bear...so what else do we expect from him...we dont expect him to talk up property...he talks it down....and makes out shares are better....
> I wonder if he actually owns any shares yet...he does not have to own anything ..to make comment on it...
> pretty certain I posted a ref to him at the weekend..about him being surprised that the prop market has stood up well so far....
> 
> ...




You didn't read my post properly or check out the abc video did you....

AK didn't once mention property in the discussion, the comparison was made by me....

He was surprisingly "bearish" sounding though on the shares if that makes you feel better???

You're forgetting the dollar-cost averaging effect of the shares being reinvested through whatever dividend reinvestment plan is in place and the fact that the divvies buy you more shares once they are reinvested (since you want to mention peaks and troughs)... can't do that on a property though.


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## Beej (2 March 2009)

singlefished said:


> Incorrect....
> 
> You are assuming that is how the property "could" be used to maximise your return or minimise your outgoings.
> 
> ...




No way - if you are counting dividends for shares you have to factor in rent for property. If an owner forgoes rent (holiday house etc) then that's a deliberate cost they are incurring and not a reflection of the available return from the asset. Land only doesn't count either as in your original post as you are using Sydney median HOUSE prices (not land values). Valuation of land is a different kettle of fish.

So in my example apples are being compared with apples - yours is apples to oranges...

Cheers,

Beej


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## kincella (2 March 2009)

I doubt a fund manager would try to compare land or beach hut...and use dividends as a return on shares....but not use the rent as a return on property.....
thats an absurb comparison...plus there is no return on residential land....
out of your depth here methinks.....pull the other leg...
and .....no way funds managers are smarter than that.....


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## singlefished (2 March 2009)

Beej said:


> No way - if you are counting dividends for shares you have to factor in rent for property. If an owner forgoes rent (holiday house etc) then that's a deliberate cost they are incurring and not a reflection of the available return from the asset. Land only doesn't count either as in your original post as you are using Sydney median HOUSE prices (not land values). Valuation of land is a different kettle of fish.
> 
> So in my example apples are being compared with apples - yours is apples to oranges...
> 
> ...




OK then.... in his report he was comparing share returns to bonds (and I assume he wasn't talking about _*"very cumfy undies"*_)

I don't know much about bonds but I assume they will suffice for the cited example???


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## singlefished (2 March 2009)

kincella said:


> I doubt a fund manager would try to compare land or beach hut...and use dividends as a return on shares....but not use the rent as a return on property.....
> thats an absurb comparison...plus there is no return on residential land....
> out of your depth here methinks.....pull the other leg...
> and .....no way funds managers are smarter than that.....




I was doing you a favour by comparing Sydney to the ASX, a simplistic example you could understand... I should have really compared _Sydney to a particular stock_, or _NSW to a particular market sector _or compared the _ASX to Australian median house prices_....

How come there is no return on residential land? as an investor you should certainly understand that it's not the structure/building that appreciates.... or did you get your sums wrong again???


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## Beej (2 March 2009)

singlefished said:


> OK then.... in his report he was comparing share returns to bonds (and I assume he wasn't talking about _*"very cumfy undies"*_)
> 
> I don't know much about bonds but I assume they will suffice for the cited example???




Yes I saw the original story when broadcast on Sunday morning - if I recall he pointed out the that 10 year share market return of ~6% was on par with the average yield from long term bonds over the same period. Ie the risk associated with the share market investment is now not anywhere close to being matched by the long term aggregate return when compared to lower risk options like bonds.

Property on the other hand it seems has provided a higher return with lower volatility and risk than shares - by a large margin (~6% vs ~10%).

Cheers,

Beej


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## singlefished (2 March 2009)

Beej said:


> Yes I saw the original story when broadcast on Sunday morning - if I recall he pointed out the that 10 year share market return of ~6% was on par with the average yield from long term bonds over the same period. Ie the risk associated with the share market investment is now not anywhere close to being matched by the long term aggregate return when compared to lower risk options like bonds.
> 
> Property on the other hand it seems has provided a higher return with lower volatility and risk than shares - by a large margin (~6% vs ~10%).
> 
> ...




so to conclude the discussion, in the book value comparison before factoring in returns (divvies or rent returns ~ apples to apples) it would be ~6% vs ~6%?

(assuming you're not implying property has appreciated at 10% per annum over the last 10 years???)


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## Beej (2 March 2009)

singlefished said:


> so to conclude the discussion, in the book value comparison before factoring in returns (divvies or rent returns ~ apples to apples) it would be ~6% vs ~6%?
> 
> (assuming you're not implying property has appreciated at 10% per annum over the last 10 years???)




I can see you are trying to be tricky by using "book to book", but I say the apples to apples comparisons are as follows:

* 10 year share market return INCLUDING re-investment of divvies = 6%pa. 
* 10 year return from bonds (from yield) = 6%pa
* 10 year return from Sydney property (from your figures), INCLUDING rental return = 10%pa

"book to book" as you are trying to define it is meaningless if it means you include re-invested divvies but ignore rent.

Cheers,

Beej


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## singlefished (2 March 2009)

Beej said:


> I can see you are trying to be tricky by using "book to book", but I say the apples to apples comparisons are as follows:
> 
> * 10 year share market return INCLUDING re-investment of divvies = 6%pa.
> * 10 year return from bonds (from yield) = 6%pa
> ...





OK - lets put this into a context....

kincilla has stated already he is already helping out his kids buy a property. 

Lets assume for this example, he just simply buys the properties outright and gifts them to his kids. Doesn't cost the kids anything ~ just like inheriting a property that many people do (and we can assume that this is how many people get into the property or investment property cycles in the first instance.... relatives generally gift their worldly possetions to their offspring on death)

Now, it's pretty fair to say that if hypothetically, you yourself thought this was a very generous gesture by kincilla, you may also have decided to match what kincilla has done with his kids by gifting your own offspring with an equivalent value of bonds, many parents do to help cover the costs of further education or to provide their kids with a lump sum when they get married and start their new life together....

See where it's going????

Comparing "book to book" is the minimum you should be looking at as returns from rentals or divvies (for example) can never be guaranteed and as we have seen recently, both are currently on the way down.....

Nothing tricky about it....


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## MrBurns (3 March 2009)

From Crickey.com.au


> Australia's long-running property bubble has burst.
> 
> Land Values Research Group director Dr Gavin Putland writes:
> 
> ...


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## Glen48 (4 March 2009)

The Money Pit: The Untold Secret of Home Ownership February 18, 2009
Filed under: Hot Topics, Life, Whatnot ”” indiakonstanze @ 2:28 am
Tags: Economy, Finances, Money, Real Estate

I will now reveal to you, my dear readers, the secret about owning a home that no one in the whole freaking world will tell you: IT IS COMPLETE AND TOTAL BUNK. It does not make you any money. It will always cost you money. Don’t believe me? Keep reading.

First off, the people who say it’s a great investment do so because: (1) they think paying rent is like flushing money down the toilet””you don’t own anything and you’re not building equity; (2) they have no nomadic instinct whatsoever, and (3) they care deeply about paint color and/or the kind of tile on their countertops. Now, let me prove mathematically, why these arguments are all HOOEY.

Rent vs. mortgage: Okay, we all know that you pay a crapload of interest on your mortgage, and you pay it up front. You do not pay interest on rent. If you buy a house for $205,000 and had no interest and a monthly payment of $1200, you would pay off your home in 171 payments (14.24 years). But that doesn’t happen. Instead, following the strictures of my own home loan, you pay $1200 bucks a month for 30 years at a fixed rate of interest. That’s an extra 16 years of payments, for a total of $230,400 that you pay over and above your principal. That means you’re paying $435,400 to own your home in 30 years. At that rate, it has to more than double in value just for you to BREAK EVEN.

Now, let’s not forget about homeowner’s insurance. Mine currently runs about $650/year, and it goes up by about $50 a year. Even if we say the price rises $50 every three years, you will pay $23,850 in 30 years of ownership IF you have no claims that cause your rates to rise more than my built-in inflation. This brings our 30-year total to $458,850.

And we also have the delightful surprise known as property tax. My property tax is about $3,000/year. Some urban areas run as much as $10,000/year and rural areas as low as $800/year. If I use my own tax amount as an estimate and assume the amount due every year does not change. I will pay $90,000 in tax over 30 years. Our grand total is now $548,850, just for the bare minimum a homeowner has to pay.

This is not including homeowner’s association dues, maintenance fees, landscaping, yard service fees, remodeling, refurbishing, appliances, etc. Over 30 years, you have to expect some of that. How much? I have no idea, but $1,200 a year seems a VERY low estimate ($100 a month for lawn service/maintenance and association dues). So let’s throw another $36,000 in the pot, for a revised grand total of $584,850, all for a house that started with a $205,000 price tag.

Still with me? Now let’s compare this to an apartment. My rent will likely be a bit less than a mortgage payment, but just to be generous, let’s say I increase my standard of living throughout that 30 year period. Let’s use $800/month for five years, $1000/month for ten years, $1200/month for 15 years. That gives us $384,000.

Renter’s insurance will cost me about $120/year. Let’s use the same metric for judging this potential cost increase as we did for homeowner’s insurance, just to be fair (an 8% increase every 3 years). This puts us with a 30-year total of $5,205. Not too shabby. This boosts our total to $389,205.

With an apartment, we have no property tax, so nothing is added to our total. We also do not have homeowner’s association dues, maintenance fees, landscaping, yard service fees, remodeling, refurbishing, appliances, etc. Some eager beavers might beg their landlords to let them repaint, but let’s just say you’re content to call the manager when the toilet clogs and that’s it. You have no additional costs added to your total.

Let’s compare:

30 years of home ownership: $584,850

30 years of rental: $389,205

The renter saves $195,645 over 30 years.

Now, for those who say the benefit of buying is to have a rent-free place to live after their mortgage is paid, that $195,645 saved could either (a) buy a decent house in a lot of parts of the country, in cash, if that money were socked away over 30 years; or (b) pay for 13.5 additional years of rent at the $1200/month price.

If you buy a house when you are 30 and live there for 30 years, you are 60 when your rent-free livin’ kicks in. If you had rented those 30 years, your 13.5 free years would get you to age 73 and a half. Not too shabby. In those 43 years of renting, you would never have had to fix your own roof, toilet, stove, or refrigerator. You could save just as much, if not more, of your remaining paycheck as a homeowner could, giving you at least the same (if not more) savings to see you through from age 73 and a half to death.

Equity? Good luck getting that in today’s market, and good luck pulling it out of a bank when you want to use it. With markets tanking right and left, you can no longer count on an easy $30,000 whenever you feel like it. For that matter, good luck getting the steady 4% a year increase in value I projected to try and make my home’s value double just so I could BREAK EVEN on my investment.

And what happens if you want to move? If you rent, all you do is ride out your lease, and lose a portion of your deposit ($100? $200? Unless you let your dog crap on the carpet, you’ll probably get most of it back). If you own, you have to hope your home has appreciated enough to compensate for the commission you will need to pay an agent. After all, in some parts of the country (mine), agents will blackball “for sale by owner” homes, thus forcing you to pay them if you truly want to sell. Add in closing costs (full or partial, depending on your agreement with the buyer), and you might be even more screwed. Plus, if you want to buy again, you have to have another down payment…don’t tell me you didn’t save another $20,000 in between the insurance and property tax and general repairs?

So. We have established that renting does not flush money down the toilet…in fact, it saves you enough to buy a home, eventually, or rent 13.5 years longer for no extra cost. It allows you to move at will, without paying an agent $8,000 every time. It does not allow you to tear down walls and paint everything pink, but hey, if I want that, I can do it when I buy a house at age 60 with all the money I’ve saved in renting for 30 years.

So the next time I’m at a party and someone asks me why I don’t want to own a home, I will direct him or her to this blog posting and smile smugly. Then I will pay cash for the cosmetic surgery that erases my smug smile lines; after all, I’ve got $195,645 to burn.


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## prawn_86 (4 March 2009)

Nice post Glen.

It was reading 'Rich Dad, Poor Dad' that made me realise a PPOR is not an asset.

My plan:
work, rent, save. When saved enough buy a positively geared property (hopefully before 30) and then go from there. If we want a house of our own we will re-assess after that....


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## Largesse (4 March 2009)

you forgot to deduct the initial 205k from the homeowners 'costs'
at the end of the 30 years the homeowner has his/her asset and the renter has nothing.

using this guys calculations,
if you assume ZERO capital growth over 30 years, at end of 30 years, 

costs:
homeowner: 584000 - 205000 = 379000
renter: 389000

asset:
homeowner: house
renter: whatever they have saved.

will depend entirely on how well the renter saves money as to whether one option is better than the other


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## MrBurns (4 March 2009)

prawn_86 said:


> Nice post Glen.
> 
> It was reading 'Rich Dad, Poor Dad' that made me realise a PPOR is not an asset.
> 
> ...




Yes I know the figures...... but .........for almost everyone you cant keep your eye on the ball all the time, life gets in the way, therefore the 
*SUREST *way of getting something behind you is to saddle yourself with a mortgage and pay it off as soon as you can, at the end of the day ,even if you do nothing else, you will have a house.

It's called forced saving.


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## prawn_86 (4 March 2009)

MrBurns said:


> It's called forced saving.




Yep. And in the society we live in (instant gratification) forced saving is the only way a lot of people can save, even if it means paying off interest.

I like to think we're (my partner and I) savvy and determined enough to 'force' ourselves to save, without pumping it into a mortgage.


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## Trevor_S (4 March 2009)

MrBurns said:


> *SUREST *way of getting something behind you is to saddle yourself with a mortgage and pay it off as soon as you can, at the end of the day ,even if you do nothing else, you will have a house.
> 
> It's called forced saving.




Lots of people get a little ahead and are then redrawing to purchase toys or cars, boats, jet skis etc so the loan payment goes on an on ie they never save either. 

I think it's a misnomer to say all home owners pay their mortgage off and the have an asset, just as it's a misnomer to say all renters spend and don't save, to my mind both are generalisations with no foundation.  My sister is the classic home owner that has a car, holidays etc tacked on top of her home loan , she'll be still be paying the current car and last years holiday off in 30 years.

Banks don't want home owners to pay the capital off, just pay the interest.  If they repay it, the bank just has to go to all that hassle of finding someone else to loan it to.


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## sinner (4 March 2009)

Largesse said:


> you forgot to deduct the initial 205k from the homeowners 'costs'
> at the end of the 30 years the homeowner has his/her asset and the renter has nothing.
> 
> using this guys calculations,
> ...




Err what? Noooo. That 205k is now tied up into the house, it's not like homeowner get's that money cash in hand. You want to realise your 10k discount there, you need to sell the house and be in the same position as the renter while assuming the cost of selling is $0.


----------



## Glen48 (4 March 2009)

Being a renter if you invest wisely you can move up market and live in the latest property and soon rents will dive as the market crumbles.
I reckon the best set up is to have a dump on the outside and a modern house inside that way when the mobs turn up they won't target you and maybe even leave a present if they feel sorry for you.
Land is down to 11K a block in Lost Wages.


----------



## robots (4 March 2009)

hello,

"house prices to keep falling" 

still no clear evidence to support the title

Craigieburn up
Deer Park up
Ferntree Gully up
Boronia up
St Albans up
Thomastown up
Airport West up
Windsor up
Werribee up (245k median there too, hey hey 3 or 4x average earner there, must me an anomaly)

a small handful of the +ve results, well done those living it large top effort brothers the hardwork paying off

thankyou
robots


----------



## Largesse (4 March 2009)

sinner said:


> Err what? Noooo. That 205k is now tied up into the house, it's not like homeowner get's that money cash in hand. You want to realise your 10k discount there, you need to sell the house and be in the same position as the renter while assuming the cost of selling is $0.




I understand this, but the article is picking and choosing where it wants to make assumptions based on PCM and perfectly rational investors/savers and when it wants to make assumptions based on 'real world' empirical evidence.

Like sure, it is realistic to assume that there will be transaction costs on liquidation of the asset, 10% of asset value is fair? on a 205k house that only puts the homeowner a touch over 10k behind the renter after 30years based on this guys calcs but this is all the while assuming ZERO capital growth over 30years. Is this realistic aswell?

need to compare apples with apples


----------



## robots (4 March 2009)

hello,

and at the moment you probably get "selling" fees of about 2.5-3.2% 

some have fixed selling rates of 5-6k, paradise

thankyou
robots


----------



## MrBurns (4 March 2009)

robots said:


> hello,
> "house prices to keep falling"
> thankyou
> robots




You must have missed this - 

https://www.aussiestockforums.com/forums/showpost.php?p=404048&postcount=3511


----------



## satanoperca (4 March 2009)

Robots,

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


----------



## sinner (4 March 2009)

Largesse said:


> I understand this, but the article is picking and choosing where it wants to make assumptions based on PCM and perfectly rational investors/savers and when it wants to make assumptions based on 'real world' empirical evidence.
> 
> Like sure, it is realistic to assume that there will be transaction costs on liquidation of the asset, 10% of asset value is fair? on a 205k house that only puts the homeowner a touch over 10k behind the renter after 30years based on this guys calcs but this is all the while assuming ZERO capital growth over 30years. Is this realistic aswell?
> 
> need to compare apples with apples




Isn't it more (or at least, just as) silly to assume that the homeowner will be able to hold the whole thirty years if there is a large chunk of capital contraction through price destruction? More likely at this point they will be forced to sell at a loss if they want to retain mobility or have other equity issues or whatever.

I mean ok sure, it is probably safe to assume some capital growth on RE between buy 0y and sell 30y but what about the inbetween when homeowner has 3rd kid on the way and is still paying bubble prices on a deflated home waiting for inflation to take his pain away?

Meanwhile the renter can just up to the cheaper suburb no worries no loss.


----------



## robots (4 March 2009)

hello,

no worries Satan, Windsor FHB's? look at Sunshine broke the highest price for the suburb the other weekend

i picked up a slab of ruskies last week so another in a few months time will be fantastic

thats right we all walk out as friends brother its only debate and discussion

thankyou
robots


----------



## robots (4 March 2009)

sinner said:


> Isn't it more (or at least, just as) silly to assume that the homeowner will be able to hold the whole thirty years if there is a large chunk of capital contraction through price destruction? More likely at this point they will be forced to sell at a loss if they want to retain mobility or have other equity issues or whatever.
> 
> I mean ok sure, it is probably safe to assume some capital growth on RE between buy 0y and sell 30y but what about the inbetween when homeowner has 3rd kid on the way and is still paying bubble prices on a deflated home waiting for inflation to take his pain away?
> 
> *Meanwhile the renter can just up to the cheaper suburb no worries no loss.*




hello,

thats right the suitcase brigade, probably the old sub-prime NINJA phrase sums most up well:

NO INCOME NO JOB OR ASSETS

thankyou
robots


----------



## Glen48 (4 March 2009)

Not many home owners stay in the same house for 30 yrs I think it is about 5 to 7 so you have the extra cost buying, selling, Legal's etc. each shift.


----------



## Largesse (4 March 2009)

Glen48 said:


> Not many home owners stay in the same house for 30 yrs I think it is about 5 to 7 so you have the extra cost buying, selling, Legal's etc. each shift.




same can be said for renters


----------



## prawn_86 (4 March 2009)

Dont you guys get tired of talking around in circles all the time.

I think Robots has said one useful thing ever, and i cant remember what it was so it cant have been that poignant


----------



## MrBurns (4 March 2009)

prawn_86 said:


> Dont you guys get tired of talking around in circles all the time.




ROFL I was thinking the exact same thing lately, it's like Ground Hog Day.


----------



## gav (5 March 2009)

prawn_86 said:


> Dont you guys get tired of talking around in circles all the time.
> 
> I think Robots has said one useful thing ever, and i cant remember what it was so it cant have been that poignant




Hello,

I can think of at least one useful thing Robots has said.  He has mentioned this quite a few times on various threads, and also in a PM to me.

"embrace your job because as life travels on you soon realise THIS is where you will make most of your money,

what comes along with property and shares is a bonus"

Even if you don't agree with his posts, I am sure the majority of the forum find him entertaining.


----------



## singlefished (5 March 2009)

Largesse said:


> same can be said for renters




other than furniture removal costs which are common to both scenarios, what else does a renter have to pay?

(might even cost you nothing to move if you get your mates on board!)


----------



## gav (5 March 2009)

singlefished said:


> other than furniture removal costs which are common to both scenarios, what else does a renter have to pay?
> 
> (might even cost you nothing to move if you get your mates on board!)




Disconnection and reconnection costs for phone line, internet, gas, water, electricity.  Doing this every 12 months is not cheap, and its getting more expensive each year. (not that I have to worry about that anymore


----------



## singlefished (5 March 2009)

gav said:


> Disconnection and reconnection costs for phone line, internet, gas, water, electricity.  Doing this every 12 months is not cheap, and its getting more expensive each year. (not that I have to worry about that anymore




Maybe I get paid to much but I can't really recall exhorbitant fees whilst either connecting or disconnecting... possibly depends on what state you reside in and the suppliers you've signed up with?

For the units we've lived in it's generally been a call to get the utilities assigned to my name on moving in (transfer from the previous occupier), and on departure they've told me to read the meters myself otherwise i'd have to pay for somebody to came and do it for me...

Phone/internet are about the only grudge payments you have to make on connection ~ never cost me anything to get them disconnected though.

Even just had my telecoms provider giving me a free upgrade to ADSL2+ since I refused to pay the $60 to upgrade from ADSL last year when they brought in their new plans - told them I didn't need the extra speed or extra 5Gig download the new plans provided and wasn't interested.... Guess they just couldn't be bothered waiting 

Anyway, still waiting on Largess explaining the buying/selling/legals/etc a renter has to pay....


----------



## robots (5 March 2009)

hello,

some great information:

http://www.theaustralian.news.com.au/business/story/0,28124,25139421-36418,00.html

"house prices to keep falling", doesnt look like the Sub-Prime even occurred in the states

thankyou
robots


----------



## metric (5 March 2009)

gav said:


> Hello,
> 
> I can think of at least one useful thing Robots has said.  He has mentioned this quite a few times on various threads, and also in a PM to me.
> 
> ...




actually, i dont even agree with this.

my observation has been that people whom hold down a job are actually slaves to a bank or two. they work all week to pay bills, never really getting any further ahead. indeed, they get further into debt.

if they instead embraced learning about property and shares, with the same fervour they slave and stress, they would find a better outcome.

it is well explained in the penny dreadful, 'rich dad, poor dad'. 


.


----------



## numbercruncher (5 March 2009)

> Originally Posted by Glen48
> Not many home owners stay in the same house for 30 yrs I think it is about 5 to 7 so you have the extra cost buying, selling, Legal's etc. each shift.






Largesse said:


> same can be said for renters


----------



## kincella (5 March 2009)

Robots, 
thanks for the link today...truth is stranger than fiction hey....
basically sound like a huge con job....millions losing their homes in the US, the govt throwing trillions of dollars to the banks to save who ????? not the home owner but the banks....then today ..obama is throwing money to the service providors....???? well thats the banks again....and are the banks lending or fixing...well no they have tightened the screws....

years ago...heard the story about people move house every 5 years....group I knew, did some research in Melb and found none of the people they contacted had moved or intended to move...most were there 20 years or more...or intended to stay that long.....they loved their houses and their lifestyle...the research covered most suburbs in melb...

sure there were some who moved due to work, more high flyers for promotions, and others moved from their first home to upgrade to a bigger home for teenage children....
All the people I know...are in the 20 plus years set....
20 years in the first home, then  have moved  for the lifestyle change....and in the 2nd home for another 20 years...with no intention of moving again

of course thats very different to the younger ones...usually not married...the suitcase brigade....


----------



## theasxgorilla (5 March 2009)

metric said:


> actually, i dont even agree with this.
> 
> my observation has been that people whom hold down a job are actually slaves to a bank or two. they work all week to pay bills, never really getting any further ahead. indeed, they get further into debt.
> 
> ...




If I wasn't so busy "working all week to pay bills" I'd gladly show you a brighter side of life 

There is an often missed statement in one of the RDPD books where Kiyosaki says that unless you are gunning for an income of more than 200,000* USD a year, _he recommends not taking the B quadrant path_.  He says it's not worth the cost.

Ponder that.

*That was circa 2002/3 so you can probably index that figure upwards


----------



## gfresh (5 March 2009)

January ABS Building approvals out.. 

http://www.ausstats.abs.gov.au/auss...FD32CA25756F0012E01C/$File/87310_jan 2009.pdf

Continued negativity here, not good for the economy in general either.. 



> JANUARY KEY POINTS
> 
> 
> TOTAL DWELLING UNITS
> ...




Another economist again not factoring in enough downside... 

http://www.businessspectator.com.au/bs.nsf/Article/SCOREBOARD-$pd20090305-PTSDY?OpenDocument&src=sph



> I talked about this in November – the fourth quarter of 2008 and the first quarter of 2009 were always going to be the weak points for the Australian economy. Policy can’t work that quickly, but now what we need to see in order to stave off a recession is a demand pick-up, particularly in housing construction. In the absence of that, then we are indeed in trouble as it will show the ineffectiveness of policy. I still think the best bet is to put a bit of faith in the policy working sufficiently such that we eke out small positive growth outcomes for the duration of the year. We’ve got plenty of houses we need to build and much needed social infrastructure that needs to be done. *We get January building approvals in Australia today so that may offer some relief – here’s hoping! I’m looking for a 3 per cent rebound today, the high is 7 per cent but as usual there is a good spread with the low at -4 per cent (median +0.5 per cent).*



^^^
But instead was -3.7%, closest to the very lowest expectation.


----------



## Beej (5 March 2009)

Largesse said:


> you forgot to deduct the initial 205k from the homeowners 'costs'
> at the end of the 30 years the homeowner has his/her asset and the renter has nothing.
> 
> using this guys calculations,
> ...




It's even worse - that article posted is the thing that is complete bunk!

* Assumes mortgage holder pays mortgage for 30 years - crap. Most people, and certainly anyone astute enough to have a chance at saving any difference between mortgage/rent, will pay their mortgage off in much less time, thus saving bucket loads of interest and living rent free for large periods of time. I've paid off 2 PPOR mortgages completely - first in 7 years, second in 5 years (and that included funding a major $100k renovation). Lived completely interest/rent free for the other 8 years over that 20 year period.

* Ignores house value in final account as already pointed out, plus presume ZERO capital growth over 30 years - pigs might fly! 30 years ago (1979) the median house in Sydney cost what? About $20k? They now cost $500k+. No matter what your view of house prices, economics etc, I would bet my left nut that in 30 years median house prices will be significantly higher than they are now!

So - if you account for even those 2 fiscal points above, the owner ends up WAY WAY WAY ahead of the renter after 30 years. Remember also where is even the savvy/astute investor/renter going to park all their "extra" money? With the volatility evident in stock markets etc, there's a very real chance that anyone trying this strategy over the past 10-15 years years will have been burned by both the DOUBLING of house prices, and the HALVING of their share market investments - so they are now completely screwed......

The article also derides many of the joys/intrinsic values of home ownership, by suggesting that not being "nomadic" is somehow bad, and that caring about your home environment and wanting to make it what YOU want is somehow of no value either.... typical perma-renter attitude really, wouldn't want that guy as a tenant! Bottom line is there is a value judgment being made there that sounds like it comes from someone who is not yet old enough to have a family etc.

Anyway, there are clearly people who think long term renting is the way to go - good on you, do what you like! Me, I'm a home owner, always will be.

Cheers,

Beej


----------



## kincella (5 March 2009)

I think those articles are written to make the renters feel better....
if they diligently saved their money..had it in term deposits....they would need to keep adding capital above the  rate of inflation each year just to stay ahead...
versus the house sits there....and with normal maintenance....its value at the end is usually in excess of the inflation.....
and in times like this....hardly any value in a term deposit.....but the opposite for home buyers with a mortgage
have been having this argument for over 20 years...and the home owners are still way out in front....


----------



## CamKawa (5 March 2009)

gfresh said:


> January ABS Building approvals out..
> 
> http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/E35BD3914D32FD32CA25756F0012E01C/$File/87310_jan%202009.pdf



From Jan 08 -> Jan 09 total dwelling units approved fell by a massive seasonally adjusted -33.5%. Suck it in and feel the pain.


----------



## MrBurns (5 March 2009)

On ABC last night , forget the show, said first home buyers enticed by the FHB double grant will be first to feel the pain as unemployment rises.

Negative equity will add to the pain for many when they try to sell.

Well done Rudd you useless meddling creep, even people in the street knew this was on the cards.


----------



## UBIQUITOUS (5 March 2009)

Despite the bad news in the media, having read the following article, I can see where those who are property investors are coming from. 


Here is a link to the article. It provides an interesting insight into current investment in the property market.

Certainly, food for thought.


----------



## Beej (5 March 2009)

CamKawa said:


> From Jan 08 -> Jan 09 total dwelling units approved fell by a massive seasonally adjusted -33.5%. Suck it in and feel the pain.




Yep - very bad for the economy (huge drop off on demand side for building/construction because of this, as seen in GDP figures), but not so good if you are a renter or even potential FHB; less dwellings being built + rising population =  upwards pressure on rents, and/or upwards pressure on prices of established dwellings.... depending on net move from rent to owning or vice versa. Increased FHB activity suggesting weight is currently on the established dwelling price pressure side. This is being reflected in suburbs where house prices are under $600k in Sydney (and some other cities) where turnover is rapid and prices are actually increasing at the moment according to all the stats.

Cheers,

Beej


----------



## UBIQUITOUS (5 March 2009)

Beej said:


> Yep - very bad for the economy (huge drop off on demand side for building/construction because of this, as seen in GDP figures), but not so good if you are a renter or even potential FHB; less dwellings being built + rising population = upwards pressure on rents, and/or upwards pressure on prices of established dwellings.... depending on net move from rent to owning or vice versa. Increased FHB activity suggesting weight is currently on the established dwelling price pressure side. This is being reflected in suburbs where house prices are under $600k in Sydney (and some other cities) where turnover is rapid and prices are actually increasing at the moment according to all the stats.
> 
> Cheers,
> 
> Beej




Beej, you really need to put a macroeconomic hat on, rather than living in a 'supply and demand' world.


----------



## kincella (5 March 2009)

they do not understand....building approvals down, new residents up....looks like we are going to have some fun in the next few years.....price hikes are on the cards....pffft... even if it is a year of more bad news....it will change...but who will be prepared for the changes....????
another couple of easy 100k's pa
and just a reminder...for those yearning for the good old days
5 years ago cost 150,000 at 8% interest = 12,000 pa or 7% = 10500
today 300,000 at 5% = 15,000 or 4%  = 12,000
the difference is only beer money
............................................................................................
extract from Bernard Salts article today.....
population booms forces a rethink

THERE has been a fundamental change in thinking by demographers about the medium-term outlook for population growth in Australia.

In September, the Australian Bureau of Statistics published a medium projection that showed the nation adding 6.9 million residents over the 20 years to 2026. 

Just two years earlier, the official outlook for this period was net growth of 3.7 million. 

The extra 3.2 million residents materialised out of new trends and data flowing from the 2006 census and changes to migration policy that upped the net migration assumption. 

The bottom line is that the birth rate was lifted and the assumption regarding overseas migration was also lifted from 110,000 to 180,000 per year. 

What this effectively meant was that strategic plans that had been developed for capital cities between 2002 and 2005 (and based on 2001 census results), including documents like Melbourne 2030 and Sydney's City of Cities, had to be rethought. 

And that is precisely what's happening right now. 

New plans are being developed for raised expectations of growth. 

But the problem has always been that the ABS develops this national view about population growth and it is then left up to the states to work out how and where growth is to be accommodated. 

And the states are doing exactly that: new population forecasts are being prepared which allocate growth, based on preferred planning principles, at the local government area level. 

another extract
The projections show that Hervey Bay will double within 20 years. It is already this nation's 29th largest city; by 2026 "the Bay" will rank 24th. 

Other rocket towns include Bunbury, projected to grow by 74 per cent over the 20 years to 2026, followed by Gladstone (up 68 per cent), the Gold Coast (up 65 per cent), Mandurah (up 64 per cent), Busselton (up 62 per cent) and Cairns and the Sunshine Coast (both up 61 per cent). 

The common denominator of these places is their sea-change lifestyle, although Bunbury and Gladstone have local manufacturing and port-handling capacities. 

But the projections aren't all about rapid growth. 

Some towns are expected to grow slowly over 20 years, with population increases under 10 per cent, such as Burnie-Devonport, Orange, Griffith, Grafton, Whyalla, Armidale and Innisfail

http://www.theaustralian.news.com.au/business/story/0,28124,25139471-25658,00.html


----------



## nomore4s (5 March 2009)

UBIQUITOUS said:


> Despite the bad news in the media, having read the following article, I can see where those who are property investors are coming from.
> 
> 
> Here is a link to the article. It provides an interesting insight into current investment in the property market.
> ...




rotflmao



UBIQUITOUS said:


> Beej, you really need to put a macroeconomic hat on, rather than living in a 'supply and demand' world.




I agree, more to think about then just supply and demand, although some macroeconomic problems are going to affect supply & demand. We are still at the early stages of this cycle imo.



kincella said:


> and just a reminder...for those yearning for the good old days
> 5 years ago cost 150,000 at 8% interest = 12,000 pa or 7% = 10500
> today 300,000 at 5% = 15,000 or 4%  = 12,000
> the difference is only beer money




That's fine as long as rates stay that low for the next 5 years. What happens if/when they go back to 8%?


----------



## kincella (5 March 2009)

HOUSEHOLDS pocketed tax cuts, lower interest payments and cash handouts in the December quarter while cutting back on cars, eating out, alcohol and cigarettes.

Figures released by the Australian Bureau of Statistics show gross disposable income soared by $11 billion - a 5.9 per cent increase - thanks to plunging interest payments on mortgages and credit cards, declining fuel prices, tax cuts and government handouts.

http://www.news.com.au/business/money/story/0,28323,25141537-5017313,00.html

normore4s......you lock in for 5 years...or 10 years if you expect to stay that long....then expect to pay around 7-8% again....but you should be earning more by then, and the loan has decreased....in a low rate environment...its easier to pay more off the loan.....


----------



## Beej (5 March 2009)

UBIQUITOUS said:


> Beej, you really need to put a macroeconomic hat on, rather than living in a 'supply and demand' world.




Macro-economic factors can matter, but macro level supply and demand (which you want to ignore completely) is the MAJOR factor that will influence house prices in the long term, as will be the case for any open market for any other commodity.

You really need to look at what is actually happening in the market and explain to me how your macroeconomic factors fit in with this? Eg: How come median prices AND turnover of property in dozens of Sydney and Melbourne suburbs (where medians are under $600k) have gone up in the past 3/6 months?

Eg: parramatta in Western Sydney: Up 13% http://www.homepriceguide.com.au/snapshot/price/index.cfm?action=view&source=apm

There are dozens of others.

Beej


----------



## singlefished (5 March 2009)

MrBurns said:


> On ABC last night , forget the show, said first home buyers enticed by the FHB double grant will be first to feel the pain as unemployment rises.
> 
> Negative equity will add to the pain for many when they try to sell.
> 
> Well done Rudd you useless meddling creep, even people in the street knew this was on the cards.




I saw it too MrBurns....



> RICHARD LINDELL: And human nature maybe pushing a whole new generation of first home buyers to the brink.
> 
> MARTIN NORTH, FUJITSU CONSULTING: We model mortgage stress based on what's happened to unemployment.
> 
> ...





http://www.abc.net.au/lateline/business/items/200903/s2507660.htm


----------



## singlefished (5 March 2009)

Beej said:


> You really need to look at what is actually happening in the market and explain to me how your macroeconomic factors fit in with this? Eg: How come median prices AND turnover of property in dozens of Sydney and Melbourne suburbs (where medians are under $600k) have gone up in the past 3/6 months?




*DOZENS*


----------



## kincella (5 March 2009)

nsw approvals were down a whopping 19%....out of 33% for aus wide for the year.....just a few more months for those interest rates to flop.....then we can lock in....and take the big chunk out of those little mortgage babies....who is excited now ? well I am...
here's the extract
......................................

CommSec chief economist Craig James said it would be a couple more months before the big interest rate cuts and the boost to the first home owner grant came through in the data.

"At some point in time we are going to see an almighty rise because we just can't continue to under build here in Australia," Mr James said.

Housing Industry Association chief economist Harley Dale said it would take more than the revival in the first home buyer market to generate a recovery in residential construction.

"A further decline in building approvals in January is a very weak update on the short-term prospects for new home building activity," Mr Dale said in a statement.

The worst performing state was New South Wales, where building approvals fell a massive 19.1 per cent in January. Approvals were also down in Queensland and Western Australia.

Building approvals rose in South Australia, Victoria and Tasmania.
Building approvals have sunk 33.5 per cent in the 12 months to January.

http://www.thebull.com.au/articles_detail.php?id=771


----------



## robots (5 March 2009)

robots said:


> hello,
> 
> "house prices to keep falling"
> 
> ...




hello,

a few for the list singlefished, didnt even go through the entire list

oh well, "house prices to keep falling for years" not looking too good

fantastic news with building approvals down again, 

anybody know how Tanya Pilbarasek is going with the subsidized rental scheme?

thankyou
robots


----------



## prawn_86 (5 March 2009)

Robots, there are probably an equal number of suburbs that have fallen in value...


----------



## Glen48 (5 March 2009)

Mr. Burns another thing about FHO they get sucked in by the low rates etc so instead of being a victim and paying rent to the banks for 400K they think they can now buy a 500K mill stone.
The are no PDS's buying RE when it could be the worst thing you do in your life beside getting Married.


----------



## robots (5 March 2009)

prawn_86 said:


> Robots, there are probably an equal number of suburbs that have fallen in value...




hello,

probably are Prawn86, just like there was 2yrs ago, 5yrs ago, 20 yrs ago, 30 yrs ago etc etc

and through those time scales plenty of suburbs that went up as well just like today, 

haven't done question time for a while (actually since Chops A must was still with us) so lets kick it off tonite, fire away

thankyou
robots


----------



## robots (5 March 2009)

hi,

are gidday robots, tonite on abc news Alan Kohler said building approvals down again and this wont be good for rents

does this mean rents will rise?

cheers
peter from Preston


----------



## CamKawa (5 March 2009)

Here's a chart from tonight's ABC news. Things aren't looking good.


----------



## robots (5 March 2009)

robots said:


> hi,
> 
> are gidday robots, tonite on abc news Alan Kohler said building approvals down again and this wont be good for rents
> 
> ...




Hello Peter,

great question, most definitely rents will rise and thanks to Camkawa with the graph just posted further indicates things arent looking good for renters

thats okay many of them have plenty of cash so increases can easily be accomodated, paradise

can people please rate this reply so I can get an indication on performance

thankyou
robots


----------



## Beej (5 March 2009)

singlefished said:


> *DOZENS*




Yep. Don't see why I should be doing all the research for you bears, but check out for the first 12 I can find after 5 minutes:

* Hornsby, Asquith, Berowra, Parramatta, Liverpool, Bankstown, Fairfield, Hurstville, Cronulla, Camden, Camperdown, Ashfield - all up from 2% -> 10%+ over the past 6 months (median price), from the following APM link: http://www.homepriceguide.com.au/snapshot/index.cfm?s_rid=APMHomePage:Demographics:Link

There ARE dozens more. I'm sorry if the facts don't support your conjecture!  House prices to fall for years? Not if you buy in the right areas it would seem!

Cheers,

Beej


----------



## UBIQUITOUS (5 March 2009)

Beej said:


> Yep. Don't see why I should be doing all the research for you bears, but check out for the first 12 I can find after 5 minutes:
> 
> * Hornsby, Asquith, Berowra, Parramatta, Liverpool, Bankstown, Fairfield, Hurstville, Cronulla, Camden, Camperdown, Ashfield - all up from 2% -> 10%+ over the past 6 months (median price), from the following APM link: http://www.homepriceguide.com.au/snapshot/index.cfm?s_rid=APMHomePage:Demographics:Link
> 
> ...




'Dozens' isn't much considering that there are hundreds of suburbs in Sydney


----------



## prawn_86 (5 March 2009)

Just to show the bulls that it works both ways this is from last weeks BRW:

Vic Houses - 10th worst suburb down 19% for 2008 worst down 30%
Vic Units - 10th worst suburb down 17% for 2008 worst down 31%

NSW Houses - 10th worst suburb down 25% for 2008 worst down 42%
NSW Units - 10th worst suburb down 43% for 2008 worst down 33%

QLD Houses - 10th worst suburb down 19% for 2008 worst down 43%
QLD Units - 10th worst suburb down 15% for 2008 worst down 41%

etc etc

So it shows that as with any asset class it depends what you buy


----------



## singlefished (6 March 2009)

Beej said:


> Yep. Don't see why I should be doing all the research for you bears, but check out for the first 12 I can find after 5 minutes:
> 
> * Hornsby, Asquith, Berowra, Parramatta, Liverpool, Bankstown, Fairfield, Hurstville, Cronulla, Camden, Camperdown, Ashfield - all up from 2% -> 10%+ over the past 6 months (median price), from the following APM link: http://www.homepriceguide.com.au/snapshot/index.cfm?s_rid=APMHomePage:Demographics:Link
> 
> ...




Sorry Beej, but just got to laugh... notice I typed it in large letters trying to make it a bit more impressive for you (I should have double spaced it as well...)_ D O Z E N S. . . . . . _Thank me later 

As far as I know there are well over 15 thousand suburbs Australia wide ~ almost 700 alone in Sydders....

Underpinning your fundamentals and diatribe with "dozens of suburbs" out of at least fifteen thousand is a bit weak, even for a spin doctoring cunning linguist like yourself...

Good to see the median prices rising... doesn't really show us the discounting that is going on in the more expensive price brackets though, similarly, it doesn't really show any evidence of the frenzied buying at the cheaper end of the market...

More activity at the lower end would surely bring the median down no? and probably show as a more pronounced drop at that due to the significantly fewer sales that are going through when compared to historic volumes of recency...


----------



## billv (6 March 2009)

singlefished said:


> More activity at the lower end would surely bring the median down no? and probably show as a more pronounced drop at that due to the significantly fewer sales that are going through when compared to historic volumes of recency...




True, the city median will fall, but it will stop the media and everyone else from saying that Oz property is overpriced, because it's not.

Property is priced at the level a buyer is willing to pay.


----------



## ROE (6 March 2009)

billv said:


> True, the city median will fall, but it will stop the media and everyone else from saying that Oz property is overpriced, because it's not.
> 
> Property is priced at the level a buyer is willing to pay.




don't get confused with price and value
price is what you pay
value is what you get 

you can pay 10,000 for a TV but do you get value for your money


----------



## Dowdy (6 March 2009)

billv said:


> True, the city median will fall, but it will stop the media and everyone else from saying that Oz property is overpriced, because it's not.
> 
> Property is priced at the level a buyer is willing to pay.




Property is way overpriced. It has increased faster then the rate of pay has increased, faster then GDP, CPI etc.

It's overpriced by about 30-40%

The only thing keeping the price up is the government grants which all it did was inflate the price well beyond what people can pay.


----------



## billv (6 March 2009)

Dowdy said:


> Property is way overpriced. It has increased faster then the rate of pay has increased, faster then GDP, CPI etc.
> It's overpriced by about 30-40%.




I disagree, I believe that some property markets have been priced upwards due to investor speculation but in general our property prices are about right.

Market forces will fix any overpricing anyway, just like they did to shares.

Ofcourse we could argue about this till the cows come home but the fact is that in Australia we have many individual property markets so blanket statements like the one you've just made are not accurate.


----------



## gfresh (6 March 2009)

billv said:


> I disagree, I believe that some property markets have been priced upwards due to investor speculation but in general our property prices are about right




That is fine with 5.x% interest rates.. a lot didn't seem to like 8.x% though, nor found it that affordable, and new entrants may not also if rates were to ever reach that level in the next 5 years. 

Especially when unemployment is around 8% in 2012 which I expect it to be at and stay that way for a while. These cycles take a decade to play out properly in their full form. 

Read a lovely article in the paper today about a 19 y/o couple buying in VIC with a whole $5000 they had saved up since they left school, the rest in government grants. I'm sure that's a great stable position to be buying a property  

GM on an absolute knife-point right now. If they go, there goes Holden, one of our most iconic brand names.. no more Holden dealerships, no more Holden manufacturing, no more Commodore. Not so much relevance to housing, but shows how much of a changed place Australia could be in a few years time. Things won't just go back to the way they were in a couple of quick years as some seem to expect.


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## kincella (6 March 2009)

report out today...on average people are spending 32% of their income on housing compared to 39% last year....its the most affordable its been in 40 years....
and reported here last week...the income to house price ration has gone down to 5.1%.....
I think those waiting for another 40% crash will never buy a house....it will never get down that far....but in the meantime you can buy an affordable house anywhere...you just have to look.....
but maybe you have one of the 10 excuses Jan Sommers noted....as to why you cannot buy a house....
I am happy for all the renters out there....its your choice... nothing wrong with that.....
think a lot of information comes from the house price crash site....
just watch out soon....the US is having trouble with its deposit guarantee...thats only 250k.....ours is 1 million.....what if its reduced to 100k ??? people will not put the money under the bed....they will look for something like....bricks and mortar...deposit rates to drop further....so no incentive with low earnings and no guarantee ???

http://www.news.com.au/business/story/0,27753,25146492-31037,00.html


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## drsmith (6 March 2009)

One question that comes to my mind is the level of capital that is available for investment in housing. Clearly there will be less going forward but the extent will depend in the length/depth of recession and it's medium to long term imapct on investment markets, employment and credit availability. The level of goverment assistance (first home owner's grant) will also play a roll.

If we were to have a relatively short recession then the capital pool available for housing is more likely to sustain prices near present levels but a more sustained downturn is obviously much more likely to have a serious impact on real house prices.

This does not have to be in the form of a large fall over a 12 month period but rather a fall in real terms over a period of a few years.


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## Glen48 (6 March 2009)

A friend in Gladstone tells me a lot of elderly have Margin loans could be from Storm and have to sell their houses he thinks about 50 were suppose to go on the market but never arrived....is it possible Bankers, legals, R E agents could snap them up before the public know?


----------



## prawn_86 (6 March 2009)

prawn_86 said:


> Just to show the bulls that it works both ways this is from last weeks BRW:
> 
> Vic Houses - 10th worst suburb down 19% for 2008 worst down 30%
> Vic Units - 10th worst suburb down 17% for 2008 worst down 31%
> ...




As with every other general thread which is only based on opinions, i noticed that people didnt comment on this where it didnt suit them...


----------



## Trevor_S (6 March 2009)

ROE said:


> don't get confused with price and value
> price is what you pay
> value is what you get




Hey.. I use the same argument with goldbugs  the stuff is worth no more then what it costs to dig it out of the ground... and this coming from an ex Au miner  

I guess when it all comes tumbling down, they can fashion there horde of Gold into a club to beat other people off with.


----------



## kincella (6 March 2009)

prawn..wheres the link to read the article...and probably not interested because there are more awful suburbs out there then there are nice ones...the ones I follow are all doing nicely thanks
I know of posters who take out bits of an article to suit them....but the whole article tells the story

couple of weeks ago the media were screaming houses price crashing.... but overall australia wide it crashed less than 1%....
hahahahaha what a scream....


----------



## Aussiejeff (6 March 2009)

> *Projects cut as construction slows*
> Chris Zappone
> March 6, 2009 - 9:31AM
> 
> ...



http://business.theage.com.au/business/projects-cut-as-construction-slows-20090306-8qcg.html

Somethings gotta give....


----------



## Taltan (6 March 2009)

Kincella
If the govt bank guarantee falls over than our banks will have to fight for every penny to surive because international funding will dry up. There will be no more credit creation and given Australian household debt levels you will be left praying property falls only 40%. I am not saying the above will happen but if you are going to put forward an argument at least follow it through to its logical conculsion

On a seperate issue does anyone know the current status on the govt extending the FHOG past June 30, will we find out on budget night?


----------



## Beej (6 March 2009)

Taltan said:


> On a seperate issue does anyone know the current status on the govt extending the FHOG past June 30, will we find out on budget night?




The issue is the FHOG *boost*. They are currently saying the boost will not be extended. We shall see. If it isn't extended, then the FHOG goes back to the original $7k/$14k as introduced by Howard when the GST first came in.



Trevor_S said:


> Hey.. I use the same argument with goldbugs  the stuff is worth no more then what it costs to dig it out of the ground... and this coming from an ex Au miner
> 
> I guess when it all comes tumbling down, they can fashion there horde of Gold into a club to beat other people off with.




Nah - Gold is heavy but soft! Whilst it would hurt, the guy with the steel (or lead + gunpowder even!) will win the fight 

Cheers,

Beej


----------



## kincella (6 March 2009)

regarding the deposit guarantee...it should never have been 1 million....
as far as I can see...the govt would just print money to guarantee it...no need to bring an insurance company into the equation...aka AIG...who need funding themselves...again...and how many times again...

banking needs to go back to the 'old' days...you made a deposit and they loaned it to business or home buyers...and took a percentage on the way...no derivatives..foreign money or huge salaries for the ceo's....simple 
everyone was happy....credit was harder to get...

as for business finance...its usually backed by residential property....the banks are charging a higher rate....like the old days...but its a tax deduction for business anyway...tightening up...??? well maybe they want resi backing again 

we will follow the US and the UK in printing money to cover the huge bailouts...so printing money for the banks, car makers, or depositors....no difference who it covers...

anyway everybody's supposed to love the krudd...so he just has to give his word and they will believe him, trust me, its safe with me etc...won't they ???
http://www.news.com.au/business/story/0,27753,25146495-462,00.html


----------



## aleckara (6 March 2009)

kincella said:


> regarding the deposit guarantee...it should never have been 1 million....
> as far as I can see...the govt would just print money to guarantee it...no need to bring an insurance company into the equation...aka AIG...who need funding themselves...again...and how many times again...
> 
> banking needs to go back to the 'old' days...you made a deposit and they loaned it to business or home buyers...and took a percentage on the way...no derivatives..foreign money or huge salaries for the ceo's....simple
> ...




I don't know if the financial system works like that.

Australian dollars never really leave the country, just the ownership. Saying that foreign money can't be used for credit - well I don't know.

If foreigners earn our money what do they do with it? They either cash it in for their money or put it in an Australian bank (few cash it out as notes and put it under their beds). Someone in the end holds possession of AUD in a bank here (a deposit). This deposit gets lent out even if the ownership is elsewhere. We can still accumulate foreign debt this way through the banking system. This to me though is manageable.

What is a bank account? It really is just like a bond that banks issue overseas to raise foreign money. You don't have 'money' in a bank account - you have an account that like a bond states what you have lent to the bank and the interest you will get (whether fixed or floating).

What I don't agree with is borrowings in terms of another currency (such as in USD because the rates are lower). We shouldn't be allowed to borrow in their terms but only on our home soil. Credit therefore would be harder to come by - you are correct but that doesn't mean we wouldn't be having large interest payments overseas.

Derivatives are not bad in their most basic form. It's when people don't specify all the risks in them that something goes wrong, or they derive of a measure that is being measured wrong (i.e default risk). with more complexity comes increased chance of failure.


----------



## Taltan (6 March 2009)

It is exactly the situation of credit being harder to get and govts printing money that is partially why I am so bearish on property. When the money is printed inflation will soar and interest rates will rise. So you get the combination of higher rates plus tighter credit rationing by the banks. Chuck in higher unemployment, factor in how relatively unaffordable property is now and you have a market with very few buyers and only one way to go.

On the flip-side is the housing shortage and govt handouts. Those two factors are harder to predict as the barriers are not economical but political machinations (govt grants/tax handouts) and incompetence (State govt don't release land). I agree that as long as they are maintained there is an artifical floor on how low property can go (assuming our economy doesn't totally crash and burn like Spain, Japan, Iceland or Ireland)


----------



## aleckara (6 March 2009)

Taltan said:


> It is exactly the situation of credit being harder to get and govts printing money that is partially why I am so bearish on property. When the money is printed inflation will soar and interest rates will rise. So you get the combination of higher rates plus tighter credit rationing by the banks.




I thought printing money reduces interest rates at which people can borrow? The more money in the market, the less the price. However in terms of the fx market the currency will fall as well. I always thought of printing money like a share issue except the business profits are not diluted but instead the country's real GDP and their capacity to pay yield - each holder of a dollar gets less of the total yield the country creates, and owns less of the pie. Interest rates only rise if the central bank prints money with one hand, and sells bonds to mop up the cash in the other and even then it affects each market differently.

Bit hazy on the subject. Haven't looked at it in awhile. Would be interested to know if this is what other people think as well.


----------



## billv (6 March 2009)

Taltan said:


> When the money is printed inflation will soar and interest rates will rise.




This is good because with higher inflation wages will rise faster and the $ value of my loans diminishes. 
Can't afford the increased repayments?
No problem, we fix our loans early and wait for our wages and rents to go up in line with inflation.


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## kincella (6 March 2009)

the more money floating around becomes well..worth less...you need more dollars to pay for what you need....milk 2.00 yesterday is 2.50 today....
that house you bought yesterday is worth more today...well its worth the same as yesterday...except you need more dollars today....(the cost versus value argument) to buy it
the mortgage remains the same in dollar terms....but the interest rate rises...and so does the cost / value of the house....
we have just been there and done that....last year.....

only the printing of billions of dollars now..is it 100 billion yet ?  

devalues yesterdays dollars by that 100 billion......or thats how I understood it


----------



## robots (6 March 2009)

kincella said:


> prawn..wheres the link to read the article...and probably not interested because there are more awful suburbs out there then there are nice ones...the ones I follow are all doing nicely thanks
> I know of posters who take out bits of an article to suit them....but the whole article tells the story
> 
> *couple of weeks ago the media were screaming houses price crashing.... but overall australia wide it crashed less than 1%....
> hahahahaha what a scream....*





hello,

spot on Kincella, the safety of bricks & mortar

no spin, no management, no boards, fantastic

what a day, bit of rain in east, nirvana

sorry i know i know i know, it takes 6 to 12 mths for us to follow the US and no one will have a job in 2010 

thankyou
robots


----------



## Dowdy (6 March 2009)

billv said:


> I disagree, I believe that some property markets have been priced upwards due to investor speculation but in general our property prices are about right.
> 
> Market forces will fix any overpricing anyway, just like they did to shares.
> 
> Ofcourse we could argue about this till the cows come home but the fact is that in Australia we have many individual property markets so blanket statements like the one you've just made are not accurate.




Market forces WILL fix any overpricing, like you said but the market is being manipulated with the government grants. 

We all know what happens when you manipulate markets. It creates bubbles and makes the inevitable bust alot worst then letting the market work itself out

Our version of sub-prime are the grants


----------



## Dowdy (6 March 2009)

kincella said:


> regarding the deposit guarantee...it should never have been 1 million....
> as far as I can see...the govt would just print money to guarantee it...no need to bring an insurance company into the equation...aka AIG...who need funding themselves...again...and how many times again...
> 
> banking needs to go back to the 'old' days...you made a deposit and they loaned it to business or home buyers...and took a percentage on the way...no derivatives..foreign money or huge salaries for the ceo's....simple
> ...





banking doesn't just needs to go back to the 'old' days. The whole system needs to be redone. If you know about the 'fractional reserve' system that banks operate to give credit, then that's what needs to be redone.

Because when you think about it all banks in the world are just Ponzi Schemes. It seems the world operates on a ponzi scheme - government, banks etc


----------



## billv (6 March 2009)

Dowdy said:


> We all know what happens when you manipulate markets. It creates bubbles and makes the inevitable bust alot worst then letting the market work itself out




Good point, I agree governments should not manipulate the property market
and those first home buyers should not be given a free deposit to buy a house, they should work and save for a deposit as we did.


----------



## Beej (6 March 2009)

Dowdy said:


> banking doesn't just needs to go back to the 'old' days. The whole system needs to be redone. If you know about the 'fractional reserve' system that banks operate to give credit, then that's what needs to be redone.
> 
> Because when you think about it all banks in the world are just Ponzi Schemes. It seems the world operates on a ponzi scheme - government, banks etc




Do you understand the concept of economic growth and how that fit's in with the fractional reserve banking system and process of money creation? It's not a ponzi scheme if there is genuine economic growth, productivity improvements, innovation, etc supporting the creation of money via credit through the fraction reserve mechanisms..... economics 101! Don't believe all the conspiracy crap you read on the internet.....

Beej


----------



## UBIQUITOUS (7 March 2009)

Beej said:


> Do you understand the concept of economic growth and how that fit's in with the fractional reserve banking system and process of money creation? It's not a ponzi scheme if there is genuine economic growth, productivity improvements, innovation, etc supporting the creation of money via credit through the fraction reserve mechanisms..... economics 101! Don't believe all the conspiracy crap you read on the internet.....
> 
> Beej





Ahhhh...bless your cotton socks Beej. 10 out of 10 for effort!


----------



## Aussiejeff (7 March 2009)

> *16,623 apartments and townhouses abandoned or halted as crisis hits sales*
> 
> By Bridget Carter
> The Australian
> ...



http://www.news.com.au/business/money/story/0,28323,25149947-5013951,00.html

Still beer & skittles?


----------



## Aussiejeff (7 March 2009)

Beej said:


> Don't believe all the conspiracy crap you read on the internet.....
> 
> Beej




Do you work for the Treasury Dept?


----------



## Macquack (7 March 2009)

Dowdy said:


> banking doesn't just needs to go back to the 'old' days. The whole system needs to be redone. If you know about the 'fractional reserve' system that banks operate to give credit, then that's what needs to be redone.
> 
> Because when you think about it all banks in the world are just Ponzi Schemes. It seems the world operates on a ponzi scheme - government, banks etc




I totally agree.



Beej said:


> Do you understand the concept of economic growth and how that fit's in with the fractional reserve banking system and process of money creation? It's not a ponzi scheme if there is genuine economic growth, productivity improvements, innovation, etc supporting the creation of money via credit through the fraction reserve mechanisms..... economics 101! Don't believe all the conspiracy crap you read on the internet.....




Take note, Beej reckons the Global Financial Crisis is just a internet conspiracy.


----------



## Beej (7 March 2009)

Macquack said:


> Take note, Beej reckons the Global Financial Crisis is just a internet conspiracy.




No - that's not what I said at all - please re-read my post, apologise for mis-representing what I said, and try again....

Beej


----------



## CamKawa (7 March 2009)

Macquack said:


> Take note, Beej reckons the Global Financial Crisis is just a internet conspiracy.



LOL I know it's like that with the permabulls.


----------



## Beej (7 March 2009)

CamKawa said:


> LOL I know it's like that with the permabulls.




*sigh*.....

Beej


----------



## Macquack (7 March 2009)

Beej said:


> No - that's not what I said at all - please re-read my post, apologise for mis-representing what I said, and try again....
> 
> Beej




Sorry Beej for interpreting what you said differently to what you were trying to say. You did leave yourself open for that response.

You say 
"It's not a ponzi scheme *if* there is genuine economic growth, productivity improvements, innovation, etc supporting the creation of money via credit through the fraction reserve mechanisms"

Does that mean you are acknowledging it is a ponzi scheme if there is NO genuine economic growth to back up endless credit creation by private banks?


----------



## Beej (7 March 2009)

Macquack said:


> Sorry Beej for interpreting what you said differently to what you were trying to say. You did leave yourself open for that response.
> 
> You say
> "It's not a ponzi scheme *if* there is genuine economic growth, productivity improvements, innovation, etc supporting the creation of money via credit through the fraction reserve mechanisms"
> ...




That is a slightly more reasonable interpretation of what I am trying to say, but I still think the use of the term "ponzi scheme" to describe the process of money creation in fractional reserve banking, even when it goes awry, is over the top. Yes - of course if there is no growth, no innovation, no productivity improvements, and yet the money supply/credit continues to grow, then that is certainly problematic. In my mind this is more a question of adequate rules/regulation though rather than an indictment of the very fabric of the system as many here would suggest.

The current GFC, fundamentally, has occurred because huge amounts of credit was created (mainly in the US) that even at the time it was created had just about zero chance of ever being repaid - it was a ticking time bomb waiting to explode. If this is ever allowed to happen, then there are going to be big problems. In the current case it was made worse through the complex securitisation products that were dreamt up that wrapped up and hid the problem loans, the unregulated credit derivative markets (credit default swaps etc), and of course the US holding interest rates way too low for too long (this is the part I guess more directly related to the fractional reserve banking system). End result, if credit freezes due to the complete removal of confidence in the system as in the GFC case, then economies contract - hard.

BUT - I maintain that the whole GFC is not in and of itself "proof" that the whole fractional reserve system is a sham. It could have been avoided if US monetary policy had been set differently, and if there had been more/better rules and regulation in place related to my above points. 

In AU we did not commit many of the above "sins", but are dragged into the whole affair anyway through globalisation and the impact via our trading partners (our economy is very dependent on trade at the macro level after all). Fortunately we have nowhere near the credit freeze problems that the US/UK have, and our banking system is still functioning reasonably well, holding up a degree of confidence in the system. We also don't have the huge amounts of bad credit to deal with - and the corresponding mammoth number of mortgage defaults etc. In my mind our recession will be more "regular" than the US one is - in that we can recover through internal factors such as getting the building/housing industry kick started again and external factors when demand picks up again for our commodity exports.

My 2c worth,

Cheers,

Beej


----------



## kincella (7 March 2009)

beej..good post as usual....
the NINJA loans with no hope of repayment...people walk away and throw the keys back....but the loans were still bundled and sold to the unsuspecting as if there was still value, that was the problem....so that scheme was a ponzi....

there will always be people out there looking for a quick..big buck..with out any effort

now looking back on innovation and the value of everything for the past  40 years or so...just start with the home..most white goods, the TV, music downloads, dvd's, cameras....hundreds of lovely convenient things around me

our first car was a ford...had heating but I dont recall air....wind down the windows style in those days..the mobile phone...and the laptop and pc's....
wonderful affordable air conditoner for the whole house....(not that little thing that sat in one room and only cooled that room).....medical break throughs and devices....

all those things have a value, save time, save costs, provide entertainment....

bit different to people living in Kenya for eg; no electricity, water, mobile phone etc....pc, tv...or even the basics of life....

so since we are on a house forum.....compare living in Kenya and other 3rd world countries...where none of these things are available....then compare it to living here, middle of a vibrant city......

in Australia, the normal house costs what the market determines....a willing buyer and a seller.....nothing ponzi about that


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## Dowdy (8 March 2009)

kincella said:


> in Australia, the normal house costs what the market determines....a willing buyer and a seller.....nothing ponzi about that




Our housing market is artificially inflated by the government grants. 
Our version of the NINJA loan is the government grant - how many time do you hear 'use the grant as the deposit'

We also have the problem with speculators taking out 'interest only' loans

I wonder how many people still buy a house with 20% down. I don't think many.


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## shaunQ (8 March 2009)

Dowdy said:


> We also have the problem with speculators taking out 'interest only' loans




I agree this is an area that will be hit hard and could start panic selling. These people have no equity in the house, depend on capital gain and if the price drops they owe more than its worth.

For those interested, I have a theory about when we will start to see some major movements downwards. My in-laws are you typical baby boomer couple, they "bought" an investment property, interest only about 3 years ago in a coastal regional town. They are retiring mid this year and trying to hold off on selling as "now isn't a good time". My theory is they will decide to sell at the same time every other mug does and the collapse will begin.

Regardless of whether a crash does or doesn't happen - I think they just don't  understand the actual risk they are taking. They are trying to maximise their profit and don't see it is at all possible to actually come out of this owing more than they sell it for - let alone the opportunity cost.

They just don't see the major benefactor of a negatively geared loan is the bank - not the lender.


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## CamKawa (16 March 2009)

Skilled migrants cutback

"AUSTRALIA'S intake of skilled migrants will be slashed by 18,500 over the next three months ”” 14 per cent of the annual intake ”” in a dramatic move to protect local jobs."

So much for the permabulls immigration theory. Lets throw up the barriers, here comes the protectionism.


----------



## gfresh (16 March 2009)

Brisbane agents **** scared post June 30th... now who would have thought.

http://www.brisbanetimes.com.au/new...ter-grant-glory/2009/03/16/1237054680952.html

Interesting about the over $500k bracket. Only 5% of total sales in January for this agent!  You can't have such a lopsided market going for long without something giving way. Unemployment will be the catalyst. 



> BRISBANE'S real-estate market is in danger of crashing when the First Home Owner Grant boost ends on June 30, some experts believe.
> 
> Real-estate agents are more worried than ever about the future of their industry, which has relied almost solely on first time buyers in the past few months.
> 
> ...




Amazing to hear an agent take off his uber-spin jacket for once!


----------



## Beej (16 March 2009)

CamKawa said:


> Skilled migrants cutback
> 
> "AUSTRALIA'S intake of skilled migrants will be slashed by 18,500 over the next three months ”” 14 per cent of the annual intake ”” in a dramatic move to protect local jobs."
> 
> So much for the permabulls immigration theory. Lets throw up the barriers, here comes the protectionism.




Which permabull immigration theory is that exactly??

a) 18,500 reduction out of a planned total immigration intake of 300,000 *yawn*. 

b) Long term, the immigration rate will be brought back up again when economic growth returns. Australia is a country with a goal to significantly increase it's population over the long term to drive economic growth.

Totally predictable anyway - if unemployment rises of course immigration rate will be cut back for a while. The thing is immigration plus population growth in general is a LONG TERM fundamental factor that drives property price growth. It's not like a 20% immigration cut-back this year would have any immediate effect on the macro-level demand for housing. If immigration were to be reduced significantly over the long term, and as a result Australia's adult population (particularly say 25-50 age group) was going to decline rather than grow for a period of a decade or more, then that would impact the macro level property demand for sure and your assertion might hold some water. But that is just not going to happen....

Cheers,

Beej


----------



## nomore4s (16 March 2009)

gfresh said:


> Amazing to hear an agent take off his uber-spin jacket for once!




Only because he wants the grant extended and is trying the force the governments hand to keep the property market propped up.


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## kincella (16 March 2009)

my 2 cents worth again....I bought a run down prop, it was going to cost 50,000 or more to  fix up over a period of time....
so I took out an interest only loan for 5 years....it was rented out, then between tenants and as cash flow allowed I fixed a bit here and there....
I planned it may take me 5 years before it was ready to return a good rent...
then after the 5 years fixed period was over, it converted to a principal; and interest loan...
the rent doubled after the house was in  good order
nothing frivolous about interest only loans in the right hands, it just kept the outoings to a minimum while in a low yield period....matching the income to the expenses...
I could have borrowed the extra for the reno up front...fixed it up from the start and hence a good yield, not worry about interest only loan...
but...builders and tradesman were scarce...wait for 6 months to get them to even start on a job....and I did not want to borrow the extra...


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## SBH (16 March 2009)

Beej said:


> Which permabull immigration theory is that exactly??
> 
> a) 18,500 reduction out of a planned total immigration intake of 300,000 *yawn*.
> 
> ...





Well I hope this recession and the reduced immigration is just a one year blip for your sake. If it is two or three years what do you think would happen to housing demand? You seen the footage of the hindenburg?


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## dhukka (16 March 2009)

gfresh said:


> Brisbane agents **** scared post June 30th... now who would have thought.
> 
> http://www.brisbanetimes.com.au/new...ter-grant-glory/2009/03/16/1237054680952.html
> 
> ...




From the same article:



> "We have to try to make the Government understand how serious this really is and what dire straits the Queensland property market will be in if this grant is not extended."




Obviously this guy is talking his own book but he actually makes the opposite case for what he is arguing for. If the property market is only being held up by FHB's, then what does that tell you?


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## UBIQUITOUS (16 March 2009)

With an increase in sub $500k sales AND falling prices in above $500k bracket (as seen), we will reach a point where FHBs will question buying a shack for below $500k, just for FHOG reasons, when better value (but still a ripoff) can be had for an unaffordable $100k extra.

The effect will be a stalling in sub $500k purchases despite the FHOG. This will end the government's plan to support house prices by providing an increased FHOG.

The only move for the government will be to either pull the grant, or increase the threshold to $600k. Either way it renders housing unaffordable.

This combined with increasing unemployment means that the housing market pyramid will not crumble, but collapse.

Check and mate


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## vincent191 (16 March 2009)

There is a shortage of "bread and butter" housing in Sydney. Anyone looking for a "ordinary Mum & Dad" property in Sydney will tell you that property prices have not drop by any significant amount.

The high end of the market may have dropped (I guess) but in the next year or so the average property price in Sydney for an ordinary residence may in fact go up because of a real shortage and to make it worst the new housing approval rate is falling.


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## Aussiejeff (17 March 2009)

I think the gummint should replace the FHBG with a FCBG.. *F*irst *C*aravan *B*uyer's *G*rant.

Say, $5,000?

Cheap, affordable housing. Bypass greedy landlords (oops - sorry robotics)

Problem solvered.


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## pilots (17 March 2009)

shaunQ said:


> I agree this is an area that will be hit hard and could start panic selling. These people have no equity in the house, depend on capital gain and if the price drops they owe more than its worth.
> 
> For those interested, I have a theory about when we will start to see some major movements downwards. My in-laws are you typical baby boomer couple, they "bought" an investment property, interest only about 3 years ago in a coastal regional town. They are retiring mid this year and trying to hold off on selling as "now isn't a good time". My theory is they will decide to sell at the same time every other mug does and the collapse will begin.
> 
> ...




Shaunq, a house in Lancein just sold for $940,000. it was on the market for $1.7Mil, we are going to see some good buys in the next few years to come.


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## Mofra (17 March 2009)

Dowdy said:


> Our version of the NINJA loan is the government grant - how many time do you hear 'use the grant as the deposit'



ROFL  

I've heard some strange claims from both sides of the fence, but this is certainly up there with the best of them.

A $7k payment from the government (which is treated as _'non-genuine_ savings' by every major lender in Australia) does not preclude the normal lending standards a borrower must satisfy.

NINJA loans were a US-only phenomenon (remember, the land of the non-recourse loans as well): No Income, No Job, No Assets.

To link the two as a similar practice is hitting the rock bottom of logic & starting to dig.


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## nunthewiser (17 March 2009)

pilots said:


> Shaunq, a house in Lancein just sold for $940,000. it was on the market for $1.7Mil, we are going to see some good buys in the next few years to come.




ahha maybe but just a side note ..... them same places in lancelin were around the 150- 250 mark before the boom . ocean farms included . 14 acres block WITH ocean views 65k at one point  


blessem

PS you seen the prices in guilderton/moore river these days !!!... m8 used to have a 100 acre farm with moore river frontage and overlooking the mouth and township  sold it for around 600k and he thought he made a packet at the time......


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## pilots (17 March 2009)

I think you will find that Mandurah and all coastal towns will crash this year.


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## Glen48 (20 March 2009)

Robots maybe you can turn this upside down?
Money Morning


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## kingbrown (20 March 2009)

Re my patch !
in a Nth west tree change area of Melb 

I have noticed more and more stale property listings in this normally tight held high end area than i have seen for many years 

It apppears virtually no high end country propertys are selling here ?
Cheapies on the fringes are moving slowly  
PPL are still hanging out for the old boom prices  
I have made a few low offers most are willing to drop a significant amount
Even the banks are holding out on the repo's 
one near by town had a price rise of over 20% in 2007 
Still i look at the value of the market and its just still so overpriced its crazy

Greed is now being replaced by shock 
A seller that does hold a auction that was such a popular event only 12 months ago 
is lucky to even get 1 bid let alone sell the place  
also with the recent fires its a bit pointless trying to sell at the moment 

With the immigration factor i see ppl talking about 
it would be an idea to look into what the real fall was in the last recession ? 

I have heard talk on radio of upto a 80% immigration reduction in the last recession ??
if someone has the time or the contacts ?
it would be good if this was checked it out
then we could have some constructive comments on this big issue


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## kotim (21 March 2009)

The further you go away fromt he major areas, the greater the desperation is becoming.  I know places in North Qld where ocean front properties(land) are now being offered in the 300 to 400 grand mark and no one is making  offers.  These very same block were selling for 500 or so a year ago etc.

Fact is that a lot of the  smaller places that got bid up big time by spruikers are starting to suffer a lot.  

I was talking to a real estate agent the other day where he is and he has an old cement shack (read dump) on a block of land that is one street back from the oceanfront.  The owner paid 275 grand  near the peak and now needs to sell for his business sake, yet you can buy an oceanfront block for less than 350 grand in the same neighbourhood.

Problem is the agent knows that a good price for the current owner would be 200 grand, but of course the owner paid 275 grand wants the money for the business, but now can't afford to sell at the going rate, or if he does, his business enterprise will suffer badly.

There are huge numbers of areas where this is happening.

I went to the Bundaberg area in Qld for a weekend just recently and stayed at Bargara Beach.  Reasonably nice area but extrememly crappy ocean front except for a couple of very sparce areas.  Very little sandy beach, most beach areas are actually just volcanic rocks all the way down to the ocean, yet Bargaras prices were greater than the Sunshine Coast in Qld.  Naturally enough prices have now started to plummet.

Lets face it, during a boom the outer areas grow the most(percentage wise) but also fall the most as they are the ones that start from lower bases after most drops, so all the more important to buy low and sell high during the boom otherwise lots of pain.

Anyway thats my 2cents worth.


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## singlefished (22 March 2009)

Here's a question....

Why are private sales included in the weekly auction results that *APM / Home Price Guide *produce and why are they included in their clearance rate calculations?

Surely a property that actually goes through the auction process can only be classed as being cleared at auction?

Using the 177 listed properties for Sydney, only 126 actually went through the auction process yet their stated clearance is based on 128/177 (73%) and not 86/126 which skews the results down to 68% (still not that bad).

Using the 25 listed properties for Brissy, 22 went through the process with only 6 clearing - 26% actual compared to their 38% stated.

Adelaide is the best however. Nothing actually sold at auction yet they state a clearance of 20%.

Didn't do Melb for fear of going permanently cross-eyed but I'm purdy sure it's the same.

Any rationale behind these obvious errors? What am I missing? I know you don't need a degree in rocket science to sell property, but....


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## kincella (27 March 2009)

singlefished...
pretty certain that question has been answered and discussed either this thread or the prices rising thread....and to add one further point...
it may be on the contract...either private sale or auction...but whatever...if its listed for auction...sells prior to the auction date...or is settled within a few days of auction....then it is quoted as being an auction sale....

there is no conspiracy...a lot of sales go to auction...but the contract is not signed on the day....negotiations take place...but it is signed within a couple of days..
in a hot market auctions are the go....in a slow market private treaty...
a sale is a sale...and will show up in reports

now back to the heading....
have a look at the stock market this week....kidding if anyone thinks this is a mature market....its traders....with the same mindset they held for the past 5 years....nothing has changed...GFC means zilch to them....good money to be made..but high risk imo

no wonder the property market has been hot for 5 months now....


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## Harro7 (28 March 2009)

Hello. 

My family and I are in the market for a new house. Should we buy or hold off and rent for a little while?


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## So_Cynical (28 March 2009)

kincella said:


> have a look at the stock market this week....kidding if anyone thinks this is a mature market....its traders....with the same mindset they held for the past 5 years....nothing has changed...GFC means zilch to them....good money to be made..but high risk imo
> 
> no wonder the property market has been hot for 5 months now....




Around 20% in 3 weeks is doing just a little better than the real estate market.  Property hot :error:


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## robots (28 March 2009)

So_Cynical said:


> Around 20% in 3 weeks is doing just a little better than the real estate market.  Property hot :error:




hello,

well done so_cynical, top effort man and all the best for the future with your endeavour's

thankyou
robots


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## SBH (30 March 2009)

Mofra said:


> ROFL
> 
> I've heard some strange claims from both sides of the fence, but this is certainly up there with the best of them.
> 
> ...




Its similar. Ninja loans and subprime was the only way the US could get enough buyers to keep the low end of their bubble going.  I.e when you reach maximum debt you have to relax your lending standards to those who otherwise couldnt afford it. This is the last stage before collapse. 

Australia has done exactly the same but have used FHBs instead. These are the people that wouldnt have bought unless the standards were dropped - or in this case an extra $7k or $14k given to them. They wouldnt have bought without this interference - unless the government invents a NINJA loan scheme in the may budget then the FHBs with no savings will be the last rung on the ladder and the bubble will pop.


----------



## Beej (30 March 2009)

SBH said:


> Its similar. Ninja loans and subprime was the only way the US could get enough buyers to keep the low end of their bubble going.  I.e when you reach maximum debt you have to relax your lending standards to those who otherwise couldnt afford it. This is the last stage before collapse.
> 
> Australia has done exactly the same but have used FHBs instead. These are the people that wouldnt have bought unless the standards were dropped - or in this case an extra $7k or $14k given to them. They wouldnt have bought without this interference - unless the government invents a NINJA loan scheme in the may budget then the FHBs with no savings will be the last rung on the ladder and the bubble will pop.




It's funny how different people view the same factors! Personally, I think your assumptions are wrong - ie that FHBs entering the market right now are people who otherwise would never buy a house. Your perceived similarities between US sub-prime and the current situation in AU  and your corresponding collapse outlook depend on that assumption strongly.

People I know of who are currently taking advantage of the FHB grant are people who have *wanted* to buy for years, but haven't been able to afford to (at least couldn't afford what they wanted anyway). Now, a multitude of factors have spurred them into action: the increased savings they have collected over those years, lower interest rates, the fact that prices (in Sydney where I live) haven't really gone up much over the past 4-5 years (ie affordability has improved quite markedly), plus the FHB grant.

The other problem with your assumptions is that in the grand scheme the FHB grant money is only a small amount. It's up to the banks to assess risk and be prudent with regards to their lending criteria and so forth wrt to the bulk of the funds being provided, including personal savings history requirements for the borrowers etc etc. And by all accounts the banks are being tighter in these respects right now than in the past. Therefore you have to assume that the bulk of current FHB loans being made will be quite OK in terms of risk and serviceability.

So if a majority if current FHBs are more like the people I assume them to be rather than the people you assume, and if the banks are in fact being prudent and risk averse, then in fact the current activity is building a very solid floor under prices as opposed to setting the scene for any "great collapse" IMO.

Cheers,

Beej


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## gfresh (30 March 2009)

As of today CBA is going only 90% LVR .. 5% genuine savings required over a period of 3 months, this is up from 3% only a month ago. Others will probably play follow the leader, it's just a matter of time. 

I think we may even see 85% max LVR by the end of the year... the credit crunch is hitting Australia, it has just taken a bit longer than some expected. 

FHB will be shut out pretty quickly at this rate. For a lot of people on the average income, say $30k is a fair amount of savings.  

The investors trick of the last 5 years of waiting until your property gained 5% (usually a matter of 6-12 months in the boom days), and then purchasing another, and then another end on end is dead in the water for a while. This will take a lot of the heat out of the market once the FHB are gone.


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## kincella (30 March 2009)

well one minute your side is saying we are heading for ninja type loans and the next minute the kids won't even get a loan.....
well the kids can get a a much cheaper loan to go with a cheaper house...thats what we want them to do....so for 250,000 they can probably get a brand new one,,,or they can head out of town a bit and get an older established one thats half hour to the city on the new freeways....
and only need 25,000 deposit....
thats really all they can afford...unless they are asking mum and dad to top it up for them..
:sheep:


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## MaverickTrader (30 March 2009)

I just bought a unit. Didnt have much of a deposit but with money being so cheap at the moment and the 1st home grant about to disappear (although it prob won't) i felt i had to jump in


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## satanoperca (30 March 2009)

Beej said:


> It's up to the banks to assess risk and be prudent with regards to their lending criteria and so forth wrt to the bulk of the funds being provided, including personal savings history requirements for the borrowers etc etc. And by all accounts the banks are being tighter in these respects right now than in the past. Therefore you have to assume that the bulk of current FHB loans being made will be quite OK in terms of risk and serviceability.
> Beej




While I agree with the above in a perfect world, as we are seeing it is hardly that, self regulation does not always work. The banks are the ones that have greatly contributed to the GFC due to their quest for risk and profit. Only time will tell if they have been prudent with lending practices in the last few months in regards to FHB.

Whilst on the topic of FHB, I had a conversation with one today. Went along the lines, "I'm taken the government grant and have a small cash deposit of $5000 and have just bought a new house. Why not, if things go pear shape all I have to loose is $5,000. Even if I get into trouble in the next few years, I will only have paid a small amount of principal off the loan and that would not equal the rent that I would have paid otherwise. What do I have to loose."

Had not thought about this way. Why not take the risk if you have no other assets to loose. 

Cheers 

Benjamin


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## Julia (30 March 2009)

MaverickTrader said:


> I just bought a unit. Didnt have much of a deposit but with money being so cheap at the moment and the 1st home grant about to disappear (although it prob won't) i felt i had to jump in



How will you go with the mortgage when rates go back up to 9%


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## So_Cynical (31 March 2009)

kincella said:


> or they can head out of town a bit and get an older established one thats half hour to the city on the new freeways....




There called tollways and travel time would be closer to 1 hour each way. 

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

Ive spent the last few days looking at the property trust sector...and came 
away thinking the vast majorly of property trusts have some debt issues and 
all have had to write down asset values...some will surly fall, all due to debt
and paying to much for property....this simply must flow on to residential.


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## nomore4s (31 March 2009)

So_Cynical said:


> Ive spent the last few days looking at the property trust sector...and came
> away thinking the vast majorly of property trusts have some debt issues and
> all have had to write down asset values...some will surly fall, all due to debt
> and paying to much for property....this simply must flow on to residential.




I think it will all depend on how desperate the holders of property become to sell. And that may depend on unemployment and interest rates.


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## kincella (31 March 2009)

tollways...ok..am just old fashioned..used the term freeways...to denote difference between roads and big 4 lane fast roads....
takes me 30 minutes from Toorak to above Craigieburn.... where the Hume freeway commences....or about 20 mins non peak hour...on my trips to Albury


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## Windza (31 March 2009)

> Its similar. Ninja loans and subprime was the only way the US could get enough buyers to keep the low end of their bubble going. I.e when you reach maximum debt you have to relax your lending standards to those who otherwise couldnt afford it. This is the last stage before collapse.
> 
> Australia has done exactly the same but have used FHBs instead. These are the people that wouldnt have bought unless the standards were dropped.




I'm inclined to agree on some levels... 
I really can't see how there's any argument to contest that the FBH's grant increase is simply a 'bandaid' over a fairly nasty infection.  
The fact that it was implemented in the midst of the GFC attests to this.  
There are also a great deal of ppl hoping for an extension - why? Because it's currently 'propping' the market up and to lose that incentive is almost certain to result in a decrease of FBH's and currently that'd mean the housing market in general.  
My feeling is that the grant is only softening the 'pop' (read: delaying the inevitable).

I have no evidence to back this up - but I believe it's a fair assumption that FBH's are generally younger and on the scale of it - less educated/experienced than the older generation in considering financial risks.  Deductive reasoning would suggest that there are a greater proportion of FBH's that will 'throw caution to the wind' at the prospect of a $14-21K 'handout' from the Gov. and find themselves in deep water when they can't finance their debt (especially if unemployment continues to rise).  
Sorry '*Julia*' - but your post fits the stereotype perfectly... get in quick or you'll miss out - simply standard marketing ploy!

I'm not saying FBH's can't think for themselves, but it certainly begs the question - how feasible is the current grant and what are the true implications?

I realise this is highly opinionated and assuming, but as someone eligible for the FBH grant I found myself initially drawn to the prospect of the increased grant but then reluctant when considering the current instability in the economy.  
I know a lot of FHB's that won't have the same reluctance and that's what keeps me away from housing ATM...  I'm happy to wait for some 'true' positive indicators before stepping in - irrespective of the grant.
Hopefully it'll be win-win...  wait and pick up the pieces, or wait and step into a returning market.


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## MrBurns (31 March 2009)

MaverickTrader said:


> I just bought a unit. Didnt have much of a deposit but with money being so cheap at the moment and the 1st home grant about to disappear (although it prob won't) i felt i had to jump in




There's your reason in a nutshell why housing has held up to some extent.

Intervention by SS KruddTanic, and the reason for his popularity rating along with cheques in the mail, this man is not stupid just crafty like a rat.


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## Beej (31 March 2009)

MrBurns said:


> Intervention by SS KruddTanic, and the reason for his popularity rating along with cheques in the mail, this man is not stupid just crafty like a rat.




Reminds me greatly of his predecessor in this respect as well..... He was the "master" of vote buying politics! Maybe it's because they are both politicians at the end of the day??? 

Beej


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## nomore4s (31 March 2009)

satanoperca said:


> Whilst on the topic of FHB, I had a conversation with one today. Went along the lines, "I'm taken the government grant and have a small cash deposit of $5000 and have just bought a new house. Why not, if things go pear shape all I have to loose is $5,000. Even if I get into trouble in the next few years, I will only have paid a small amount of principal off the loan and that would not equal the rent that I would have paid otherwise. What do I have to loose."
> 
> Had not thought about this way. Why not take the risk if you have no other assets to loose.
> 
> ...




This is a very naive imo. There is plenty to lose. For starters there is the emotional strain this scenario places on your life, if they think otherwise they are kidding themselves, it could be months of struggling to meet repayments and bills before they are foreclosed. Also if they can't sell the house for what they paid for it they could end up owing thousands to the banks as well as being declared bankrupt which will have an affect on thier lives for a number of years. This isn't America where you can just walk away without a care.

It is this sort of thinking and lack of responsibility that could eventually cause our property market to collapse. The fact the banks are still lending money to people like this with such small deposits and clear lack of responsibility is somewhat concerning imo.


----------



## kincella (31 March 2009)

the poster's nic tells you a lot about him...the maverick...and he could be pulling your legs...
all the emphasis on fhb and comparison to ninja loans....then a poster comes out and tells you all, confirms what you were believing......that which you feared would happen....omg  (oh my goodness)

who knows....even I am considering increasing a loan to renovate a prop...and may even extend it to a new car....
now the  economists saying when people start buying new cars again is the sign of recovery...
....little by little bit by bit...things will change again


----------



## satanoperca (31 March 2009)

Nomore4S,

I agree, that taking on a loan as you have nothing to loose is irresponsible, but I can see the FHB situation, one that I am not in as I have assets to loose.

It is this notion, that some FHB believe that they have nothing to loose by going into debt that is off concern and it is possible this point which people as seeing a comparision between the US subprime and the FHBG. If the FHBG required an additional 10% saved deposit then at least the FHB would have some of their own money invested and would look more careful at the decision to go into debt.

So I do see a whole lot of problems occurring in the future with FHB as such :
1) Interest stay low because the economy is shot, unemployment raises, FHB loose their job and cannot make repayments. As the economy is shot, CG on housing is unlikely to have increased, FHB in negative equity.
2) Economy improves, interest rates go up, FHB cannot make repayments. FHB market has dropped in value, negative equity.
3) Economy improves, interest rates go up, unemployment low, housing market increases, everything is Ok.

It will be interesting to see how it pans out in the future.

Cheers


----------



## gfresh (31 March 2009)

I think there is maybe a lot of a backstop with 20-something buyers.. "if it all falls in a heap, we'll just move back with Mum & Dad.." The bail out mentality once again. And the parents are pretty much supportive of this, after all they were the ones letting them stay at home until 25 years old. 

If any of you watched "The Nest" on SBS last year, it was amazing how little independence some people have even at 25 years of age!


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## kincella (31 March 2009)

the boat broke loose from its moorings...a different sound to .....
you might lose your money

the spelling is being either copied or tossed around a bit too much for me
??


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## kincella (31 March 2009)

gfresh I watched that show....the daughter of one...demanding everything..doing nothing....I think she even stated it would all be hers one day...so may as well take it now...including have the car at her disposal
even when the father needed it to take the wife to work and home...

stats out recently show them staying home, or sharing with others until 34...
and the mums and dads excuses...the kids could stay there so as to save up for the future home etc...yet none of the kids did save....but some of them actually did not want to go home later...they liked their new found committments in the shared houses...

if a lot of those parents go to tree/sea change places...it will cause the kids to rethink their choices...like mums place will not be an option due to employment or lack of it in those places


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## aleckara (31 March 2009)

gfresh said:


> I think there is maybe a lot of a backstop with 20-something buyers.. "if it all falls in a heap, we'll just move back with Mum & Dad.." The bail out mentality once again. And the parents are pretty much supportive of this, after all they were the ones letting them stay at home until 25 years old.
> 
> If any of you watched "The Nest" on SBS last year, it was amazing how little independence some people have even at 25 years of age!




Will play a little devils advocate here...

There are a lot of young people out there like this anyway. A lot of them don't want to compromise on lifestyle simply to get a property. I'm not talking about the lifestyle of spending money, and all that. Young people get used to the area they grew up in, the connections made in these areas. They don't see anywhere else as an option (unless travelling of course) because to them there is nothing out there for them - they might as well give up living completely. In Sydney this is particuarly true for the young people living close to the city - most of them would rather travel for the rest of their lives than move to the affordable areas where there are no contacts, no places to 'have fun', and whatever.

I'm not saying it is right - just saying this is how it is for a lot of them. Why have independence when it means you will have less freedom than before? To them most probably doing that would reduce their freedom and their perceived independence, particuarly with the way housing prices are nowdays.

Also youth unemployment is quite high atm. A lot of them wouldn't be moving out solely for the reason that they may not perceive their jobs to be as stable.


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## Taltan (31 March 2009)

If your young it also does not take a genius to work out that one day either inner city prices will drop or alternatviely you will get a good inheritence. One of the two gotta happen


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## ryang57 (31 March 2009)

Pommiegranite said:


> With today's news from Residex, that there have been widespread falls across Australia, I believe this thread is now appropriate. I therefore request that the 'House prices to keep rising for years' thread be closed, due to the fallacy of it's title.
> 
> Questions:
> 
> ...




the real answers are as follows:

-until 2011-12 or so
- deflation (end of the credit cycle)
- the police? arrest? huh? What will stop the falls? collective global confidence to finally catch the falling knife without getting cut
- hmmm...there are other factors... prolly similar bust as uk/us 
- decoupling of what? NOTHING is decoupled when it comes to macroeconomical inflation/deflation of a global magnitude

Ultimately, only morons invest in houses. And the only reason they go up is because there seems to be an unlimited supply of morons. It's paradoxical. But this wave of reality as everything returns to reasonable value, will have the majority of naive australians dumbfounded why they now have a $300,000 loan and a $150,000 house hahaha.

Technically, there is no good reason to really invest in houses, unless you could predict a major housing shortage in the near future. But even then, that is microeconomical, and macroeconomics always trump it. Considering the costs involved, all they are really doing is preventing money from being debased if it were held in your hand.


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## singlefished (31 March 2009)

ryang57 said:


> Ultimately, only morons invest in houses. And the only reason they go up is because there seems to be an unlimited supply of morons. It's paradoxical. But this wave of reality as everything returns to reasonable value, will have the majority of naive australians dumbfounded why they now have a $300,000 loan and a $150,000 house hahaha.
> 
> Technically, there is no good reason to really invest in houses, unless you could predict a major housing shortage in the near future. But even then, that is microeconomical, and macroeconomics always trump it. Considering the costs involved, all they are really doing is preventing money from being debased if it were held in your hand.




The reality is however that you have to either pay rent to these morons or join the club and buy a house, like it or not. Unless however you're not prepared to cut the apron strings and are quite happy to stay at home with mummy for another few years, hoping for the 50% falls you so niavely quote....


----------



## pilots (31 March 2009)

ryang57 said:


> the real answers are as follows:
> 
> -until 2011-12 or so
> - deflation (end of the credit cycle)
> ...




Ryang57, we are some of your morons who invested in houses ten years ago, to day they have come back about 300k, but we are still ahead over 2.5Mil, add to this the rents we are getting and I can tell you we are VERY HAPPY MORONS.


----------



## michael_t_f (31 March 2009)

I'm also a moron that bought a house in 2000 then sold in 2005, I now have a managed business which pays for my lifestyle and plenty of cash in the bank, I'm also just a moronic sparky that doesn't touch his weekly wage ever, has zero debt and is 26.


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## darnsmall (1 April 2009)

ryang57 said:


> the real answers are as follows:
> 
> -until 2011-12 or so
> - deflation (end of the credit cycle)
> ...




Would it be fare to say the morons you're referring to are the FHB's getting into the market now; just before they lose their jobs?
I know a few seemingly smart people, that are getting into the housing market now. I was a little dumbfounded, but I guess performing at one particular area of education/work/life doesn't mean you don't have a weakness in other areas eg, investment


----------



## investorpaul (1 April 2009)

darnsmall said:


> Would it be fare to say the morons you're referring to are the FHB's getting into the market now; just before they lose their jobs?
> I know a few seemingly smart people, that are getting into the housing market now. I was a little dumbfounded, but I guess performing at one particular area of education/work/life doesn't mean you don't have a weakness in other areas eg, investment




I still believe the majority of people are ignorant to the potential for large wipe spread job losses. They still hold the view "it wont happen to me"

Every estimate now is pointing to job losses of 7.5% to 10%, thats hundreds of thousands unemployed. A fair portion of which would be first home buyers. I hope Mr Rudd feels like **** when these people lose their house, even though they thought it was a good time to buy because of Rudds handouts


----------



## Temjin (1 April 2009)

Just in case some of you missed this latest newsletter from Monday Morning. 



> *Fact, Australian banking standards are better than overseas.*
> 
> *Fact, Australian borrowers are better placed to cope with the recession than those overseas.*
> 
> ...




Of course, I'm not expecting this would be viewed upon favourably by those who have vested interests with real estate properties.


----------



## Beej (1 April 2009)

Temjin said:


> Just in case some of you missed this latest newsletter from Monday Morning.
> 
> Of course, I'm not expecting this would be viewed upon favourably by those who have vested interests with real estate properties.




Can you post the author/source of that article please?

PS: Many many holes in the logic there. The first and biggest is the author forgets about unemployment benefits and other social welfare payments that families effected by unemployment would receive, plus also makes no attempt to estimate how long many households could hold out for based on savings, forward payments on the mortgage against the contracted schedule etc etc. Most people don't remain unemployed forever.

Bottom line, I'm not saying that rising unemployment is not a factor that has the potential to place downwards pressure on house prices, but the potential impact is being over-estimated in articles like yours above. You would need a significant number of very forced sales across all area's in a city/country to see any dramatic downwards shift in median prices. Additionally a large amount of the newly and long term unemployed tend to be new entrants to the work-force unable to find jobs, plus lower skilled workers who have difficult finding new jobs after a lay-off. Home ownership amongst these groups would generally be minimal. 

This perhaps explains why, As Rory Robinson from Macquarie Bank has pointed out in several articles, during past recessions house prices have actually continued to rise on many occasions in line with rising unemployment rate, so I think this issue is not as black and white as many would hope.

I also note that last year and the year before the housing bears arguments were all pinned on a great credit contraction forcing a wave of defaults and forced sales ala US sub-prime. Now that has failed to eventuate here, all the bearish outlooks seem to be pinned on rising unemployment triggering a wave of forced sales, something that in past recessions at least has actually not occurred!

Cheers,

Beej


----------



## elmundotrade (1 April 2009)

Hi Investorpaul.

Sorry for the question out of context or subject..lol   
But I was wondering......Are you still day trading with Ig market cfd's..?
I noticed you were doing great with your results, and a while ago I asked you something in your blog but I never got any reply.... and all of a sudden you stop with the results.   Just curious as to whether you will continue to day trade with Ig or not.?

Have a great day.    

Paul.


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## Knobby22 (1 April 2009)

I'm inclined to agree with Beej.
For house prices to fall a large amount, we would need unemployment at 12%, 8% just won't do it. Then Steve Keen's predictions may be correct. 

The big question is how deep and long will this recession be? Many are saying that in Australia it will be over this year which doesn't sound too disastrous.


----------



## Temjin (1 April 2009)

Beej said:


> Can you post the author/source of that article please?




I was expecting this from you, but sure Beej. 

http://www.moneymorning.com.au/

Sign up for it because it does not hurt to learn something OUTSIDE the topic of real estate properties too. 



			
				Beej said:
			
		

> PS: Many many holes in the logic there. The first and biggest is the author forgets about unemployment benefits and other social welfare payments that families effected by unemployment would receive, plus also makes no attempt to estimate how long many households could hold out for based on savings, forward payments on the mortgage against the contracted schedule etc etc. Most people don't remain unemployed forever.




Isn't all that hypothetical too? There is no prove to show that these unemployment benefits and other social welfare payments, etc, would be more than enough to cover for the lost in income and extreme low saving that would put pressures on house prices. You can speculate all you want, and we will only know the result in the next few years. And no, most people don't remain unemployed forever, but a lot of them WOULD remain so enough time to HAVE an effect on the economy in general. (i.e. reduced spending, reduced investment, increased government benefits payout, etc) 

And if you feel the article is full of logic errors, go ahead and send him a reply on them. I would like to see his replies too. 

But again, and as always, I'm not expected this article would change any of your opinions on this sensitive topic.


----------



## satanoperca (1 April 2009)

Beej said:


> Bottom line, I'm not saying that rising unemployment is not a factor that has the potential to place downwards pressure on house prices, but the potential impact is being over-estimated in articles like yours above. You would need a significant number of very forced sales across all area's in a city/country to see any dramatic downwards shift in median prices. Beej




Just out of interest what would be a significant number of forced sales. Say 5% of the market. Anyone willing to guess what that would correlate to reduced prices. I would suggest that it would not take a great deal of forced sales to start seeing declines in property prices. It is also interesting to note that defaults on mortgages are on the increase even though IR are at an all time low and unemployment is just starting to increase 



Beej said:


> This perhaps explains why, As Rory Robinson from Macquarie Bank has pointed out in several articles, during past recessions house prices have actually continued to rise on many occasions in line with rising unemployment rate, so I think this issue is not as black and white as many would hope.
> Beej




How much kudos do you give to Roy of Macquarie Bank when it share price has dropped more than 40%. If he was so good at predicting the future then I would expect their share price to be a little better – sorry off the topic. The relation b/w unemployment and mortgage rates defaults of the last recession to this one is hard to compare as household debt in relation to GDP has significantly increased since then. This was shown when interest rates went to 9% last year and people started hurting because they we over indebted, not like the last recession when IR were in the high teens.



Beej said:


> I also note that last year and the year before the housing bears arguments were all pinned on a great credit contraction forcing a wave of defaults and forced sales ala US sub-prime. Now that has failed to eventuate here, all the bearish outlooks seem to be pinned on rising unemployment triggering a wave of forced sales, something that in past recessions at least has actually not occurred!
> Beej




Don’t jump the gate there is still a long way to the finish line. Again, trying to draw comparison b/w this recession and the last is like trying to compare US & Oz, not to simple.


----------



## robots (1 April 2009)

satanoperca said:


> Robots,
> 
> Picking the few suburbs (those will high FHB - government assisted) does not strengthen your arguement that house prices are not falling.
> 
> ...




hello,

one up bro, looking forward to those ruskies and parma bro

we can debate all arvo and still walk out as friends man

thankyou
robots


----------



## GumbyLearner (1 April 2009)

robots said:


> hello,
> 
> one up bro, looking forward to those ruskies and parma bro
> 
> ...




Lay another brick


----------



## robots (1 April 2009)

hello,

it justs paradise man, i cant believe the ride we go on everyday Gumby

well done brothers, 

this is all just economics 101, and some here (Beej, Kincella, associate professor robots, BillM, Johnemo etc) would be top of the class

man, i am so "anti-establishment"

thankyou
associate professor robots


----------



## GumbyLearner (1 April 2009)

robots said:


> hello,
> 
> it justs paradise man, i cant believe the ride we go on everyday Gumby
> 
> ...




You're a doyen. There is no arguing with that. :iamwithst


----------



## satanoperca (1 April 2009)

Hi Robots,

Just trying to keep the discussion going, one more qtr to go. 

Who would of thought prices would be up a whole 1.1%, oh you of course.

I will have to pump up those tyres on the pushy, always pays to be prepared.

Cheers

Benjamin


----------



## robots (2 April 2009)

hello,

i didnt make any predictions just had a bet with you to keep the discussion going and do my bit for ASF 

the results are amazing, for the 30th time i wouldnt have a clue whats around the corner

just doing my bit for the community, have a great day

thankyou
robots


----------



## Aussiejeff (2 April 2009)

robots said:


> hello,
> 
> i didnt make any predictions just had a bet with you to keep the discussion going and do my bit for ASF
> 
> ...




hello,

no doubt about it robi, you are genius

i just wish the rest of us dummies had 1% of your smarts

total respects, man

thankyou
aussiebots

ps: vote robi for el presidente


----------



## enigmatic (2 April 2009)

can anyone explain to me how 1.1% up in house prices is calculated is this per month or year. just a question to keep discussion going


----------



## kincella (2 April 2009)

enigmatic
heres the link .

http://www.rpdata.com/news/rp/RP_Da...operty_Value_Indices_release_Mar_09_FINAL.pdf

and the article about the 1%

http://www.rpdata.com/news/rp/20090331_media.html

and the million dollars sales only account for 5% of all sales...its a very small % of the whole market


----------



## enigmatic (2 April 2009)

Cheers for that kincella although it does seem to support my idea that it would still be better for me to keep my money in the bank and save to reduce my total loan by 20k in the qtr then to worry about paying 4.5k extra in the qtr although my state actually went down 1% so i not only reduced the amount i need to borrow the interest rates have dropped and the house price has dropped, In all you would have to so I am up for not buying in yet.

Please note 20k is not the actual amount i save it may be more or less.


----------



## satanoperca (2 April 2009)

Thanks for the links.

Can someone please clarify the results of RPdata. 
1) Are they for January & February 09 and not the first quarter of 09 (jan - March)?
2) Are the results just a guide given the month of February is indicative only as stated on the RPdata site?
3) Did RPdata release a similar report of Jan/Feb 08?
4) The YOY figures for Jan & February are all negative with exception to Darwin, does this indicate that the market has fallen?
5) If prices fell by 3.8% in 08 and have risen by 1.1% so far this year, does this imply that prices are still down on 07?
6) Why do they publish results that are indicative only?

Cheers


----------



## satanoperca (14 April 2009)

It could not be :
"Property crashes as first-quarter home sales, prices and clearances slump"

http://www.theaustralian.news.com.au/business/story/0,28124,25330870-25658,00.html

Clearance rates are significantly down YOY, unemployment on the rise, US in a dream about their financial situation, superannuation gone south and our own government spending money they don't have, can only see property prices going up in the short term. 

Get ready, the SHBG (second home buyers grant) & THBG is on its way.


----------



## MrBurns (14 April 2009)

This cant be right , tell Robots he'll sort it out !


----------



## singlefished (14 April 2009)

A clear indicator that auction clearance rates mean squat when volume is only a shadow of it's former self....


----------



## kincella (14 April 2009)

the suburb I watch...no more cheap houses listed, the middle priced home is back on the market
oh I love that article today....if only the fhb have been in the market than the median price has to drop...the kids were buying up to that magical 600k mark..? what happened to the 300k figure as being the amount they could afford, and the investors have stayed away..so of course the numbers are down....
and no offence to RE Agents generally...but my experience with them has been...most of them must  get their infor from the daily media.....its easy to twist their arms .........


----------



## satanoperca (14 April 2009)

kincella said:


> and the investors have stayed away..so of course the numbers are down....
> QUOTE]
> 
> Yes, sales numbers are down, investors are staying away, FHB paying more than they can afford, every indication that property is going to rise in the near term.
> ...


----------



## Beej (14 April 2009)

satanoperca said:


> *Clearance rates are significantly down*




Clearance rates are NOT down - they have been running at 70%+ in Sydney and Melbourne since Feb. Read the article again and work on comprehension skills.....

It states that auction sales volumes are down, and that the AVERAGE prices across all auctions are down (due to lower volume of top end property sales). This is not news. As usual articles like this one are behind the curve. If you check out the Sydney auction results for March, as I have shown in several postings on the "prices to rise" thread, you will see that top end auction results ($1M+) are on the rise, and the median sale price for auctions each week has been trending upwards significantly.

When I first saw the above post I was getting ready to eat some humble pie as I was expecting some sort of meaningful price data. Instead all we get is old news that sales volumes are down..... *yawn* - surprise surprise surprise! A soft real estate market, country in the middle of recession; is anyone surprised that most property owners are simply not selling? As I have stated many times before, this is so far following "standard" pattern of the R/E market during an economic downturn. I think the surprising thing (for some) should be that despite all this prices are actually rising in many price segments - especially in Sydney and Melbourne, due to the increased buyer competition for the lower number of properties on the market.

I stand by my call that median price figures for Q1 2009 will show increases in prices for Sydney, and probably Melbourne as well. 

Anyone here want to go on record with a different prediction?



satanoperca said:


> Qantas cuts jobs - another well known company reducing expenditure in the wake of a global slow down but don't worry nothing to see here folks.




Qantas is always cutting jobs, services, profits, then expanding them, then cutting them..... it's the airline industry, very cyclical....

Cheers,

Beej


----------



## kincella (14 April 2009)

I am not indicating that prices will rise in the near term.....its the long term view I am positive about...
and since everyone is focused on auction numbers.....and miss the other numbers, the private sales numbers exceed those of the auctions...
..................................................................................
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

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


----------



## CamKawa (14 April 2009)

satanoperca said:


> It could not be :
> "Property crashes as first-quarter home sales, prices and clearances slump"
> 
> http://www.theaustralian.news.com.au/business/story/0,28124,25330870-25658,00.html




"And after a dismal 2008, the Perth property market continues to struggle. Only 34 properties sold at auction over the first three months of this year, at an average of $372,000 -- down almost $200,000 on last year's average of $556,000."

Hasn't Perth bitten the dust! 

I reckon the only thing stopping house price falls from really getting under way here is like satanoperca says a 2nd and 3rd house buyer bail out, and if Kevin doesn't have the money I think he may just print more of it, he has to, falling house prices are political poison. It'll be an interesting year ahead.


----------



## satanoperca (14 April 2009)

Beej said:


> Anyone here want to go on record with a different prediction?
> 
> Beej




I have already placed my bet/prediction with Robots for a slab of beer and a parma if RE prices are negative for the year after the second quarter results are published by the ABS.

I will agree, that the first quarter results may show postive growth and why shouldn't they - record low IR rates, unemployment still low, government throwing money around, FHBG etc. 

Beej, would you like to make any prediction for the end of the year results just for interest?

Talking about Qantas, shares have responded with a drop of 7%, still holding.


----------



## drsmith (14 April 2009)

Beej said:


> Qantas is always cutting jobs, services, profits, then expanding them, then cutting them..... it's the airline industry, very cyclical....



It is but when did Qantas last make a loss ?

According to today's media release profit before tax (PBT) is expected to be in the range of $100m to $200m for the full 2008/09 financial year. In the last 6 months of 2008 PBT was $288m.


----------



## UBIQUITOUS (14 April 2009)

> Property experts blame the fall on the fact *investors are deserting the market*. The top end of the market has been labelled as "dead".




Looks like Beej, Kincella and Robots will be drawing straws as to who will be turning out the lights.

but fear not, because house prices double every 7 years.


----------



## kincella (14 April 2009)

ubiquitous....I thought your signature sums up our views on property as an investment very well...
"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return." ”” Benjamin Graham (The Intelligent Investor)

did you know that prop prices in the 'bust boom bust' period of 1986 to 1996 doubled in 10 years,,,but in the 20 years to 2006 the price increased  5 times... it was flat in 06..so by 07 it would have been 6 fold increase...so yes...theres my triple growth over 10 years....
I thought it used to triple in 10 years......as a rule

so yes we do have a good investment with property


----------



## Beej (14 April 2009)

satanoperca said:


> I will agree, that the first quarter results may show postive growth and why shouldn't they - record low IR rates, unemployment still low, government throwing money around, FHBG etc.
> 
> Beej, would you like to make any prediction for the end of the year results just for interest?




OK - I'll have a crack at that. 

As stated I think Q1 will show growth in Sydney/Melbourne. Perth and much of SEQ will continue to struggle. National median figure will probably show some over-all growth as a result. 

The remainder of my comments pertain to Sydney/Melbourne only, and are not hard predictions, just guesses based on how I see the market. I reserve the right to change my full year outlook as I observe the actual market through the year!

For the rest of the year I think volumes will remain low, FHB activity will drop back to a more normal level of < 20% after June 30 with the boost is removed. Upgraders who sold to FHB numbers will be more active during Q3 and Q4 though, which I think should result in an over-all moderate rise in Sydney/Melbourne median prices for the year (no more than 5% I would think in total though). The national median will probably remain about flat to slightly negative for the year, depending really on how well (or not) Perth/Brisbane etc hold up.

My one hard prediction is I don't think there will be huge (let's define that as more than 10%) price falls across the board (nationally) this year as many others think.

Cheers,

Beej


----------



## UBIQUITOUS (14 April 2009)

kincella said:


> ubiquitous....I thought your signature sums up our views on property as an investment very well...
> "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return." ”” Benjamin Graham (The Intelligent Investor)
> 
> did you know that prop prices in the 'bust boom bust' period of 1986 to 1996 doubled in 10 years,,,but in the 20 years to 2006 the price increased 5 times... it was flat in 06..so by 07 it would have been 6 fold increase...so yes...theres my triple growth over 10 years....
> ...




Kincella, you do not understand my signature quote nor do you understand value investing. You might think you do, but you don't.


----------



## kincella (14 April 2009)

really...you sound so sure of yourself with a remark like that.....
astounded...one could say such a thing


----------



## UBIQUITOUS (14 April 2009)

kincella said:


> really...you sound so sure of yourself with a remark like that.....
> astounded...one could say such a thing




Easy...I've read your previous posts


----------



## robots (14 April 2009)

hello,

check check:

rpdata.com.au

i will be turning off the lights alright when i lay the smackdown like the Undertaker, how many in a row?

thankyou
robots


----------



## singlefished (14 April 2009)

Beej said:


> OK - I'll have a crack at that.
> 
> As stated I think Q1 will show growth in Sydney/Melbourne. Perth and much of SEQ will continue to struggle. National median figure will probably show some over-all growth as a result.
> 
> ...




Sorry, but I had the distinct impression I was reading a weather forecast half way through 

I'll add to this for Brissy.... light to moderate declines for Brisbane through the rest of the year with the medians trending down 5-10% by years end. Moving into next year, expect to see further declines of a similar 5-10% with some high pressure unemployment systems darkening the horizon for the rest of Queensland unless some light relief approaches from the north-west for the mining sector.

Sunrise tomorrow at 6:05am with a high tide of 2.18m at 12:41am.

Back to the studio now for a sports report and rundown of the coming weeks wrestling action with Robots....


----------



## robots (15 April 2009)

hello,

top post singlefished, you legend man for keeping the entertainment going for all here at ASF

Vote No 1 for Vince Mc Mahon greatest public speaker the world has seen

thankyou
robots


----------



## gfresh (15 April 2009)

singlefished said:


> I'll add to this for Brissy.... light to moderate declines for Brisbane through the rest of the year with the medians trending down 5-10% by years end. Moving into next year, expect to see further declines of a similar 5-10% with some high pressure unemployment systems darkening the horizon for the rest of Queensland unless some light relief approaches from the north-west for the mining sector.




Probably not such a bad prediction  Interesting stats in the latest Residex newsletter - Brisbane Houses down -2.12% last year, and -1.89% last quarter. 

Perth Houses down -11.21% last year, and -3.95% last quarter 

Unit prices are pretty steady (FHOG range), but if house prices come down any further in QLD or WA, I think the shrinking gap between house and unit prices will probably help push unit prices down.


----------



## MrBurns (15 April 2009)

Here's a tip from the Crikey website (they have a tips and rumors section)



> I have been involved in the real estate industry for 25 years. I have operated in blue chip suburbs in the last 10 years ... a TSUNAMI IS APPROACHING ... at the top end values will decrease by 50% and unfortunately a lot of wealth has been destroyed. Let's face the facts; we all borrowed too much money. I am really frightened that people like myself in the short to medium time frame will conclude that our assets may not be worth as much as our liabilities.


----------



## Beej (15 April 2009)

MrBurns said:


> Here's a tip from the Crikey website (they have a tips and rumors section)




A completely meaningless quote from some random web surfer - he's a dreamer.....

Beej


----------



## MrBurns (15 April 2009)

Beej said:


> A completely meaningless quote from some random web surfer - he's a dreamer.....
> Beej




Agents are at the coalface, they know, why would anyone else post that ?


----------



## UBIQUITOUS (15 April 2009)

From today's DR newsletter. This sums up the status of the RE market:

--The trouble is, there is still a lot of liquidating to do. And we are not just talking about labour markets where, after all, Qantas expansion was the result of low fuel prices and globalisation for many years. No. We're talking commercial and residential real estate.

--That's where Australia's banks have the most exposure on their loan books. And that's where you'll see write downs and losses on commercial property portfolios. We suspect that's why the banks are getting tight. They are preparing for much tougher times. Are you?

--Well you wouldn't be if you were just listening to the good folks at the Reserve Bank of Australia. Luci Ellis, the head of the RBA's financial stability department, said that lending standards never delved too low into subprime territory in Australia to lead to a mortgage lending bubble.

--In comments she delivered in Melbourne, she added that the inability of Australians to deduct the interest on their mortgage from taxes gave them a financial buffer against falling prices. She said that Aussies tended to pay off their mortgages more quickly because of this, whereas in America, the interest deduction presumably encourages people to maintain high balances on their mortgage. 

--And what defence of bubblicious Aussie house prices would be complete without trotting out that old canard, the housing supply gap! "Unlike in the United States," Ms. Ellis said, "housing supply [in Australia] had not boomed in the same way for the past five years. There simply has not been an overhang of supply built up that would subsequently weigh on prices."

--We'll get to the supply bogey in a moment. But we're certain Ms. Ellis knows that the supply of homes is just one part of the pricing equation. The other part is, of course, demand. And the demand for housing is clearly influenced by the price of money (mortgage rates plus the first home buyer grants). Everywhere else in the world, plunging interest rates led to a huge mortgage lending boom that inflated house prices at historic multiples of household income.

--Nowhere else in the world, in fact, has housing become as expensive as it is today in Australia, when measured against household income. Two things make this possible. First is the availability of mortgage financing to lever up and get on the property ladder. Second, and more importantly, is the deep seated belief-encouraged and repeated by those in government and banking and real estate-that property prices always go up.

--*The Great Australian Property Price Crash is coming people. You can't have a depression in credit and expect inflated housing values to magically levitate. The latest figures on housing and commercial finance show a few things. They show that first-home buyers are propping up the market while investors flee (as was the case in the U.S. in 2006). And they show that bank-lending to the private sector (both fixed loans and revolving credit) is retrenching.*

--But what about the great supply deficit? Ms. Ellis cites a report by the National Housing Supply Council. This "State of Supply" report is prepared by a committee of insiders from the building, banking, and real estate industries. You'd naturally expect them to conclude that the supply gap is large and growing.

--Yet this is not exactly what they've done. They've confessed that their estimates of housing demand are based on statistical models. To quote directly, "The Council estimates that a minimum of around 85,000 dwellings is the gap (unmet need) in the supply of housing in 2008. This is based on the incidence of homelessness and the low level of vacancy rates in the private rental market."

--And you thought we were joking about the homeless. *We've always said if there was really a supply problem, you'd see more homeless people*. The estimate the Council comes up with for the gap assumes, we assume, that the homeless are homeless because there aren't enough houses. This is nonsense. Studies show that a fair portion of the homeless choose to be homeless, or would be homeless regardless of historically low mortgage rates.

--But that point aside, low rental vacancy rates are also cited as evidence of a gap. This is nonsense too. Couldn't this also be the fact that so many Australians live in capital cities? And so many of them want to live in the same place? It's not that there aren't places to live. It's that everyone wants to live in the same place, which violates the laws of physics, of social propriety, and also drives up rents).

--In other words, maybe the two factors the Council cites in fabricating a housing gap have other, better explanations that a fictional shortage of housing. But maybe that narrative doesn't suit the needs of people who make money selling houses.

--Ah! A caveat arrives on cue!

*--"The Council acknowledges the crudeness of this [housing supply gap] estimate and also points out that there were some 830,000 vacant dwellings in Australia at the time of the 2006 Census*. The Council has assumed that most of these were probably second homes, homes in the process of sale or homes awaiting redevelopment and that there is likely to be limited capacity for absorbing growth in underlying demand within the present level of housing supply."

--Baffling. Or just deliberate chicanery?

*--There are 830,000 vacant dwellings. But that, according to the Council, is not enough to meet the housing supply gap of just 85,000 dwellings? Math was never our strong suit. But this smells fishy.*

--Could it be that property investors, let's say boomers sitting on property as a retirement income, are not prepared to sell those investments at these prices? There's no urgency, after all. Do they expect to sell these properties to pay for their retirement? Or are they just taking advantage of the tax benefits of negative gearing?

--Who knows, dear reader? But we'd humbly suggest there is no housing supply gap at all. You could bring some of those 830,000 vacant dwellings on the market by changing the negative gearing laws. *And the elimination of the first home buyers grant would prevent so much future demand from being "brought forward" merely to prop up values for existing homeowners who want to sell now to the sucker first home buyers.*

--*But we reckon none of that is going to happen. While the stock market wades through earnings information and employers batten the hatches and throw men overboard, Australia's property market is headed towards an epic fall. More on the fall tomorrow.*


----------



## MrBurns (15 April 2009)

I agree with UBIQUITOUS

First home buyers thrown to the wolves.
The media are just waking up to it now.

Kevin Rudd just isn't incompetent he's a nasty four letter word.

Added - sorry he was quoting, not his words but still agree strongly.


----------



## Trembling Hand (15 April 2009)

UBIQUITOUS said:


> From today's DR newsletter. This sums up the status of the RE market:




UBIQUITOUS can you please provide proper links to the stuff you are coping & posting?

Who is DR?


----------



## UBIQUITOUS (15 April 2009)

Trembling Hand said:


> UBIQUITOUS can you please provide proper links to the stuff you are coping & posting?
> 
> Who is DR?




Trembling, it is from an emailed newsletter from Daily Reckoning. The article provides information as to where the data is coming from eg ABS, National Housing Supply Council etc

You would just need to delve further yourself.


----------



## MrBurns (15 April 2009)

Trembling Hand said:


> UBIQUITOUS can you please provide proper links to the stuff you are coping & posting?
> 
> Who is DR?




I guess this is it, I just subscribed - 

http://www.dailyreckoning.com.au/


----------



## Beej (15 April 2009)

That 830,000 vacant houses stats is rubbish. It's from the 2006 census and all it means is that when the census person came knocking no-one was home - it does not mean the house was empty/vacant. In fact the census has no practical way to measure this properly. So the basis of half of Ubiquitous' article is totally debunked.... and the first half actually presents some pretty solid arguments why prices will in fact hold up (all the quotes from the RBA etc).

As for the argument that there is plenty of space in AU, well tell that to all the people that won't buy a perfectly decent 3 bedroom house in Cambeltown S/W of Sydney for $250k but instead pay $500k+ to be closer to the centre of the city. It's called demand and limited non-renewable supply of what people actually want which = higher prices for such property. The market in AU actually covers a very wide range from the very affordable to the very expensive, and anything in between - you just have to open your eyes and look at the whole market. Soon you will figure out that affordability is actually not the issue with R/E prices in AU. Demand for a limited supply of desirable locations is the issue.

So keep trying - we've waiting for the crash predicted here on ASF for many years now, still hasn't happened. The US started crashing 2 years ago now......Still isn't happening here. 

In fact auction clearance rates and prices are rising in our major capital cities it seems (http://www.rpdata.com/news/rp/20081231_media.html), interest/lending rates at all time lows, large numbers of FHBs active and upgraders now coming into play. Rental returns are at historically high levels (average 5% for houses and 6% for units across Sydney right now), however investors won't return in large numbers until the economy improves - and when they do the bears are going to be taken by surprise. Banks are well capitalised and lending happily - lending for residential housing seems to have bottomed late last year and has been rising steadily since (http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument).

No rush to buy though - some time yet before we enter any significant new growth phase, and right now it's pretty hard to find decent property available in good area's anyway as they are all snapped up quite quickly in Sydney and Melbourne. But just don't wait for a great crash - you will be waiting for a long time....

Cheers,

Beej


----------



## robots (15 April 2009)

hello,

top post Beej, 

its still amazing the number of people so dark on property owners but then on the other hand tell many how poor an investment class it is,

like Glen48 and Case-Shiller (a couple of great minds) continually inform us of the 0.5% pa return for resi-property over 100yrs, hahahaha

hope everyone had a great day

thankyou
robots


----------



## gfresh (15 April 2009)

Beej said:


> So keep trying - we've waiting for the crash predicted here on ASF for many years now, still hasn't happened. The US started crashing 2 years ago now......Still isn't happening here.




At first there was denial prices were falling at all (anywhere!), and as most recent stats show, yes they have been. Okay, maybe this has been Brisbane and Perth based, but it has also been amongst the middle to high end in other areas. So now we have gone from a state of "prices will never fall", to at least some acceptance "yes maybe they can". That was half the damn battle with the whole idea that "house prices to rise for years"! If these continue 1-2% a quarter falls in Bris/Perth eventually comes to 4-15% by the end of 2010. It sounds minor, and nowhere near crash territory, but when you're talking about hundreds of thousands of dollars it is not quite so. 

"Underlying demand and supply" is equally open to interpretation as the number of vacant properties out there. Realestate related organisations, and now the RBA has come up with wonderful measures to say there is "underlying demand", but as we have seen, the RBA can get it wrong. Remember "China will save us from recession" early last year  I'm also wondering why the hell the RBA is banging on about this heavily right now anyhow (two announcements in the last 2 weeks), is their role now to put the general publics mind at rest on their house price?  If so, why? Seems pretty bizarre behavior to me compared to their usual mandate, almost to the extent of trying to stave off panic. i.e. there is no need to tell a room full of people "don't worry about the snake!" unless the room is already ****-scared of a snake somehow being in the room.


----------



## robots (15 April 2009)

hello,

check:

rpdata.com.au

see melbourne, great results

as Beej has eluded to, many many many markets across australia

gains are well and truly locked in for many

thankyou
robots


----------



## CamKawa (15 April 2009)

gfresh said:


> I'm also wondering why the hell the RBA is banging on about this heavily right now anyhow (two announcements in the last 2 weeks), is their role now to put the general publics mind at rest on their house price?  If so, why? Seems pretty bizarre behavior to me compared to their usual mandate, almost to the extent of trying to stave off panic. i.e. there is no need to tell a room full of people "don't worry about the snake!" unless the room is already ****-scared of a snake somehow being in the room.



The RBA is the lender of last resort. When house prices crash here the big 4, in particular the CBA, Australia's largest home lender, may be in a world of financial pain. The RBA is spruiking house prices for all they are worth (not much as you have stated) to avoid having to bail the banks out.

I wouldn't be surprised to see the CBA once again being run by the government when the dust has settled on this mess.


----------



## UBIQUITOUS (16 April 2009)

Beej said:


> That 830,000 vacant houses stats is rubbish. It's from the 2006 census and all it means is that when the census person came knocking no-one was home - it does not mean the house was empty/vacant. In fact the census has no practical way to measure this properly. So the basis of half of Ubiquitous' article is totally debunked.... and the first half actually presents some pretty solid arguments why prices will in fact hold up (all the quotes from the RBA etc).




So 830k households just happened to be out when the census people came around...yeh right! I do agree that the figures might be stretched, but no way is there a greater demand than supply. If this were the case, there would be no RE listings and people would be living on the street.

I prefere this piece of research which provides non vested interest research as opposed to the usual suspects - Residex, REIV et al: 

http://www.earthsharing.org.au/wp-content/uploads/iw2lh-08-report.pdf

"“The 2008 I Want to Live Here report has found a 7% genuine vacancy rate in the inner city as compared to the much publicised 0.9% vacancy rate. The reported rate is a shocking one tenth of the genuine vacancy rate that speculators withhold from the market” said report author Tohm Curtis"




> So keep trying - we've waiting for the crash predicted here on ASF for many years now, still hasn't happened. The US started crashing 2 years ago now......Still isn't happening here.




Errr...yes it is. Maybe not on your street, but in most of Australia, it is happening. You see, your 'safe area' for investment is getting smaller and smaller. Soon, you'll be saying that as long as you buy a house exactly the same as yours in your street, RE is a great investment.



> In fact auction clearance rates and prices are rising in our major capital cities it seems (http://www.rpdata.com/news/rp/20081231_media.html), interest/lending rates at all time lows, large numbers of FHBs active and upgraders now coming into play. Rental returns are at historically high levels (average 5% for houses and 6% for units across Sydney right now), however investors won't return in large numbers until the economy improves - and when they do the bears are going to be taken by surprise. Banks are well capitalised and lending happily - lending for residential housing seems to have bottomed late last year and has been rising steadily since (http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument).





I see you're now quoting ABS figures, whereas at the beginning of your post you rubbished ABS stats. Typical Beej. As for RPdata 'research', lets not even go there.


----------



## gfresh (16 April 2009)

More incorrect data in the press, conveniently leaving out the -1.89% falls for Brisbane last quarter that I put up yesterday from the same table they are reading from 

http://business.theage.com.au/business/alarm-as-wealth-goes-into-freefall-20090415-a7hi.html



> Separately released Residex data *showed house price growth in every city but Perth (down 3.9 per cent) in the first three months of the year*, with Melbourne prices up 0.5 per cent over the three months and 1.6 per cent in March.




Journos can't even read a basic table..


----------



## Beej (16 April 2009)

UBIQUITOUS said:


> Errr...yes it is. Maybe not on your street, but in most of Australia, it is happening. You see, your 'safe area' for investment is getting smaller and smaller. Soon, you'll be saying that as long as you buy a house exactly the same as yours in your street, RE is a great investment.




Except all the price data coming out for Q1 2009 is showing that prices INCREASED everywhere except Perth and Brisbane (where prices went ballistic in 2006/2007)..... and even in those cities flats are holding up quite well......so much for the shrinking investment opportunity.... so keep dreaming! 

Read this: http://www.residex.com.au/newsletter/source2009_04aMC.html?content=MarketCommentary&from=news0409a 



> I see you're now quoting ABS figures, whereas at the beginning of your post you rubbished ABS stats. Typical Beej. As for RPdata 'research', lets not even go there.




I didn't rubbish ABS stats - I rubbished your incorrect interpretation of them. ABS stats are unbiased; they are just the numbers. You have to think a little to figure out what they really mean though.

As for 830k people not being home when the census came knocking - that's HIGHLY likely! People go on holidays, travel o/s, travel for business, go out with their friends, visit their family, got work etc etc all the time. It's not a stretch to imagine that 1/10 people at any single point in time would be doing one of those things, and that would mean there was nobody home when the census person came knocking. As for the demand argument in general - it really is undeniable - I don't know why you bears keep trying to suggest there is no shortage of housing in Australia? Try going to rent a flat in inner Sydney right now - 50 people turn up to each inspection! It's about a growing, highly urbanised population, increasing living standards (over the long term) and competition for a basically fixed supply of well located property - kind of obvious to me and most others....

Cheers,

Beej


----------



## kincella (16 April 2009)

come on boys...this discussion about house prices to crash is just sooooo pedestrian....
facts are, a drop in price of less than 2,3,or 4% in the current GFC climate, that has been dragging on for almost 2 years, seems hardly worth mentioning...
seems its more about wishing and hoping.....what was that song...was it Celia Black ???
there are plenty of affordable houses out there...one to suit everyones price and taste...stop reading the papers and go out and have a look.....

oh oh...you want to buy in the heart of the city...in the middle of everything...well you will have to settle for a unit in that case...the houses will be out of your price range...or deemed unaffordable....
:sheep:


----------



## michael_t_f (16 April 2009)

> Except all the price data coming out for Q1 2009 is showing that prices INCREASED everywhere except Perth and Brisbane (where prices went ballistic in 2006/2007




I could buy back the same house I sold 4 years ago in Brisbane for the same price today.

The unemployment has only just begun, the FHG is about to run out, property prices have just started to decline even at these super low rates and you think it's a good investment at the moment?


----------



## Beej (16 April 2009)

michael_t_f said:


> I could buy back the same house I sold 4 years ago in Brisbane for the same price today.




Oh really? The median price stats for Brisbane suggest otherwise (Q1 2005 -> Q1 2009 shows a median increase in the order of 20%+ in total, including more recent falls), so either the area you used to own in has been hit much harder than the average, or that's what you "think" because it makes you feel better about all the rent you have been paying in the past 4 years instead of owning! 

Want to tell us the suburb and we can check the APM data?

The irony this would be far more likely to be true in many suburbs of Sydney than in Brisbane!

Cheers,

Beej


----------



## amy997 (16 April 2009)

Beej said:


> Try going to rent a flat in inner Sydney right now - 50 people turn up to each inspection!




Not so true these days. The apartment next door to where i live has been empty all year, The landlord has been desperate to rent it, a month ago he knocked $100pw off the rent but still no takers. When there is an open home no one even shows up. This is a well located 3 bedroom apartment 5km from Sydney CBD in very good condition.
Late last year there was another one in the same block empty, it took 2 months to fill, theres definitely no rental crisis in this area.


----------



## tommymac (16 April 2009)

http://www.theaustralian.news.com.au/story/0,,25319017-25658,00.html?from=public_rss

This report states that the big four banks have not tightened their loan criteria for first home buyers as much as the general public think.



> A $444,000 loan from the CBA would require someone on $70,000 to spend 62 per cent of their monthly income on mortgage repayments, which amounted to $2827 a month. Real Estate Buyers Agents Association of Australia president Byron Rose said a loan of more than $400,000 for someone on $70,000 a year was "absolutely too much".


----------



## singlefished (16 April 2009)

Beej said:


> Oh really? The median price stats for Brisbane suggest otherwise (Q1 2005 -> Q1 2009 shows a median increase in the order of 20%+ in total, including more recent falls), so either the area you used to own in has been hit much harder than the average, or that's what you "think" because it makes you feel better about all the rent you have been paying in the past 4 years instead of owning!
> 
> Want to tell us the suburb and we can check the APM data?
> 
> ...




Beej, if you take *private messages* I can send you the address of the block of units I rent in and you can check the sales history for yourself in onthehouse.com.au with sales history going back to when the units were first on the market in 2004.

Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).

For obvious reasons I'm not going to be posting my residential address on a public forum!!!

Not saying that this is the norm all over Brissy, but was rather shocked to see the actual selling price of both properties (especially the sold Feb 07) after noting what the sold Nov 08 had been marketed at during the for sale period.


----------



## robots (17 April 2009)

singlefished said:


> Beej, if you take *private messages* I can send you the address of the block of units I rent in and you can check the sales history for yourself in onthehouse.com.au with sales history going back *to when the units were first on the market in 2004.*
> 
> Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).
> 
> ...




hello,

this is the huge problem which the community will face, new construction

"buy off the plan" "stamp duty savings" "architect designed"

many "off the plan" joints in Southbank, Docklands here in Melbourne would only just be at or slightly above purchase price today

yet a 70's block would of achieved some fantastic results, paradise

a developer won't build if makes no money and fair enough,

have a great day brothers, walk tall and say hi to the person in the street

thankyou
associate professor robots


----------



## kincella (17 April 2009)

Robots, there were some unique problems with the Docklands area...thought it was Centro that was taken to court...could be wrong...need to google and get the stories....
funny business going on at the time....the manager would not allow people to sell their units on completion...or use another agent for sale...funny business with rents too....seemed a bit overpriced at the time

when I looked at the prices about 6 months ago...they were comparable with Toorak prices....but without the Toorak benefits...ie shopping, parks, Chapel St nearby etc


----------



## gfresh (17 April 2009)

singlefished said:


> Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).




I can also give a couple of examples of people I know who's units would probably only fetch close to what they paid for it in the last 3-5 years in fairly central Brisbane and Gold Coast areas. Not OTP either.


----------



## Beej (17 April 2009)

singlefished said:


> Beej, if you take *private messages* I can send you the address of the block of units I rent in and you can check the sales history for yourself in onthehouse.com.au with sales history going back to when the units were first on the market in 2004.
> 
> Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).
> 
> ...






gfresh said:


> I can also give a couple of examples of people I know who's units would probably only fetch close to what they paid for it in the last 3-5 years in fairly central Brisbane and Gold Coast areas. Not OTP either.




Sure, I don't dispute these examples - newly built apartment blocks have a unique situation for 2 reasons. The first it is easy for an area to be over-built, which will obviously put a lid on prices when original purchasers (or the developer) sells over time. The second reason is that investors get a HUGE tax break from the building depreciation allowance on newly constructed units in addition to the normak negative gearing benefits. This results in a situation where yuo can actually sell at the same or a lower price than the original purchase yet still have actually made a profit.

Bottom line though is in Brisbane at least, according to the median price figures, that situation (currently) is the exception rather than the norm.

Cheers,

Beej


----------



## nth brisbanite (17 April 2009)

michael_t_f said:


> I could buy back the same house I sold 4 years ago in Brisbane for the same price today.




That's so over the top that it's not worth considering.  I'm a very active investor in Brisbane and there would not be one suburb that has not gone up substantially over the last 4 years.  For example, properties that I have bought in Bracken Ridge, Kallangur, Bald Hills and Moggill would have gone up at least 20% in the last 3 years.  

In the first home owners' price range, houses are selling like hot cakes at the moment at prices which are surprising everyone.  No one knows what is going to happen with FHB grant - I'd be surprised if it doesn't continue in some form, maybe not 14000 (existing)/21000 (new) but possibly 10000/15000.


----------



## gfresh (17 April 2009)

.. and so it follows they will go up 20% in the next 3 years 

Believe it or not, there is not infinite numbers of FHB out there.. Even if it continues, that effect will taper off. Most are buying right now with the expectation that it is not going to continue, even if it does, they would have already bought. But I agree these 3 months will be a great time for sellers


----------



## kincella (17 April 2009)

of course care needs to be taken...but look at the stock market today...back to Nov 08 levels

and now this british economist...suggests the worst of the recession may be over.....now I know these types hardly ever get it right....and I usually dont take too much notice of them...
seems everyone has been in lock down and saving....hence retail figures, cars , harley davidsons etc taking a break....but there is much more confidence out there...and one would be wise to listen and watch for themselves....
http://www.news.com.au/business/story/0,27753,25346209-31037,00.html


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## gfresh (17 April 2009)

Across from SS.. further lending tightening, or maybe just suitable diligence.. this from ANZ. These could be in place another 12-36 months, or maybe even permanently. 

A 16% increase in living expenses, plus I think it is .25% increase in rates margin. 



> In response to the continuing softening in the economic environment, effective Monday, 20th April 2009, ANZ will be making changes relating to serviceability criteria.
> 
> These changes reflect ANZ’s prudent and measured response to the current economic environment and ensures the bank and our customers are well positioned for any weakening in the economy throughout 2009.
> 
> ...


----------



## UBIQUITOUS (17 April 2009)

gfresh said:


> .. and so it follows they will go up 20% in the next 3 years
> 
> Believe it or not, there is not infinite numbers of FHB out there.. Even if it continues, that effect will taper off. Most are buying right now with the expectation that it is not going to continue, even if it does, they would have already bought. But I agree these 3 months will be a great time for sellers




Good point G.

The FHB rush is future demand brought forward. I expect FHB purchases to plummet.


----------



## Beej (17 April 2009)

UBIQUITOUS said:


> Good point G.
> 
> The FHB rush is future demand brought forward. I expect FHB purchases to plummet.




I guess that's a point of differentiation. I think that the current FHB numbers are coming from existing, pent up demand. With no deposit loans and tightened lending criteria by the banks I can't see how demand can really be brought forward to any great extent as people have to have saved something already. Ie people who have been wanting to buy for some time but have been saving, waiting. Flat/falling prices, + low interest rates. + the grant have spurred them into action. This is also backed up by the figures which show FHB numbers have been very much below normal/average for the last 2 years prior to the current mini-boom.

Going forward I think FHB numbers will just return to the historical norm (or a little below allowing for some proportion of future demand having been "used" up). I'm expecting to see the proportion to fall beck to between 15 and 20%. Let's see what happens and who was right! 

Cheers,

Beej


----------



## rryall (17 April 2009)

Beej said:


> I guess that's a point of differentiation. I think that the current FHB numbers are coming from existing, pent up demand. With no deposit loans and tightened lending criteria by the banks I can't see how demand can really be brought forward to any great extent as people have to have saved something already. Ie people who have been wanting to buy for some time but have been saving, waiting. Flat/falling prices, + low interest rates. + the grant have spurred them into action. This is also backed up by the figures which show FHB numbers have been very much below normal/average for the last 2 years prior to the current mini-boom.
> 
> Going forward I think FHB numbers will just return to the historical norm (or a little below allowing for some proportion of future demand having been "used" up). I'm expecting to see the proportion to fall beck to between 15 and 20%. Let's see what happens and who was right!
> 
> ...





The great uknown is whether the doubling (or in some cases tripling) of the FHBG will be extended past July (correct me if I am wrong). Since this is still uknown surely those looking at buying in the next 12 months will buy prior to this cut off date hence bringing FORWARD demand.


----------



## CamKawa (17 April 2009)

rryall said:


> The great uknown is whether the doubling (or in some cases tripling) of the FHBG will be extended past July (correct me if I am wrong). Since this is still uknown surely those looking at buying in the next 12 months will buy prior to this cut off date hence bringing FORWARD demand.



Yes I agree the residential housing market is living on borrowed time and borrowed government money. The only way house prices will continue to rise is if Kevin doubles and trebles what has already doubled and trebled and that outcome post June 30 wouldn't surprise me. I think Kev may spend as many tax payer dollars as he sees fit in order to temporarily extend his popularity in the polls. If he runs out of money he'll just print more USA style.

On the other hand if we run out of first home buyer’s gullible enough to buy into Australia's residential housing ponzi scheme, then Kev can throw as much money as he likes at it and house prices won't rise. A bit like how about half of the stimulus money is being saved and not spent.


----------



## robots (17 April 2009)

hello,

see:

rpdata.com.au

residex.com.au

look up Melbourne, utopia

thankyou
associate professor robots


----------



## kincella (17 April 2009)

geez, and if he keeps part of the grant, and the house prices have already bottomed, except for QLD and WA, and the prices dont fall by 40% this year or ever....what will you do ????  do you have a plan B ? or plan C ?

spoke to 2 neighbours this week, both made offers to their landlords to buy...both landlords said no...not interested in selling....
oh and these people are out renting after a divorce....not FHB,  they have the money and the means and are in the market to buy another home...

they may have been like others, waiting for the price to drop, thinking their landlords might have to panic and sell....
so now they will be looking elsewhere.....we have roughly over 50,000 divorces annually (figures to 2001 only)...so there is another market apart from fhb...


----------



## MACCA350 (17 April 2009)

One of my mates has decided to jump in due to the FHB boost ending...........and last I heard he had no intention of buying in the near future.

Sure he is just one, but I'm sure this boost and the end date and the low interest rates has made many jump into the market who had previously felt they couldn't afford to get in(which was his opinion only 18 months ago).........IMHO the governments boost has propped up the market with the bodies of many who couldn't previously afford to get in and who will most likely falter as interest rates rise. I believe this is the reason banks have recently tightened their lending criteria, to try and curb the influx due to irresponsible incentives.

cheers


----------



## kingbrown (17 April 2009)

As i first home buyer with money 
iam quite reluctant to fall in and take this grant
as in my opinion iam only paying more in this loaded market  

Most of my freinds however especially ones with very little cash 
have been seduced by this FHBG to June 30

So from on the ground iam saying to you guys 
that yes many FHB brought forward a home purchase 
even if its not that affordable 

To them its appears to be free money and yes the home builders are giving them more cash backs on top of the FHBG 
Hang on isnt that called jacking the finance ?

Anyway what ever figures Kev or REIV pull out of the hat now 
it wont be pretty figure this time next year
As its called a RECESSION !!

K.B


----------



## Temjin (17 April 2009)

kingbrown said:


> As i first home buyer with money
> iam quite reluctant to fall in and take this grant
> as in my opinion iam only paying more in this loaded market
> 
> ...






MACCA350 said:


> One of my mates has decided to jump in due to the FHB boost ending...........and last I heard he had no intention of buying in the near future.
> 
> Sure he is just one, but I'm sure this boost and the end date and the low interest rates has made many jump into the market who had previously felt they couldn't afford to get in(which was his opinion only 18 months ago).........IMHO the governments boost has propped up the market with the bodies of many who couldn't previously afford to get in and who will most likely falter as interest rates rise. I believe this is the reason banks have recently tightened their lending criteria, to try and curb the influx due to irresponsible incentives.
> 
> cheers




Well done for kingbrown and MACCA350's mate. Both of you managed to see the reality on the FHG and the government's attempt to artificially boost the market. It's certainly extremely difficult for most people to resist the temptation and NOT follow the crowd. I have plenty of other friends who are so emotionally attached to the "hot market" right now that they refuse to listen to any reasonings and firmly believe that if they don't buy now, there wouldn't be any more houses to buy. 

I'm still wondering how much more debt can these First Home Buyers take on to sustain the ponzi scheme. Those who sold them the houses are certainly making a killing off it.


----------



## gfresh (18 April 2009)

kingbrown said:


> Anyway what ever figures Kev or REIV pull out of the hat now it wont be pretty figure this time next year. As its called a RECESSION !!




Well what I do know they will be pulling out is a $50bn deficit , which is going to take many years to pay off.. and also will mean taxes, levies, and "user pays" is going to be the catch cry for a long time to come. When they start to  see petrol excise creeping up, alcohol excise, property taxes, GST and no doubt other sneaky charges slowly being put in place one by one (from both Federal and State level) to recapture these billions, they will realise the hell they have actually brought upon themselves.


----------



## Aussiejeff (20 April 2009)

Quick! Lock in a low rate NOW before they rocket up!!



> *Commonwealth Bank of Australia (CBA) will raise its interest rates on fixed rate mortgages just as the federal government and industry players voice concern over banks' failure to pass on the full amount of interest rate cuts to customers.
> 
> Australia's largest mortgage lender said it will raise its interest rates on fixed rate mortgages by between 20 basis points and 45 basis points from Tuesday, but one-year home loans will not be affected.*
> 
> ...




http://www.thebull.com.au/articles_detail.php?id=2164


----------



## kincella (20 April 2009)

think you will find the debt is 200 billion..check out andrew bolts blogs on the heraldsun site.....
it was a manufactored crisis....now a manufactored recovery....
please do not buy a house for the next 3 years


----------



## robots (20 April 2009)

hello,

people should really stop and look into the implications of fixing a loan considering the break-free costs popping up,

variable all the way for mine, go with the flow, happy with the 46 yr low's

you never know whats around the corner:

divorce, death, job re-location, bad neighbours, time-out, look after family member, out grown house etc etc

thankyou
robots


----------



## kingbrown (20 April 2009)

Temjin said:


> Well done for kingbrown and MACCA350's mate. Both of you managed to see the reality on the FHG and the government's attempt to artificially boost the market. It's certainly extremely difficult for most people to resist the temptation and NOT follow the crowd. I have plenty of other friends who are so emotionally attached to the "hot market" right now that they refuse to listen to any reasonings and firmly believe that if they don't buy now, there wouldn't be any more houses to buy.
> 
> I'm still wondering how much more debt can these First Home Buyers take on to sustain the ponzi scheme. Those who sold them the houses are certainly making a killing off it.




Thats how you make money out of the Mc Hordes Temjin 
Most think like Mc sheep


----------



## Aussiejeff (21 April 2009)

Will KRudd'nCo try to counter the banks pre-empting the RBA's rates policy (CBA raising fixed mortgage interest rates - others sure to follow) by extending the FHB grant "indefinitely"?

Stay tuned for another exciting episode of "SupaKRudd - Man Of Steel II".


----------



## helicart (21 April 2009)

yes an interesting question on whether to fix property loans at the moment. 

suppose it comes down to whether, for instance, 

the 5 year fixed will be less than the average 5 year variable.

CBA package comp variable 4.94
CBA package comp 5fixed  6.10

= 1.16 differential

Hence, breakeven would be the variable smoothly progressing up to 7.26 by 2014......that's 2.32%. A tough call to say whether it'll make it.

But variable breakeven would be higher if you discounted more distant future cash flows, which you should because rents and wages will most likely be higher then. 

And don't forget most fixed deals don't allow a meaningful offset or redraw facility, which also screws with your ability to revalue and use the equity freely.


----------



## aleckara (21 April 2009)

Aussiejeff said:


> Will KRudd'nCo try to counter the banks pre-empting the RBA's rates policy (CBA raising fixed mortgage interest rates - others sure to follow) by extending the FHB grant "indefinitely"?
> 
> Stay tuned for another exciting episode of "SupaKRudd - Man Of Steel II".




What a waste of taxpayers money - very expensive just to buy a few votes. Wish it went to government services instead.


----------



## MrBurns (21 April 2009)

Aussiejeff said:


> Will KRudd'nCo try to counter the banks pre-empting the RBA's rates policy (CBA raising fixed mortgage interest rates - others sure to follow) by extending the FHB grant "indefinitely"?
> 
> Stay tuned for another exciting episode of "SupaKRudd - Man Of Steel II".




If he does he will create the new worst housing bubble in history, the present one is the worst to date.

I've got no faith in the little Arian, I dislike him more than any previous leader including Hawke, he's transparent, manipulative, sneaky and sly.

Reminds me of on of Hitlers chosen ones.. a very cruel streak in that man.


----------



## Trevor_S (21 April 2009)

Aussiejeff said:


> by extending the FHB grant "indefinitely"?




I think it's inevitable, even though they know it leads to increased house prices, after all way back, before the current increase, the federal housing minister stated:

http://www.news.com.au/heraldsun/story/0,21985,25285409-664,00.html



> Plibersek responded: "No there won't be. There won't be an increase in the First Home Buyers Grant, because we've seen from experience what happens when you provide a grant like that -- or increase it -- is that it goes straight into the pocket of the seller."




and then they promptly increased it


----------



## Aussiejeff (21 April 2009)

Trevor_S said:


> I think it's inevitable, even though they know it leads to increased house prices, after all way back, before the current increase, the federal housing minister stated:
> 
> http://www.news.com.au/heraldsun/story/0,21985,25285409-664,00.html
> 
> ...




LOL. 

Being a political animal, I'm sure if you cornered Plibersek on that remark she would counter with some ridiculous defence like _"I never said that - I was misquoted by the media"_


----------



## Trevor_S (21 April 2009)

Aussiejeff said:


> Being a political animal, I'm sure if you cornered Plibersek on that remark she would counter with some ridiculous defence like _"I never said that - I was misquoted by the media"_




Probably but you can easily counter that with: 



> During that interview (which was recorded and can be downloaded as a podcast on our website)




in the same link as above...


----------



## helicart (21 April 2009)

Trevor_S said:


> I think it's inevitable, even though they know it leads to increased house prices, after all way back, before the current increase, the federal housing minister stated:
> 
> http://www.news.com.au/heraldsun/story/0,21985,25285409-664,00.html
> 
> ...




well said Trevor....

confirms one of Ronald Reagon's greatest lines:

"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"


----------



## Beej (21 April 2009)

helicart said:


> well said Trevor....
> 
> confirms one of Ronald Reagon's greatest lines:
> 
> "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"




Terrifying words indeed if the head of your government is a senile geriatric who's only claim to fame before politics was to act in a few "B" grade Hollywood westerns in the 50s.....

Beej


----------



## gfresh (21 April 2009)

What did George W do before politics? Oh that's right he managed to dodge the draft, was an alcoholic, did cocaine.. but then he was "born again" so was all fine again  They know how to pick them!

So are the fixed rates a precursor to variable rates rising in 3-6 months time you think? So much for those long-dated fixed under 6%...


----------



## helicart (21 April 2009)

Beej said:


> Terrifying words indeed if the head of your government is a senile geriatric who's only claim to fame before politics was to act in a few "B" grade Hollywood westerns in the 50s.....
> 
> Beej






And what was Obamarama's claim to fame? I mean apart from being a binge drinking, cocaine snorting, pothead?

Try some broader sources of news than Good News Week and The Glass House for Reagan's work experience pre President....


----------



## Aussiejeff (23 April 2009)

> *THE boost to the first home owners' grant will not be extended beyond June 30, Prime Minister Kevin Rudd has suggested. "The first home owner's boost, as you know, we have indicated that will conclude within a very fixed and finite time frame,'' he told reporters in Perth.
> 
> "It's had strong useful results so far, but I have got to say all good things must come to an end.''*



http://www.news.com.au/heraldsun/story/0,21985,25373912-5005961,00.html

Where to for home prices after it is canned?

aj


----------



## singlefished (23 April 2009)

Aussiejeff said:


> http://www.news.com.au/heraldsun/story/0,21985,25373912-5005961,00.html
> 
> Where to for home prices after it is canned?
> 
> aj




I don't think it will get canned completely.....

The temporary "boost" as such may be canned but I think the current $7K grant could possibly be *permanently* increased to $14K or higher for new houses with the current $7K remaining for existing stock or possibly disappearing altogether.

Just trying to read between the lines..... they have said the "boost" was temporary, nothing mentioned about adjusting the value of the base FHG to compensate though did they????


----------



## mullys (23 April 2009)

The so called end of the firsthome owners grant I think is one of the biggest things that is driving Sydney's current rise in houseing prices for houses under 500k.
Rudd is handing out money everywhere and now there's talk of a third stimulus!  I havnt even got my first one yet.  What a joke.  
If its totally canned I think you will see house prices fall again,  thats why I think it wont be.


----------



## Trevor_S (23 April 2009)

Beej said:


> Terrifying words indeed if the head of your government is a senile geriatric who's only claim to fame before politics was to act in a few "B" grade Hollywood westerns in the 50s.....




The guy bought down the USSR, they tried to match his spend in the warfare budget and lost.

That aside, how is Rudd any more qualified or Howard  ... ? Turnbull*, sure he is .. but the rest. They are politicians or bureaucrats, probably the worst people to run a country.

* no, that's not me being a Liberal devotee.


----------



## Beej (23 April 2009)

Trevor_S said:


> The guy bought down the USSR, they tried to match his spend in the warfare budget and lost.




Yea - the riskiest "all in" global geopolitical "poker" move since WWII. I lived in absolute fear of nuclear war as a boy and teenager because of the cold war arms race through the 70s and 80s......

Beej


----------



## CamKawa (24 April 2009)

Aussiejeff said:


> http://www.news.com.au/heraldsun/story/0,21985,25373912-5005961,00.html
> 
> Where to for home prices after it is canned?
> 
> aj



Some newspapers this morning are saying the grant won't be extended while others are saying that it will. As I've said earlier in the thread I'd be surprised if Kevin doesn't extend it. I think Kevin is playing funny buggers at the moment implying that he will pull the rug on the FHBG after June 30 in order to entrap the last remaining home buyers into panic buying before June 30, rather than have them postpone the buying decision.


----------



## helicart (24 April 2009)

CamKawa said:


> I think Kevin is playing funny buggers at the moment implying that he will pull the rug on the FHBG after June 30 in order to entrap the last remaining home buyers into panic buying before June 30, rather than have them postpone the buying decision.




You could be right....and Kevin thinks no one would be as smart as him to guess what he is up to.....he is such a self important little ear wax eating schoolboy in shorts isn't he.....


----------



## kincella (24 April 2009)

pressure grows as Melbourne's population races towards 4 million....and bless their souls, they are heading out into the suburbs....amazing growth of almost 75,000 each of the past 2 years....
and it is far more affordable living out there....compared to the cost of housing in the city...no wonder the train  and road system is in chaos..... 

all cities are experiencing growth....
our population grew by over 360.000 for the year....wow thats the size of a  a big regional city......
cheers

ps I think the fhb grant will stay...its just the boost they may or may not remove...7000 is no big deal.....they should consider only a fhb grant for a new home...and none for existing houses

http://www.theage.com.au/national/p...ckets-to-4-million-20090423-agt5.html?page=-1


----------



## MrBurns (24 April 2009)

helicart said:


> You could be right....and Kevin thinks no one would be as smart as him to guess what he is up to.....he is such a self important little ear wax eating schoolboy in shorts isn't he.....




I'm starting loathe the little prick, he really annoys me now.

He's got no right to withhold the decision on the FHBG, he is just assessing the potential damage to his poll ratings before he tells us his decision.

and he's got no right to extend it either, he's done enough damage, the little worm.


----------



## gfresh (24 April 2009)

CamKawa said:


> Some newspapers this morning are saying the grant won't be extended while others are saying that it will. As I've said earlier in the thread I'd be surprised if Kevin doesn't extend it. I think Kevin is playing funny buggers at the moment implying that he will pull the rug on the FHBG after June 30 in order to entrap the last remaining home buyers into panic buying before June 30, rather than have them postpone the buying decision.




I don't think he will, not now.. wouldn't look good to be changing his mind over things and easy for political point scoring from the other team. "Trapping" people in, if the market did tank late in the year would also be pretty suicidal political wise. Imagine the screams..



helicart said:


> You could be right....and Kevin thinks no one would be as smart as him to guess what he is up to.....he is such a self important little ear wax eating schoolboy in shorts isn't he.....




and Turnbull isn't ? I think they're both as bad as each other..



MrBurns said:


> I'm starting loathe the little prick, he really annoys me now.




 come on, you always hated him from day dot..


----------



## MrBurns (24 April 2009)

gfresh said:


> I don't think he will, not now.. wouldn't look good to be changing his mind over things and easy for political point scoring from the other team. "Trapping" people in, if the market did tank late in the year would also be pretty suicidal political wise. Imagine the screams..




He's backed himself into a corner now , if he drops it the market will plummet if he doesn't it inflates further and will eventually plummet more later.

He will be figuring how to delay this and more handouts till just before the election or call it early, he's worked out that FHBG boosting and cheques in the mail will ensure him success at the polls and the little worm will time it to suit.


----------



## MrBurns (24 April 2009)

gfresh said:


> ..
> come on, you always hated him from day dot..




Yes but he's manged to move it to a whole new level.


----------



## helicart (24 April 2009)

MrBurns said:


> I'm starting loathe the little prick, he really annoys me now.
> 
> He's got no right to withhold the decision on the FHBG, he is just assessing the potential damage to his poll ratings before he tells us his decision.
> 
> and he's got no right to extend it either, he's done enough damage, the little worm.




hehehe......anyone that would have Lachlan Harris for a media advisor shows absolute contempt for the proletariat......like all delusion of grandeur types, Rudd despises the common man and plays him for a fool every time....


----------



## Beej (24 April 2009)

MrBurns said:


> He's backed himself into a corner now , if he drops it the market will plummet if he doesn't it inflates further and will eventually plummet more later.
> 
> He will be figuring how to delay this and more handouts till just before the election or call it early, he's worked out that FHBG boosting and cheques in the mail will ensure him success at the polls and the little worm will time it to suit.




The whole argument is only about the BOOST being dropped. The original FHB grant ($7k/$14k), plus each states own programs and stamp duty concessions will remain regardless. 

Whatever happens, the boost has already done it's work now. I think they will pull the boost, but might add something new to encourage purchase/construction of new dwellings. Either way the removal of only $7k extra boost will not have a dramatic influence now IMO. FHB numbers will drop back to the 15-20% mark (more in line with normal levels), but the market will be driven by the upgraders and a slow return of investors (investors maybe more towards the end of the year). Currently (anecdotally), a lot of investors are staying out so they don't have to compete in a mini-boom with all the FHBs - but the high rental yields and ability to lock in low interest rates do have some with a longer term view than many here chaffing at the bit.

Cheers,

Beej


----------



## MrBurns (24 April 2009)

Beej said:


> The whole argument is only about the BOOST being dropped. The original FHB grant ($7k/$14k), plus each states own programs and stamp duty concessions will remain regardless.
> 
> Whatever happens, the boost has already done it's work now. I think they will pull the boost, but might add something new to encourage purchase/construction of new dwellings. Either way the removal of only $7k extra boost will not have a dramatic influence now IMO. FHB numbers will drop back to the 15-20% mark (more in line with normal levels), but the market will be driven by the upgraders and a slow return of investors (investors maybe more towards the end of the year). Currently (anecdotally), a lot of investors are staying out so they don't have to compete in a mini-boom with all the FHBs - but the high rental yields and ability to lock in low interest rates do have some with a longer term view than many here chaffing at the bit.
> 
> ...




I think you'll find the removal of the boost will have a big effect on the market PLUS now we have the banks INCREASING mortgage rates so the time may have come for the fall.


----------



## helicart (24 April 2009)

Rudd and Harris are still too wet behind the ears to realize when you give something to the electorate for free, you take it away progressively by stealth....so it goes under the radar of the dim blondes and blokes that are the Aussie media....

he could have staggered it down, first drop approvals for existing homes in post codes within 20km of capital cbd's, then for all existing homes, then for new homes. 

that would have kept it off the front page and out of the 6 o'clock news.

It also follows the main principle of big govt......make govt decisions so complex that the electorate doesn't have the time to examine whether you are being fair and reasonable....

As PJ O'Rourke astutely recognises...... "When it comes to govenment, complexity is fraud"
because it snows the public every time.


----------



## Beej (24 April 2009)

MrBurns said:


> I think you'll find the removal of the boost will have a big effect on the market PLUS now we have the banks INCREASING mortgage rates so the time may have come for the fall.




Well we shall see.... I think you will proven wrong, as have all the great house price crash pundits thus far. Median prices moving UP right now pretty much everywhere except Perth/Brisbane.....

Re mortgage rates, a couple of them tweaked FIXED rates upwards - variable is still heading down mate. Alan Kohler on Business Spectator today predicts 2% cash rate.... So let's see who's right on that one as well, but again I think you will be proven wrong if you think variable interest rates are heading up anytime soon!

Cheers,

Beej


----------



## kincella (24 April 2009)

waiting on the paperwork to lock in half the mortgage at 5.59 for 3 years and leaving half at variables....until I see the bottom ...rams has 6.19 for 10 years

keeping one prop forever, and may change another...hence the 3 year fix only on that one...
saving on interest this year will be about 30,000 on all props
no point locking in if you expect to change earlier...although this case scenario is locking in the low rates....when we expect them to rise later....so the break fees should not apply....knowing the banks they will get around that one
oh and bulls like me will probably buy another...if I can find the bargains...

anyone notice the big increase in the population...my post earlier today
and the other thread  ...should I sell...2 br unit unrenovated in toorak at 
565k  ..... those prices are not dropping...
time will tell


----------



## helicart (24 April 2009)

kincella said:


> waiting on the paperwork to lock in half the mortgage at 5.59 for 3 years and leaving half at variables....until I see the bottom ...rams has 6.19 for 10 years
> 
> keeping one prop forever, and may change another...hence the 3 year fix only on that one...
> saving on interest this year will be about 30,000 on all props
> ...





below is a comparison of rate scenarios under different economic conditions.....(xls is available by clicking on pic)  NPV and nominal figures are fixed minus variable interest over 5 years....

I don't see svr's rising significantly for years....so am staying variable for the time being....


----------



## kincella (24 April 2009)

if you are stuck with one of the other players paying 10.4% on a variable..save money going to 5%
reason one is fixed...its my bet against a higher fixed rate down the track....like the big ones did this week
currently the difference in the two rates is .39  ie 5.20 to 5.59
and I am still expecting the variable to go lower....which may bring the other fixed rates lower...and then lock it up for 5-10 years....
and I expect house prices in some cases to rise....
cheap money means one can spend a bit more


----------



## CamKawa (24 April 2009)

MrBurns said:


> He's backed himself into a corner now , if he drops it the market will plummet if he doesn't it inflates further and will eventually plummet more later.
> 
> He will be figuring how to delay this and more handouts till just before the election or call it early, he's worked out that FHBG boosting and cheques in the mail will ensure him success at the polls and the little worm will time it to suit.



I agree with you. He's dug himself into a hole now. If he continues to dig and the finanical crisis comes to a speedy resolution then he will be OK. On the other hand he is fukced. It's a double or nothing choice for Kev.


----------



## helicart (24 April 2009)

kincella said:


> if you are stuck with one of the other players paying 10.4% on a variable..
> 
> ouch...you must have really wanted that property.
> 
> ...




considering the compromises fixing puts on redraws and offset accts, and revals and LOCs, accessing equity for another buy has me staying variable. 

good luck to both of us...


----------



## kincella (24 April 2009)

no I refinaced at a lower rate...then GE took over the lender and hiked...and then no cuts
the looming problem will be the govt spending.....borrowings, and then our rating drops to AA and the banks will have to pay more...article somewhere today raises this issue


----------



## helicart (24 April 2009)

kincella said:


> no I refinaced at a lower rate...then GE took over the lender and hiked...and then no cuts
> the looming problem will be the govt spending.....borrowings, and then our rating drops to AA and the banks will have to pay more...article somewhere today raises this issue




yeah that's net foreign liabilities business.....public liabilities are low (though Rudd is fast fixing that) but private liabilities are growing.....we really are a nation that cannot internally fund asset prices at current levels, and need foreign money to do so. 

As net foreign liabilities go up, we'll lose AAA, and fixed funding will have upwards pressure. Hopefully though, the RBA won't be stupid enough to increase rates to control headline or core inflation...nor attract foreign money to buy govt bonds to pay for Labor stimuli. If not, then variables shouldn't be as effected as fixed.


----------



## MrBurns (24 April 2009)

Despite ths blokes name the report is spot on - 

http://money.ninemsn.com.au/article.aspx?id=805721



> Government warned not to extend first home scheme
> 24/04/2009 10:30:00 AM
> By Stuart Fagg, ninemsn Money
> 
> The government has been warned not to cave into public pressure and extend the increased grant for first home buyers amid revelations the scheme has inflated house prices at the bottom of the market.


----------



## gfresh (24 April 2009)

CamKawa said:


> I agree with you. He's dug himself into a hole now. If he continues to dig and the finanical crisis comes to a speedy resolution then he will be OK. On the other hand he is fukced. It's a double or nothing choice for Kev.




Correction: The whole country will be f'ed if he gets it wrong  I've been thinking the same thing recently. He is basically gambling the prosperity of the next few years on this crisis being all over by 2010, and company profits revenues coming back to somewhere near it's old levels. No doubt listening to the same clowns that underestimated this crisis in 2008. Yet even the IMF is saying Australia will cop only 0.6% growth in 2010.

If it's not a fast recovery, Australia will receive higher taxes, higher levies, and high inflation with the added kicker of low growth. All this spending will get him re-elected with an early election, but when the monetary restraints really kick in to pay down this thing, it'll soon wear off on the public in the 2nd term as that is where the nasty decisions will need to be made. 

Helicart: I think they will. The RBA was busy doing it in 2007 as imported inflation were the real drivers of inflation, and even then the global crisis was known in many people's eyes. Banks are raising their fixed rates, especially on the longer dated ones, means they know where we're heading. The RBA will also do it to increase bank profitability, and as you say encourage foreign funds. They state their mandate is the financial stability of the economy, but it's also about protecting the probability of the banks, even if they are probably related.


----------



## MrBurns (24 April 2009)

There will be no early end to this mess, Microsoft just reported a 32% fall in profit - that's *32%*

http://www.abc.net.au/news/stories/2009/04/24/2551763.htm


----------



## MrBurns (24 April 2009)

Haven't seen the report but the headline says it all - 

http://www.moneymorning.com.au/reports/first-home-buyer-grant.php?gclid=CMG_19rEiJoCFRFWagod1xZuLA



> FREE Report: Why the First Home Buyers Grant is a trap that will enslave hundreds of thousands of young Aussies for years and create a home-grown sub-prime nightmare...


----------



## Beej (24 April 2009)

MrBurns said:


> There will be no early end to this mess, Microsoft just reported a 32% fall in profit - that's *32%*
> 
> http://www.abc.net.au/news/stories/2009/04/24/2551763.htm




You are a real "glass half empty" guy aren't you Mr Burns? The world, and the US in particular, are in the middle of a nasty credit crisis initiated recession, and a major US based multinational technology firm, which derives it's revenue from both the global corporate sector and the western consumer, still reports a massive quarterly profit of US$3B, which is "only" 32% lower than the previous corresponding quarter in a boom year, and you think that's a really bad result?

I'd say that was a pretty good result for Microsoft under the circumstances! Look at GM, Ford, GE, the US big banks etc etc for a reality check on what "bad" results look like!

Beej


----------



## MrBurns (24 April 2009)

Beej said:


> You are a real "glass half empty" guy aren't you Mr Burns?
> Beej




Beej I know a few people who took the glass half full approach in the past and they're now broke.

You have to wake up and smell the rot, these figures will lead to massive unemployment globally, it will effect everything and it's not really started yet, wait and see how the market reacts over the coming couple of weeks.

I'm as keen as anybody to get out there and do something but I'm not stupid, if you or anybody else is willing to gamble on this market stocks or real estate at present good luck to you, you may get very rich or you may go down badly.


----------



## Beej (24 April 2009)

MrBurns said:


> if you or anybody else is willing to gamble on this market stocks or real estate at present good luck to you, you may get very rich or you may go down badly.




That's called risk! No risk no reward  How much you take on is an individual choice; clearly you are choosing no risk at all, therefore no reward, unless everyone/everything else fails! That's why you see everything in the worst case "glass half empty" context.....

PS: Microsoft stock went up in after hours trading after their results were announced.

Cheers,

Beej


----------



## MrBurns (24 April 2009)

Beej said:


> That's called risk! No risk no reward  How much you take on is an individual choice; clearly you are choosing no risk at all, therefore no reward, unless everyone/everything else fails! That's why you see everything in the worst case "glass half empty" context.....
> Beej




Beej clearly you are one of those guys that calls everyone who is cautious a "glass half empty guy" or someone who doesnt take risks,  There are risks and I've taken plenty with commercial property and won, there are also stupid punts I dont go in for those, thats a mugs game it really is gambling, when my antenna tells me it's time to go, I do, and I usually win.


----------



## helicart (24 April 2009)

Beej said:


> You are a real "glass half empty" guy aren't you Mr Burns? The world, and the US in particular, are in the middle of a nasty credit crisis initiated recession, and a major US based multinational technology firm, which derives it's revenue from both the global corporate sector and the western consumer, still reports a massive quarterly profit of US$3B, which is "only" 32% lower than the previous corresponding quarter in a boom year, and you think that's a really bad result?
> 
> I'd say that was a pretty good result for Microsoft under the circumstances! Look at GM, Ford, GE, the US big banks etc etc for a reality check on what "bad" results look like!
> 
> Beej




Beej, I think Burnsy was implying a 30% drop in Microsoft profit is an indication of how bad the GFC is. The media, corporations, central banks, and govts are all trying to sell the economy up....and yet every couple of weeks they have to come out and revise their fluffy figures and expectations downwards....go figure.....

there's no point being a glass half full or empty in times like this....you get the most objective data you can and interpret it yourself, objectively....with no spruiker spin ....

no one would have been surprised by Microsoft's big profit drop if the govt and media hadn't been snowing Joe Public.


----------



## MrBurns (24 April 2009)

helicart said:


> Beej, I think Burnsy was implying a 30% drop in Microsoft profit is an indication of how bad the GFC is. .




Correct, another indicator you cant ignore.


----------



## Beej (24 April 2009)

helicart said:


> no one would have been surprised by Microsoft's big profit drop if the govt and media hadn't been snowing Joe Public.




Sorry but who was surprised? If anything the market seems to have been surprised by how well Microsoft profit is holding up! If you want to pick big corporate results that show how bad things are, go for GM, Citigroup etc - I think using this latest Microsoft quarter to proclaim the sky as falling is drawing a long bow, that's all! 

PS: I don't own Microsoft shares.

Beej


----------



## MrBurns (24 April 2009)

Beej said:


> Sorry but who was surprised? If anything the market seems to have been surprised by how well Microsoft profit is holding up! If you want to pick big corporate results that show how bad things are, go for GM, Citigroup etc - I think using this latest Microsoft quarter to proclaim the sky as falling is drawing a long bow, that's all!
> 
> PS: I don't own Microsoft shares.
> 
> Beej




I think just to say it's not as bad as the others doesnt make it good, it's freeking awful that a virtual monopoly can drop a third of it's profit, it's first loss since it's inception...........just like that.

Stuff the auto industry, who has got themselves another bailout by the way, we have enough cars but we cant do without the new upgraded mega pixled gigabited Windows V.XXX111, I can't wait


----------



## CamKawa (24 April 2009)

gfresh said:


> No doubt listening to the same clowns that underestimated this crisis in 2008.



Like Stevo at RBA who kept jacking up % rates in the misguided belief that China will save us. LOL



gfresh said:


> If it's not a fast recovery, Australia will receive higher taxes, higher levies, and high inflation with the added kicker of low growth. All this spending will get him re-elected with an early election, but when the monetary restraints really kick in to pay down this thing, it'll soon wear off on the public in the 2nd term as that is where the nasty decisions will need to be made.



What mystifies me is why the moronic public are happy with all these bails outs. Can't they see Kev hasn't got the money to hand out. He is borrowing it plunging current and future tax payers into world pain while trying to support an aging population. The young ones here with half a brain will go and work overseas just for the tax advantages. I know I will, buggered if I want to be a sucker PAYG worker getting the shaft to support a government sponsored ponzi housing scheme.


----------



## Beej (24 April 2009)

MrBurns said:


> I think just to say it's not as bad as the others doesnt make it good, it's freeking awful that a virtual monopoly can drop a third of it's profit, it's first loss since it's inception...........just like that.




They still made a massive profit, not a loss. Their profit has dipped plenty of times in the past. I think you are thinking of their revenues when stating that this is their first "loss" in their history.

To add more - if you know anything about Microsoft and their current market positioning, you would know that they have an absolute marketing and sales disaster on their hands with their bungled Vista operating system - at least half their profit fall and revenue decline could probably be attributed to that (Ie their own poor product development and marketing), rather than the "GFC". Really, the bottom line is this: pick better examples in looking for conformation of your uber-bearish views on everything!

For a real bellwether of the global economy, watch the Cisco results when they are announced in early May.



CamKawa said:


> The young ones here with half a brain will go and work overseas just for the tax advantages. I know I will, buggered if I want to be a sucker PAYG worker getting the shaft to support a government sponsored ponzi housing scheme.




LOL - and which western country would you go to that will have a lower level of government debt (as a ratio of GDP) to be repaid through their humble residents taxes than Australia, even given our current situation?

If the AU government debt ends up at $200B or $300B or whatever after 4-5 years, the cash hand-outs (whatever you think of them; I do not support them) will only represent < 10% of that figure at about $21B. The bulk of the coming deficit is purely and simply from reduced commonwealth revenue due to plunging corporate and personal income tax, + GST receipts.

PS: As far as the tax payer component going into housing grants, that's an even smaller $1.5B total or so. So really focusing your bitterness towards the housing sector stuff (even though you are obviously distressed that house prices are rising not falling) is very mis-guided.....

Cheers,

Beej


----------



## kincella (24 April 2009)

Burnsie, I am with Beej on this one....we have had almost 2 years of media freaking gigantic proportions of bad news....blah blah blah....the world was going to turn upside down....blah blah :sheep:

yet the reality is quite different....
now a load of small businesses are struggling,, thats for sure...they have tightened the belt....they are like me...we do not upgrade to the latest honky tonk new toy that microsoft churns out.....so it must affect MS bottom line...

I use xxxx software....it was very good, they sent me an invoice for 495 recently..they want me to pay an annual fee to keep my program up to date....no thanks....they do not make changes that actually affect me...
and if I do want to update...I will just pay about the same and buy the new product...off the shelf....


----------



## kincella (24 April 2009)

talking about vista...that new wireless bb that telstra changed me over to...has died after 3 weeks....and the new nokia mobile that was supposed to access the web...did not work either....and believe most of the problems lie with vista....telstra tell me I have a good case to have the break fees on the contract removed....ie with all the notes on the accounts of the breakdowns
now back to the old ADSL service....
now back to the subject....360,000 population increase in one year.....and 75,000 for Melbourne....puts a bit more pressure on housing....its nice to see the kids heading out into the sticks, where its cheaper, it will be interesting to see how the centre of the city moves....
I cannot see it going lower.....just sideways for awhile...then back up again as recovery takes place 
ps remember I have another 30 years to support myself.....not actively looking lately...but will be on the lookout for another commercial prop....I like the income and growth from that source
cheers


----------



## Beej (24 April 2009)

Yes Kincella - all interesting data and views re population, movement, location etc.

On a related note - a lot here like to go on about how bad things are in the UK and how we will follow etc etc. Here's a chart I stumbled across from that uber-bearish site GHPC (so it must be OK!  ), which shows how house prices in LONDON have hardly fallen at all - only -4.1% in the last year in fact, after years of stellar growth:

http://www.housepricecrash.co.uk/indices-rightmove-london.php

This shows how major cities property markets can really hold up well in the most dire environments. Sydney and Melbourne have the resiliency factors here in AU I believe. 

Also more data out re current "mortgage stress" levels from Fujitsu Consulting: mortgage stress levels by their measure down 2.8% in April - probably due to the stimulus cash handouts:

http://www.news.com.au/business/money/story/0,28323,25375131-5013951,00.html

And more - mortgage default rates according to another article I saw by Christopher Joyle from Business Spectator running still below long term historical averages at 0.48%.... tiny tiny rate compared to the US and the UK.....

Still waiting for more price data for Q1 2009, but all evidence still pointing to moderate rises in the 2 major cities at least....

So those waiting for the big price crash in Sydney and Melbourne - wait all you like, but it's not going to happen.... 

Cheers,

Beej


----------



## explod (24 April 2009)

> So those waiting for the big price crash in Sydney and Melbourne - wait all you like, but it's not going to happen....
> 
> Cheers,
> 
> Beej




Now that's a big statement.

Overall statistics from the last year or so may not be reflected in the next lot of quarterly figures.    The contraction of the super companies, though already impacting on unemployment have not emerged yet on the reporting of the smaller businesses and down the line yet.   My observations would suggest that after the rule off of the financial year we may hav e a very different perspective.   But to say it will never happen is more than a tad brave IMHO


----------



## singlefished (24 April 2009)

Beej said:


> Well we shall see.... I think you will proven wrong, as have all the great house price crash pundits thus far. Median prices moving UP right now pretty much everywhere except Perth/Brisbane.....




No less wrong than the vested interest spruikers pumping into the same media outlets.... It would be nice to have access to a parallel universe to see what would have happened if the boost *hadn't* have been implemented when it was.

Got to remember that if the market was in such good shape _prior_ to the stimulus then the boost wouldn't have been required - surely the "pent-up-demand" theory with cheaper prices and lower interest rates would have seen to this, but it didn't, so it's obviously a makey-upper, a misnomer, especially since it can't be quantified or proved.

Simply pulling forward future demand (as it was intended to do) doesn't solve the problem though.... it's just squeezed more people into the airplane  before the big bumps in the road start rocking the boat (love that last sentence )


----------



## MACCA350 (24 April 2009)

Money Morning mentioned that Fujitsu/JPMorgan Australian Mortgage Industry held a survey both in June 08 and January 09 asking two questions

1) Can you afford to enter the market?
2) How important is the first buyer grant?

Below are the resulting graphs


What is interesting is that the percentage of people who believe they can afford a house has more than doubled, I guess that is due mostly to low interest rates..........problem is if they act on this now when they couldn't afford it only last year they'll be screwed when interest rates go back up. 

Add in the increased 80% of people find the FHB vital or very important, it looks like there are many who shouldn't really have jumped in, have or will jump in........I mean seriously if you can only now afford a house because of the (once in a life time) low interest rates and government grants you really shouldn't do it because you'll most likely fall in a heap and be worse off in a couple of years when the banks takes it back 

cheers


----------



## singlefished (24 April 2009)

MACCA350 said:


> Money Morning mentioned that Fujitsu/JPMorgan Australian Mortgage Industry held a survey both in June 08 and January 09 asking two questions
> 
> 1) Can you afford to enter the market?
> 2) How important is the first buyer grant?
> ...




I wonder if the results would have been the same now that a lot of the big banks are looking for genuine savings for the deposit and rejecting the FHG+boost as such. The FHG+boost is very relevant to the purchase decision of if/if not to buy especially if it can't use it towards the initial deposit.

Note that the big banks are now also tightening up their lending criteria with Westpac the latest to adjust their LVR down to 90% for new customers I believe... pretty sure I read something about that yesterday.


----------



## helicart (24 April 2009)

There's other variables that confound the Fujitsu results. 

- FHBs have had time to save a bigger deposit so now qualify.

- They might still value the bonus because they are looking for more expensive houses. 

- there's a strong subjective/emotive aspect in asking FHBs how important the bonus is....the response is open to interpretation and subject to prevailing economic sentiment.


----------



## michael_selway (25 April 2009)

MACCA350 said:


> Money Morning mentioned that Fujitsu/JPMorgan Australian Mortgage Industry held a survey both in June 08 and January 09 asking two questions
> 
> 1) Can you afford to enter the market?
> 2) How important is the first buyer grant?
> ...




Hey very interesting 

Btw do you have an exact link to that article/graph?

thx

MS


----------



## singlefished (25 April 2009)

gotta love google 

http://www.moneymorning.com.au/20090424/how-the-property-market-is-preparing-you-for-inflation.html


----------



## ROE (25 April 2009)

Stop this gloom and doom stuff 
Buy now before you are price out of the market forever.

here is some fun reading .... I couldnt stop laughing...

"I'm so mad at my neighbor. I bought my new home here in Ashburn last summer and plan to sell it next year (after holding two years to avoid taxes) to make a nice return on my investment. The problem is my neighbor is trying to sell his house (very similar to mine) right now and he keeps lowering his asking price. Each time he lowers his price, I see my potential profits next year getting squashed. Doesn't he realize he's hurting the comps for all of his neighbors by doing this? I don't think he is acting very "neighborly" by doing this. I want to say something to him and tell him he should stop putting his interests ahead of his neighbors. It's people like him who are ruining the market for the rest of us. If he would just refuse to lower his price, we could maintain our comps and everyone would benefit. What can I do to stop him?"

- Question during a real estate chat held by the Washington Post.

I want to sell my CBA shares at $50 but people keep lowering price infront of me..I'm SOOOOOOO MADDD...


----------



## singlefished (25 April 2009)

ROE said:


> Stop this gloom and doom stuff
> Buy now before you are price out of the market forever.
> 
> here is some fun reading .... I couldnt stop laughing...
> ...




What can she do to stop him : _buy the neighbours place at the inflated price ASAP so he can also maintain his profits_


----------



## MrBurns (25 April 2009)

singlefished said:


> What can she do to stop him : _buy the neighbours place at the inflated price ASAP so he can also maintain his profits_




Precisely


----------



## Aussiejeff (27 April 2009)

**IDEA!!**

The Gummint should introduce an "uptick" rule relating to RE, so that no RE can be sold for a price less than 20% higher than what it was bought for!!

Problem solvered!

Prices always up, UP and A-W-A-A-A-Y-Y-Y-Y!!!

*Wheee!*

I'm such a genius.....


----------



## Temjin (27 April 2009)

MrBurns said:


> Precisely




Yep, that would definitely works.  



			
				helicat said:
			
		

> There's other variables that confound the Fujitsu results.
> 
> - FHBs have had time to save a bigger deposit so now qualify.




No, the increase in affordability was largely due to the interest rate drops. If FHBs have had time to save a bigger deposit, those who have accumulated enough would have gone into the market anyway. It's not like they were, at least those in the surveys, were ALL WAITING and ALL WERE SAVING to get into the housing markets. 



> - They might still value the bonus because they are looking for more expensive houses.




They are looking for more expensive houses BECAUSE they were rising due to the mini boom caused by the grant. 

But regardless, there is no proof that those surveyed were all looking to buy a larger / more beautiful houses than they were several months ago. Your variable here is too subjective and has no solid evidence. 



> - there's a strong subjective/emotive aspect in asking FHBs how important the bonus is....the response is open to interpretation and subject to prevailing economic sentiment.




As above, that is YOUR interpretation of it and there is no proof. Again, too subjective. 

The question asked in the survey was more likely to mean that if you don't have the grant, would you be able to afford to buy the house you were originally looking for? If not, would you look for a cheaper suburb or wait longer to save for a larger deposit?


----------



## Judd (27 April 2009)

As has probably been somewhere in the preceding 189 pages, "Since when has throwing money at something ever made it cheaper?"

And now a few doubts on the wisdom of the FHBG is starting to creep into the media.

I've read somewhere that Saul Eastlake, economist for the ANZ, advised the now PM in one of those talk fests not to provide a FHB subsidy for existing housing but only for new housing.  I don't consider that any subsidy should be given for residential housing it's not as if it is productive in providing an income for the residents.  Adam Smith rules OK.

Still, it doesn't matter what we think as the dic&heads will do what politicians have always done - look after their own interests.

http://www.theaustralian.news.com.au/story/0,25197,25390502-5013404,00.html



> FIRST-HOME buyers Lee Brown and Jessica Tompkins are desperately saving for their first home. So, at first glance, it seems odd that they are hoping Kevin Rudd does not extend the boost to the first-home owners grant in the coming budget.
> 
> But the Sydney couple say that rather than give young investors a much-needed leg-up in the property market, the grants - which are worth up to $21,000 for those wanting to build a new home - have driven up prices and created panic among those trying to beat the June 30 cut-off.
> 
> ...


----------



## MrBurns (27 April 2009)

From Crikey, aint it the truth...........



> First homebuyer grant was nothing but a gift to vendors
> 
> Adam Schwab writes:
> 
> ...


----------



## gfresh (28 April 2009)

With fear of legal action, lenders are going to be even stricter than they are currently already starting to be. The credit landscape is going to be totally different in the next 5 years. I don't think the sort of environment that allows such massive competing for prices will be back for some time. 

You can look at the demand and supply for housing, but nobody even buys a house unless they have finance to start with. In isolation none of the reason developments such as removal of 95%+ loans, 3%+ genuine savings, and now this probably would have a large effect, but together they must do leading into the next few years.. Unless they are progressively wound back as conditions improve of course. 

http://www.theage.com.au/national/government-moves-to-punish-dodgy-lending-20090428-aks5.html



> MORTGAGE brokers, bank employees, payday lenders and retailers offering credit will face fines and even jail under new "responsible lending" rules set to become law in November.
> 
> The provisions, in draft legislation to be introduced in June by Corporations Minister Nick Sherry, will, for the first time, require all credit providers to be licensed and will make it an offence to supply unsuitable credit that cannot be repaid.
> 
> ...


----------



## Soft Dough (28 April 2009)

MrBurns said:


> From Crikey, aint it the truth...........




The problem is the extra 14k isn't pushing up prices by 14k, it ratchets it up by the gearing level.

the best way to make homes more affordable for first homebuyers is to allow the market to correct.


----------



## CamKawa (2 May 2009)

Oh no. Who would have thought? 

*Victorian house prices suffer biggest drop in 40 years*


----------



## kincella (2 May 2009)

that is an amazing article...considering this article reporting from REIV
copied this post from the sister forum....

*Cheaper homes, but going up*Natalie Craig 


HOUSES in more affordable Melbourne suburbs are appreciating faster than those in traditionally lucrative areas such as Camberwell, Toorak and Canterbury, data shows.

The Real Estate Institute of Victoria's quarterly house price figures show that 15 of Melbourne's "top 20" growth suburbs for the first three months of the year had a median price below $500,000.

Real estate industry executives say this is because of falling interest rates and first home buyers' grants.

Suburbs with the fastest growing prices included Mount Martha, up 16.3 per cent to $500,000, Keysborough, up 12.9 per cent to $390,000, Epping, up 8.1 per cent to $303,000, and Boronia up 6.9 per cent to $355,000.

However, the overall Melbourne median house price fell 3.1 per cent to $410,000.

http://www.theage.com.au/national/ch...0501-aqar.html


----------



## Beej (2 May 2009)

CamKawa said:


> Oh no. Who would have thought?
> 
> *Victorian house prices suffer biggest drop in 40 years*




It's funny how the bears are happy to crow about REIV figures when it suits them but scream "baised/spruikers" etc when anything comes out from them on the other side of the argument!

As for the REIV data - interesting, but it's not backed up by the RP Data, APM or ABS figures. ABS has Melbourne prices down a mere -3.3% year/year from Dec 07 to Dec 08, and RP-Data/Rismark and APM both have median price GROWTH showing for Q1 2009. ABS figures for Q1 not out yet.

Cheers,

Beej


----------



## MACCA350 (2 May 2009)

Beej said:


> It's funny how the bears are happy to crow about REIV figures when it suits them but scream "baised/spruikers" etc when anything comes out from them on the other side of the argument!
> 
> As for the REIV data - interesting, but it's not backed up by the RP Data, APM or ABS figures. ABS has Melbourne prices down a mere *-3.3% year/year from Dec 07 to Dec 08*, and RP-Data/Rismark and APM both have median price GROWTH showing for Q1 2009. ABS figures for Q1 not out yet.
> 
> ...



REIV data stated -9.7% yoy Dec 07-08, -3.1% this Quarter and -4.7% yoy March 08-09

I asked why there is such a difference between the figures in the other thread(getting confusing having two similar threads ). Do any of these reports(I know REIV don't) use the data collected by the government(ie from stamp duty) and hence 100% accurate?

cheers


----------



## MrBurns (2 May 2009)

ROFL I havent seen spin like that since Shane Warne was at his peak, prices drop despite the Govt practically giving them away, what do you reckon will happen when we stop contributing double to the FHB's ?

Drop like a stone.

Ohh Enzo you've outdone yourself this time you should be PR man for the Taliban.............



> House prices falling in Melbourne
> Posted 4 hours 34 minutes ago
> 
> 
> ...




http://www.abc.net.au/news/stories/2009/05/02/2558900.htm


----------



## CamKawa (2 May 2009)

If the REIV reckon prices fell 3.1% in the March quarter, which would be an Enzo massaged figure, what did they really fall by? 5,6,8%???


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## MrBurns (2 May 2009)

Nice result No2 in Google - 

http://www.google.com.au/search?hl=...=any&cr=countryAU&as_nlo=&as_nhi=&safe=images


----------



## Lancelot (3 May 2009)

Beej said:


> It's funny how the bears are happy to crow about REIV figures when it suits them but scream "baised/spruikers" etc when anything comes out from them on the other side of the argument!
> 
> As for the REIV data - interesting, but it's not backed up by the RP Data, APM or ABS figures. ABS has Melbourne prices down a mere -3.3% year/year from Dec 07 to Dec 08, and RP-Data/Rismark and APM both have median price GROWTH showing for Q1 2009. ABS figures for Q1 not out yet.
> 
> ...




LA LA LA LA  The Bears cant hear you


----------



## satanoperca (4 May 2009)

Interesting chart from REIV.
http://data1.reiv.com.au/trendchart/default.aspx

It would seem that property prices can go down and are still trending down in Victoria from peak to end of 1st qtr 09 - 12.5% fall.

Don't tell anyone, it is different here in Oz.

Just waiting for the 1st qtr 09 stats from the ABS to get a clearer picture.

Cheers


----------



## kincella (4 May 2009)

satan...that graph suits your belief....but you and I both know only the lower end of the market is selling all those fhb's....so the median has to be lower....but you go out and try to buy a property for 410k, you may have to go a long way out of the city....I bet it did not come down from 470....in fact its probably a 380k property thats increased in price...
if 10 properties sell for 400k  to 500k and none for above, as they are not on the market....the median has to reflect that lower value...
know a few people looking in the 600k plus range....the props sell for up to 800 to a  million


----------



## satanoperca (4 May 2009)

Kincella,

I do not believe that the graph is accurate or reflects the real life situation.

If you look at Albert Park, you will see a huge swing in median over a few years. I know that these huge swings do not accurately reflect the real price changes in the suburb. The rises and falls have been significantly less but it does show that house prices can fall, no more no less.

My observations have been that prices in the 500-850K mark have gone up in recent months as the bargains that were around at the end of 08 have all but dried up.

At the moment I still see more reasons why property should go up rather than down :

1) Very low interest rates
2) Still relatively easy lending standards
3) Low unemployment
4) Strong psychology of property always rises
5) A share market that crashed last year
6) A government that hasn't offically declared how much debt they are in after taking office over a year a go.

However, as global growth is still contracting it will only take one of the above to change and the scales will be tipped in favour of property prices falling. 

Cheers


----------



## kincella (4 May 2009)

so why was the property market so bouyant when rates were over 7% and unemployment about the same ? back in 2007....
the sharemarket crashed over 50-90% depending on the mix of shares held, 

we have had the GFC, now the flue scare...climate change...govts changed around the world....property crashes in the US for their own distinct reasons...the Uk and Ire....and look at our market....

pretty resilient lot with some difference to those above....oh and no one here recognised that we lead and the other big 2 follow our market....nor did they notice we peaked in 2003/2004 then flatlined until it took off again briefly in 2007... 'they' being  the latest guru's or spruikers....
being a multiple prop owner I know my market...hence my sales in 2003 and 2004....when I cashed in half of them....its just been rather ordinary ever since....but thats what we come to expect....it can be ordinary for 7 years...and then 3 years of magical prices...
so far its the 5th year since the market was at it heights.....and I am looking for my next bargain...is it double or triple every 10 years ? 
figure I have a 2 year window...thats all
cheers


----------



## satanoperca (4 May 2009)

Maybe one of the above has already changed.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument

It just cannot be, falling house prices are an impossibility. 

I agree Kincella, everything moves in cycles and I missed a good rise in Westfarmers shares today after selling out on Friday for a nice little profit.

Cheers

PS, cannot wait to hear the range of reasons why a small drop in property prices is rather insignificant.

Robots those beers are starting to look good but it could still go either way at this moment.


----------



## CamKawa (4 May 2009)

Sorry to interrupt the high fiving and back patting session here... but back in the world of reality.

*ESTABLISHED HOUSE PRICES*

*Quarterly Changes*


Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities decreased 2.2% in the March quarter 2009.
The main contributors to the decrease were Sydney (-2.9%), Melbourne (-2.3%), Perth (-3.6%), Brisbane (-1.1%) and Adelaide (-0.8%). These decreases were partially offset by increases in Darwin (+2.2%), Canberra (+0.5%) and Hobart (+0.1%).
The movement in the preliminary established house price index between September and December quarters 2008 has been revised from an estimated decrease of 0.8% to an estimated decrease of 1.2%.
*Established house prices, *Quarterly % change* - *March quarter 2009


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## singlefished (4 May 2009)

satanoperca said:


> PS, cannot wait to hear the range of reasons why a small drop in property prices is rather insignificant.




Already been covered in the other thread...


----------



## kincella (4 May 2009)

oh dear...you are quibling about less than 1%.....its those median figures that are skewing things up....meanwhile the stocks have lost between 50-90% and oh so volatile....
plenty of caves for the bears to hibernate in...wonder what prices caves are going for ?


----------



## satanoperca (4 May 2009)

kincella said:


> ...wonder what prices caves are going for ?




Don't know but home safes sales are on the increase.

50-90% falls on the sharemarket - must have been some pretty crappy stocks. How about the stella run in the last few months on the ASX. 

The bulls can argue which ever way they won't but it seems that we are not different here to the rest of the world, prices are falling. 

Cheers


----------



## singlefished (4 May 2009)

kincella said:


> oh dear...you are quibling about less than 1%.....its those median figures that are skewing things up....meanwhile the stocks have lost between 50-90% and oh so volatile....
> plenty of caves for the bears to hibernate in...wonder what prices caves are going for ?




It's already been discussed ad nauseum that the stock market is a completely different beast from the property market and they cannot be directly compared.

I fail to see why you keep bringing it up. Your bias towards property has meant you've missed out on one of the best bear market rallies in recent times.

You need to be a bit more diversified with your investment outlook so it will offset some of the property market losses currently going on in the market.


----------



## gfresh (4 May 2009)

ABS (today), APM, and REIV figures in stark contrast to RPData shonky figures

Again, as pointed out a couple of pages back, still very sus on RPdata figures presented at any time.


----------



## MACCA350 (4 May 2009)

Did someone mention that the FHOG boost ending is not bringing forward demand and hence not expecting demand to drop off after the deadline?

Link


> "I wish I had more time, but the clock was ticking," he said. "We might not have this opportunity again, so when I saw $42,000 was on offer I pushed it through."





> "We weren't going to buy, but we probably will because of the grant," she said. "If it wasn't for the rush of the deadline I think we would have carried on renting for a year."





> "I am 99 per cent sure we will sign tomorrow ”” I have to rush, you can make a lot with $26,000,"




Seems to me there is a fair amount of demand being brought forward to get in before the deadline.

cheers


----------



## ROE (4 May 2009)

satanoperca said:


> Interesting chart from REIV.
> http://data1.reiv.com.au/trendchart/default.aspx
> 
> It would seem that property prices can go down and are still trending down in Victoria from peak to end of 1st qtr 09 - 12.5% fall.
> ...




It's called imputed valuation effect, it play nice in the bull market, it shall salvage in a bear market... what the hell is imputed valuation you may ask?
You see it first hand in the last 18 months in the stock market

Let me use housing as an example (apply to stock or business also), say your house you purchased for 300K and you rent out for 300 bucks a week and contract sign for 2 years.

couple months later a house down the road similar to your sell for $350K so you revalue your house and it came to 350K..wow awesome..I'm now 50K richer.... but what most people failed to understand is it's just imputed value, you haven't done a god dam thing, the rent hasn't increase, economy hasn't perform any better, people output or productivity hasn't increase.

but the sad thing is people then used that imputed value to borrow more to buy more imputed value assets (boom times) or take out and buy a new car and telling themselves this **** can go on forever, pretty damn easy to get rich this property investment stuff 

so now your debt has increase as the result of the imputed valuation while productivity hasn't increase at all

now if imputed valuation can magically goes up so can it magically reverse into gear but the reverse is savage as people increase their debt based on imputed valuation during the good time and a domino effect has link all their assets into this imputed value...and banks hold all these assets in their hands as collateral... 

let kick the reverse gear shall we because people losing job as a starting point.

so house down the street now sell for $330K, people revalue your property
to 330K, next house sell for $300K they revalue your property downward to $300K and once they do this a while, chaos kick in and banks who seize your asset due to job lost or over-commitment start to compete with other banks to get rid of the assets to safeguard further fall... all your imputed value assets now in a kaput and you are at the mercy of the banks.

No housing shortage or any other reason people come up with will stop this onslaught...and the ball on this onslaught has just start to roll 

Happy investing  and remember house price double every 7 years... so don't give up keep striking for that 10 properties in 2 year stuff...


----------



## Lancelot (5 May 2009)

ROE said:


> It's called imputed valuation effect, it play nice in the bull market, it shall salvage in a bear market... what the hell is imputed valuation you may ask?
> You see it first hand in the last 18 months in the stock market
> 
> Let me use housing as an example (apply to stock or business also), say your house you purchased for 300K and you rent out for 300 bucks a week and contract sign for 2 years.
> ...




Just as well us pi's don't all do that then hey?

And it takes a lot more than 1 cheaper/distressed sale to change the valuations.


----------



## singlefished (5 May 2009)

Some commentary about the shocking car sales figures which appears to be suffering just as badly as the housing industry.

http://business.smh.com.au/business/car-sales-plunge-but-hyundai-thrives-20090505-atcc.html



> "The first thing people do in a time like this is defer buying anything they don't have to, but if they have to make a purchase decision, they look at relative perceived value, rather than any aspirational element,"






> "The bottom line is that if people are concerned about their employment prospects, no matter what sort of incentive you put in place, they are not going to buy a new car,"




It would be interesting to see if there is any correlation between declining car sales and the declining property sales volumes. Car sales would likely pick up before houses and could possibly read as a leading indicator on future direction.

Fortunately for us however, we don't have to listen to salesmen talking up the car market even when it's declining


----------



## singlefished (5 May 2009)

hello,

just in case anyone missed the news the other day:

http://abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument

thankyou
singlefished


----------



## nunthewiser (5 May 2009)

singlefished said:


> hello,
> 
> just in case anyone missed the news the other day:
> 
> ...





THANKS M8 CANT GET THAT LINK FROM ANY OF THE SUNSHINE AND LOLLIPOP GANG


----------



## robots (5 May 2009)

singlefished said:


> hello,
> 
> just in case anyone missed the news the other day:
> 
> ...




*hello,

yeah thanks also mate for the link

thankyou
robots*


----------



## singlefished (5 May 2009)

YOU'RE WELCOME!


----------



## nunthewiser (5 May 2009)

any thoughts on those results robots ? or are they just evil lies concocted by people with dire intentions ?


----------



## robots (5 May 2009)

hello,

just going with the flow Nun, wouldnt have a clue what it all means or where things go from here into the future

i like the observations of buyers advocates Morrel & Koren and there commentary which basically supports that good property is holding up well

anything crap is getting sorted

thankyou
robots


----------



## singlefished (5 May 2009)

Quite interesting to read that's it's apparently only 1 or 2 really, really expensive properties selling at discount which is responsible for the declines.

http://www.theaustralian.news.com.au/business/story/0,28124,25430542-25658,00.html



> Real estate analysts say a relatively small number of very expensive houses are being sold at big losses and this is skewing the national figures, despite strong demand from first-home buyers driven mainly by falling interest rates.





Funny how this top 5% of the market was negligible last week.

The ABS use data from the Valuer General, and base their data on suburb clusters. These sporadic very expensive "collapsing clusters" surely cannot carry enough weighting to impact the median as much as is being suggested by the analysts above?



> 10 The ABS uses stratification to control for this 'compositional' effect by grouping (or 'clustering') houses according to a set of price determining characteristics. The finer the level of stratification available, the more similar or homogenous the cluster of houses will be. However, the finer the level of stratification, the fewer the property sales in the period. Therefore, the clusters defined have to balance the homogeneity of housing characteristics and the number of observations required to produce a reliable median price. The lowest level geographical classification that is commonly available across data sets is the suburb. Therefore, suburbs are the building blocks on which the clusters are based.




http://abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6416.0Explanatory%20Notes1Mar%202009?OpenDocument


----------



## satanoperca (5 May 2009)

Who would have thought so many people could get so emotional about property. Name call and shouting, what next knives and guns.

Robots, ABS data will be fine, surely we can trust the government to tell the truth. 

Just to be fair should we place a margin of error on the results, say +-0.5%.  Still not counting my chickens just yet but with rising unemployment, contracting credit, huge government deficits, every dark horse has to have its day.

Inflating the balloon is nearly all complete (FHBG), rapid deceleration would seem the only outcome until equilibrium is reach.

Cheers

Not such a sunny day on the ASX today - gee emotion got the better of me.


----------



## CamKawa (6 May 2009)

I stole this video link for GHPC

*Why people kept paying bubble prices*


----------



## Lancelot (6 May 2009)

nunthewiser said:


> any thoughts on those results robots ? or are they just evil lies concocted by people with dire intentions ?




Taken from another forum, not my words but my conclusion as well.
C&P saves me having to type it.

http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail



> The ABS--have always focussed on just houses and ignored apartments, semis, terraces etc. So they are ignoring around 20% of the market. *More recently, these homes have accounted for about 33% of all sales, so the ABS is missing one-third of the market.*
> I think the ABS is fine over long multi-year periods where the "noise/errors" in their estimates washout. But in the short-term you can get a lot of volatility.




And when we add in that extra 33% of sales I suppose the *REAL* figures would look something like this


----------



## kincella (6 May 2009)

Lancelot...the comments following the article are interesting too


----------



## Lancelot (6 May 2009)

kincella said:


> Lancelot...the comments following the article are interesting too




Yep, plenty can see the negative in anything, must be the colour of their glasses.

Same colour as Bears

But its not about comments, it's about how ABS collects its data, and if they leave out a large % of sales, their data is incomplete and inconclusive.


----------



## CamKawa (6 May 2009)

Lancelot said:


> And when we add in that extra 33% of sales I suppose the *REAL* figures would look something like this



Do you know RP Data are?

Well lets have a quick look. 

RP Data have significant interests in the mortgage market through Rismark who received an award for "Mortgage Manager of the Year - 2009"

Could they be talking up their own book?


----------



## Lancelot (6 May 2009)

CamKawa said:


> Do you know RP Data are?
> 
> Well lets have a quick look.
> 
> ...




Yeah, whats your point?

When your car plays up do you get advice from a Mechanic or do you go to a dentist?

Sounds like you would go to a dentist


----------



## UBIQUITOUS (6 May 2009)

Lancelot said:


> Yeah, whats your point?
> 
> When your car plays up *do you get advice from a Mechanic* or do you go to a dentist?
> 
> Sounds like you would go to a dentist





Very bad example!


----------



## CamKawa (6 May 2009)

Lancelot said:


> Yeah, whats your point?
> 
> When your car plays up do you get advice from a Mechanic or do you go to a dentist?
> 
> Sounds like you would go to a dentist



What?


----------



## Lancelot (6 May 2009)

CamKawa said:


> What?




Cant understand?

I rest my case


----------



## Lancelot (6 May 2009)

UBIQUITOUS said:


> Very bad example!




And your example would be?

Use figures from a crowd that only counts 70% of the numbers?

Sounds as loopy as those demographia clowns who think the world is 5 countries


----------



## CamKawa (6 May 2009)

Lancelot said:


> Cant understand?
> 
> I rest my case



Yes give up. LOL


----------



## UBIQUITOUS (6 May 2009)

Lancelot said:


> And your example would be?
> 
> Use figures from a crowd that only counts 70% of the numbers?
> 
> Sounds as loopy as those demographia clowns who think the world is 5 countries




From your comments, you seem to be taking the collapse of the market very personally. Perhaps you might be able to take some positives out of it such as 'property values go down aswell as up'.


----------



## kincella (6 May 2009)

the collapse of the market ??? which country are you talking about ??? or do you call a drop yoy of a questionable 2% a 'collapse'....hehehehehe
check out the smart investor review  to see how many suburbs rose 50-70% last year..with a prediction of a further rise of 20%
so what did you call the massive  falls in the stockmarket ???  of 50-90% ?


----------



## UBIQUITOUS (6 May 2009)

kincella said:


> the collapse of the market ??? which country are you talking about ??? or do you call a drop yoy of a questionable 2% a 'collapse'....hehehehehe
> check out the smart investor review to see how many suburbs rose 50-70% last year..with a prediction of a further rise of 20%
> so what did you call the massive falls in the stockmarket ??? of 50-90% ?




Kincy, if people stop buying food from supermarkets, then that is a collapse in that market, irrespective if a few still wish to pay the extortionate prices.

Here's a link to help you out:

http://en.wikipedia.org/wiki/Market


----------



## kincella (6 May 2009)

this is the reason I suggested the comments were worth a read...this one from Chris Joye.......
it helps to provide clues.....thay have a substanital affect...

****The ABS on the other hand uses data that it gets from the banks. One private explanation I heard from the government today was that the banks are taking much, much longer to process home loans and this may be causing havoc with the ABS data--ie, they are not getting the real-time information they would otherwise want.If the banks are also feeding the ABS physical valuation data as well as sales, then this would be another explanation--given that the valuers' estimates have a downward bias in the current climate.By pooling data over 3 months, the ABS will be heavily skewed to January's results, which were by far the worst of the 3 months (according to both APM and RP Data's numbers).
and this..............
Since there is a 7-90 day delay (from exchange of contracts) before all the index providers get the data from the VGs, APM (I think) and RP Data-Rismark use sales information inputted by agents to supplement the government data. Empirical testing over time on this data shows that it is virtually 100% accurate. There is a reason for this: around 70-80% of all agents use RP Data's software for their own businesses. The sales data they input in turn impacts their own comparable sales analysis and has to be accurate.The empirical testing proves this out.

http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail


----------



## kincella (6 May 2009)

Whoops....Vic Govt increasing the FHB's grant on new homes from $5000 to $11000...and the extra for regionals to $4500....so there is $15500...and if the Fed govt drops that extra 7000...new homes still due for $14000...
so $29500...available in Vic regionals...and ...$25000 for the city folk...
 :sheep:
http://www.news.com.au/business/story/0,27753,25437536-31037,00.html


----------



## dhukka (6 May 2009)

kincella said:


> Whoops....Vic Govt increasing the FHB's grant on new homes from $5000 to $11000...and the extra for regionals to $4500....so there is $15500...and if the Fed govt drops that extra 7000...new homes still due for $14000...
> so $29500...available in Vic regionals...and ...$25000 for the city folk...
> :sheep:
> http://www.news.com.au/business/story/0,27753,25437536-31037,00.html




More stupidity from the morons in power.


----------



## singlefished (6 May 2009)

kincella said:


> Whoops....Vic Govt increasing the FHB's grant on new homes from $5000 to $11000...and the extra for regionals to $4500....so there is $15500...and if the Fed govt drops that extra 7000...new homes still due for $14000...
> so $29500...available in Vic regionals...and ...$25000 for the city folk...
> :sheep:
> http://www.news.com.au/business/story/0,27753,25437536-31037,00.html




Fantastic news!

Keeps the economy ticking over nicely and will further drive the falls we're currently seeing in purchase and rental of existing detached housing as more and more new stock comes onto the market...


----------



## Lancelot (6 May 2009)

UBIQUITOUS said:


> From your comments, you seem to be taking the collapse of the market very personally. Perhaps you might be able to take some positives out of it such as 'property values go down aswell as up'.




Why do all you numpties in the bear, or hardly done by and jealous Gen y camp always think that if someone comments, they must be taking it personally?

I have seen no evidence of a collapse, my properties prices have remained as stable as they were through the last recession, if indeed we are in one, and  my tenants are still paying rent just like they did then.

The difference this time is that the debt has reduced and the rent is now enough that it supports my traveling habits.

Thanks tenants, much appreciated.


----------



## Lancelot (6 May 2009)

kincella said:


> this is the reason I suggested the comments were worth a read...this one from Chris Joye.......
> it helps to provide clues.....thay have a substanital affect...
> 
> ****The ABS on the other hand uses data that it gets from the banks. One private explanation I heard from the government today was that the banks are taking much, much longer to process home loans and this may be causing havoc with the ABS data--ie, they are not getting the real-time information they would otherwise want.If the banks are also feeding the ABS physical valuation data as well as sales, then this would be another explanation--given that the valuers' estimates have a downward bias in the current climate.By pooling data over 3 months, the ABS will be heavily skewed to January's results, which were by far the worst of the 3 months (according to both APM and RP Data's numbers).
> ...





LA LA LA, (bears heads go back in sand) only information that supports bears views, no matter how flawed, can be used.


----------



## CamKawa (6 May 2009)

singlefished said:


> Fantastic news!
> 
> Keeps the economy ticking over nicely and will further drive the falls we're currently seeing in purchase and rental of existing detached housing as more and more new stock comes onto the market...



That's what I reckon, the government should have done this maybe 4-5 years ago. Now is not the time to ramp up the building of more houses just as prices start to buckle. This bubble may burst with a rather loud bang and voters may well be right to point the finger at the government come election time.


----------



## kincella (6 May 2009)

2 examples....loan application early Dec 8...loan offer 29.01.09 = 7.5 weeks
next loan application 5.03.09....still waiting for the paperwork...8 weeks
in the old days 2000-2002 approval same...1 week, then about 1 week for paperwork to come thru
in the recent cases approval was given in 48 hours or earlier....but its the backlog in loans that created the 8 weeks delay so far...
so in the first case...sales should have gone thru in Dec...in this case Feb
the second case whould have gone thru in the Mar quarter now lucky if its May
so I would not be expecting a slow down in house figures....when there is such a long delay in the paperwork
oh and if other states follow Vic (which they will) with a state boost....goodness only knows when this will slow
oh and I am all for it if it keeps people in jobs....as it is intended to do


----------



## kincella (6 May 2009)

anyone with a copy of that smart investor  report that can copy it here?
they did say there were plenty of affordable homes still out there...I think they mentioned Lockhart in Nsw for under $200k's.....see a block of land there for about $30k's...and mentioned hundreds of cheap suburbs


----------



## singlefished (6 May 2009)

CamKawa said:


> That's what I reckon, the government should have done this maybe 4-5 years ago. Now is not the time to ramp up the building of more houses just as prices start to buckle. This bubble may burst with a rather loud bang and voters may well be right to point the finger at the government come election time.




Trying to read more into it - this could be a plan to "drive" prices down actually.

Thinking about it, these generous bonuses to FHB's can't go on forever. If the Vic Government is providing $20K and the Commonwealth continue to provide $21K (total $41k) for new properties then they'll have to keep stumping up forever and a day if prices continued to trend up.

If however, cost of existing stock continues to drop as we're currently seeing and prices end up somewhat lower, then the Governments can subsequently claim victory as house prices across the board are more affordable as the bubble is slowly deflated. The grants would ultimately be easier to remove in a cheaper market as there would be less need for them.

The faster prices come down, the faster the grants can be removed.

hmmmmmm........


----------



## satanoperca (6 May 2009)

I agree with the removing of the grant on existing homes, but increasing it on new homes is just ridiculous but what do you expect from Labour. 

Hasn't Vic gov got a huge deficiet already, whats another $120M - just borrowed money.

Maybe a new challenge between the US & Oz, who can create the biggest subprime for future generations to enjoy.

This game has still a long way to play out and will be interesting watching, but I am out of property for the moment and debt free  a good feeling.


----------



## CamKawa (6 May 2009)

satanoperca said:


> I agree with the removing of the grant on existing homes, but increasing it on new homes is just ridiculous but what do you expect from Labour.



I'm not trying to justify the grant but the government’s way of thinking (and that of the HIA) is to encourage the building of new homes in order to stem the tide of rising unemployment. Mind you I think unemployment may skyrocket all the same.

The more houses they build the more prices will fall.


----------



## Beej (6 May 2009)

CamKawa said:


> The more houses they build the more prices will fall.




The more median/average prices will fall yes, and perhaps values of houses in the areas where the majority of new homes are built. But prices of established houses in built-out established areas with all the infrastructure, proximity to CBDs, beaches, the best schools etc etc will only increase more as the more houses there are the more exclusive these established area's become.

So everybody wins! 

Cheers,

Beej


----------



## Lancelot (6 May 2009)

Beej said:


> The more median/average prices will fall yes, and perhaps values of houses in the areas where the majority of new homes are built. But prices of established houses in built-out established areas with all the infrastructure, proximity to CBDs, beaches, the best schools etc etc will only increase more as the more houses there are the more exclusive these established area's become.
> 
> So everybody wins!
> 
> ...




Oh Goody,
*WINNER*

I like the sound of that


----------



## numbercruncher (6 May 2009)

Beej said:


> The more median/average prices will fall yes, and perhaps values of houses in the areas where the majority of new homes are built. But prices of established houses in built-out established areas with all the infrastructure, proximity to CBDs, beaches, the best schools etc etc will only increase more as the more houses there are the more exclusive these established area's become.
> 
> So everybody wins!
> 
> ...





Hello,


wrong again .....


Maybe you guys should get a job instead of relying on never ending equity ?


----------



## Lancelot (6 May 2009)

numbercruncher said:


> Hello,
> 
> 
> wrong again .....
> ...




Now why would we want to do that?
Even you said we have







> never ending equity



 Though personally,  I prefer the cold hard cash that my renters earn and pay me


----------



## Beej (6 May 2009)

numbercruncher said:


> wrong again .....




Sorry but how is my statement wrong? As one of your state-compatriots once famously asked "Please Explain?"

Beej


----------



## singlefished (6 May 2009)

Beej said:


> The more median/average prices will fall yes, and perhaps values of houses in the areas where the majority of new homes are built. But prices of established houses in built-out established areas with all the infrastructure, proximity to CBDs, beaches, the best schools etc etc will only increase more as the more houses there are the more exclusive these established area's become.
> 
> So everybody wins!
> 
> ...




Well, to be honest, Sydney is stuffed then!

That's the biggest problem down there, lack of "efficient" infrastructure... but that's what happens when you let a city grow over many years without constant improvement and addition to existing facilities. The PRL Epping-Chatswood line was the first significant rail upgrade in 80 years or so....

Brisbane fares a slight bit better I find, the network of busways that have built up in addition to the existing rail network have made a huge difference, and the bus network now carries more passengers per day that the train system.

Obviously, Brisbane being a smaller city, it's easier to control and spend on especially with the huge amounts of money the govmnt has raked in from the mining boom. Still many deficiencies however but hopefully the stand out phrase in the forthcoming State and Com'w'th budgets will be "INFRASTRUCTURE SPENDING!"

A good example outwith Australia would have to be Singabore... master planning "almost" done right. Too much control and regulation has left all but small parts of the island characterless, but the urban redevelopment authority over recent years have become aware of the issues and are addressing these problems. Public transport works a treat though and they almost have one of the few profitable MRT systems in the world.

These exclusive Sydney suburbs would be better described as _isolated suburbs_ as that's how they'll remain for many many years... a lot of business and companies moving/have moved out of the city and west to the likes of Parramatta, cheaper rents/better working environment/etc...


----------



## CamKawa (11 May 2009)

Looks like not all the "property moguls" are living the dream.

Mortgage stress hits 25% of households

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.


----------



## MACCA350 (12 May 2009)

What do other countries think about our housing market?

Bloomberg - Australia May Face Debt Crisis From Grants to Young Home Buyers

cheers


----------



## CamKawa (12 May 2009)

MACCA350 said:


> What do other countries think about our housing market?
> 
> Bloomberg - Australia May Face Debt Crisis From Grants to Young Home Buyers
> 
> cheers



I saw that to. I think the best financial reporting about this country comes from o/s where the self serving interests of our government and spruikers, not just property ones, have little or no influence.


----------



## singlefished (12 May 2009)

CamKawa said:


> I saw that to. I think the best financial reporting about this country comes from o/s where the self serving interests of our government and spruikers, not just property ones, have little or no influence.




... you better check the author and location at the bottom of the report...


----------



## MACCA350 (12 May 2009)

singlefished said:


> ... you better check the author and location at the bottom of the report...



lol......I missed that part, saw it on Bloomberg and assumed it was written by an American........oops

cheers


----------



## CamKawa (12 May 2009)

singlefished said:


> ... you better check the author and location at the bottom of the report...



I have thank you. What's the problem with a local writing the report?


----------



## CamKawa (12 May 2009)

MACCA350 said:


> lol......I missed that part, saw it on Bloomberg and assumed it was written by an American........oops
> 
> cheers



Bloomberg is US owned so its editors aren't puppets on strings to either our government or local advertisers. The editorial influence is more important than who or where the article was written.


----------



## cutz (13 May 2009)

Just heard on Lateline biz that the ASX is launching a new product that allows speculators to short sell the Sydney housing market, shame they a not also launching one for Melbourne, i kind of like the idea of hedging my home against the continuing decline.


----------



## Aussiejeff (14 May 2009)

cutz said:


> Just heard on Lateline biz that the ASX is launching a new product that allows speculators to short sell the Sydney housing market, shame they a not also launching one for Melbourne, i kind of like the idea of hedging my home against the continuing decline.




It won't last.

I predict a "temporary" ban on short selling in the housing market will be implemented shortly after this puppy leaves the kennel.

The "temporary" ban will last as long as the "temporary" deficits.



aj


----------



## satanoperca (18 May 2009)

http://business.theage.com.au/business/house-prices-to-fall-further-report-20090517-b7dv.htmlGood Morning,





> Economists say house prices, which have already posted their largest yearly fall since the Great Depression, could continue plunging despite cuts to interest rates and the extension of the first home buyers grant.






> National house prices are 7 per cent below their peak and have been less responsive than commonly thought to the level of joblessness, housing supply, and interest rates, RBS economists Kieran Davies and Felicity Emmett say.







> Moreover, the drop has occurred despite much less sub-prime lending and over-building than overseas and a relatively modest unemployment rate of 5.4 per cent.






> This influx of first-home buyers has meant capital city house prices fell a relatively modest 6.7 per cent in the year to March.




6.7% drop is only modest, but don't worry there are more drops to come.

To keep the thread going we woud need to see several years of these modest drops for the title to be substantiated.

Sun goes coming up over Melbourne city now, quite beautiful.


----------



## CamKawa (18 May 2009)

Rents for luxury property in Australia tumble

This may have a knock on effect further down the price line.


----------



## aleckara (18 May 2009)

Aussiejeff said:


> It won't last.
> 
> I predict a "temporary" ban on short selling in the housing market will be implemented shortly after this puppy leaves the kennel.
> 
> ...




Why won't it last? I'm not sure about the structure of this derivative. If it is just like a futures contract then it won't really affect the underlying market -its more of a market of its own. More than likely it will allow people to get in and out of housing easier without selling it giving people liquidity without giving the housing market the liquidity it needs.

Short sellers need to be hedged against longs don't they? Otherwise they have to pay up. Unless someone hedges using real property (which would be hard considering taxes and so on) I don't see this being the next best thing.

What it will most likely do is move the losses from the owner occupiers scared of losing value to the speculators in tough economic times - this may help to support house prices as people are not forced to sell.


----------



## Glen48 (19 May 2009)

Today's ABC wireless  reported how rents are down by 20% in Sydney and agents reporting they have never seen any thing like it..Some woman reported how she could not sell her house with out taking a loss so decided to rent it out until the market picked up and she is a Fund manager.... heaven help her clients.


----------



## singlefished (19 May 2009)

satanoperca said:


> To keep the thread going we woud need to see several years of these modest drops for the title to be substantiated.




Don't worry mate, there's more chance of this thread substantiating it's title than the prices rising thread 

You've already had >1 year of negativity and as mentioned on lateline business tonight, we're only just starting our recession after lagging the US and Europe for over a year.

I was put onto this through another forum a few days ago:
http://www.propertyinvesting.com/marketupdate/budget 

Sound advice and analysis given the economic outlook.


----------



## CamKawa (19 May 2009)

singlefished said:


> I was put onto this through another forum a few days ago:
> http://www.propertyinvesting.com/marketupdate/budget



It’s Interesting that he points to the FHOG as being THE reason for house prices rising, so much for the spruikers "fundamental" arguments. I'm looking forward to this bubble bursting; it's going to be ugly. 

On another note how about 747's hit in the opinion polls some say due to the rising of the retirement from 65 to 67. Where's Kev going to be when house prices start falling?


----------



## kincella (19 May 2009)

hehehehe... and that spruiker wants  you to register  for ???xxxx $$$$$, but you will save $2010 for his advice to you...but wait you get back $800 of freebies.....
sounds like a stick and carrot approach, rather than a carrot and stick approach......ps I did not watch his video...if its not in text then forget it...just an ego trip for him.... and be wary of bald men spruiking
...........................................whats this all about Hey ???
RESULTS Pre-Registration 
The final 50 places in our RESULTS program, where you will receive 1-on-1 mentoring from an experienced property investor, will be released to the public at 11am on 1st June 2009.

You can jump to the front of the queue though by pre-registering. Pre-registration also allows you a saving of up to $2,010 plus you will receive a free bonus back (worth $852) after joining.

It's free and easy to pre-register your interest. All you need to do is provide your details below and click submit.

Warm regards,

- Steve McKnight


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## kincella (19 May 2009)

I was hoping there would be a violin smiley....to play a woeful tune for some of you...or maybe country music would be more your style....with all the wailing songs they sing...lose the wife, lost the dog...


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## CamKawa (19 May 2009)

Any sort of honesty and real estate spruiking don't go hand in hand, so it'd be interesting to see how many people he can sucker into signing up.


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## Mc Gusto (19 May 2009)

I too expect house prices to fall or alternatively remain flat for the coming few years. Why? Because the fundamentals are there. Higher unemployment, minimal to no wage increases and mortgage stress on those in over there heads who bought at the peak.

However, the only factor against this is the old supply and demand argument. Currently inner melbourne we are seeing greatly reduced supply. All time lows, thereby creating a demand higher than supply and maintaining (to an extent) the housing market. How long can this last? I am not sure. Maybe it will weather the storm of the recession. Maybe it will bust up in 6 months time?

In my parents generation (they are in their 60's) there were literally decades where the housing market hardly moved. They recalled a good 10 years where prices litterally stayed flat. The prophecy that houses always have to increase is in my opinion a falacy. Wise investment should reap reward, however, you need to be happy with what you live in and not expect profits everytime. It is a false economy as to the majority if your house has doubled so has the market.

Thanks

Gusto

ps i am in the market for property over the next 6 - 12 months..expecting further declines


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## Temjin (19 May 2009)

Another article from the money morning.



> Whenever we think we’ve missed something, or are getting confused, we down tools and go back to basics. It’s not necessarily that we think we’re wrong, it’s just that sometimes when we read the mainstream press and commentators we can hardly believe what they are saying and writing.
> 
> When I write that I “go back to basics” it usually means paying a visit to the section in the economics text books marked “Supply & Demand.”
> We find that usually settles things once and for all.
> ...



The funniest part is that HIA, a natural permabull for obvious reasons, predicted that house prices will continue to rise when interest rate is PREDICTED TO RISE in the future and when the incentives are GONE.

Some kind of logic there, really. 

I'm at a total lost at the kind of statement these vested interest stupid people can put out. Either they are totally disillusioned or they really believed it, that house prices will never fall regardless of how high the interest rate is, how high the price is, how high the unemployment rate is or there is a global debt deflation crisis. 

Of course, I'm sure someone will start making claims that interest rate will remain a 50 years low FOREVER. So house prices will continue to rise.

You better not hope this would happen as if the RBA decides to hold interest rate at such a low level, it means they are expecting the economy will continue to deteriorate and will require constant STIMULUS through neoclassical style economics.  

Of course, we all know what happened to US/UK house prices when interest rate has remained 0%. Or how long the "nil" growth lasted in Japan with 0% rate for over 10 years. 

Another area of concern is, if First Home Buyer Grant was designed to SUPPORT the housing industry, as the lobby groups have claimed, then why it was needed in the first place if the housing market is as stable and not in a bubble stage as they proclaimed? Such irony....why not remove it if everything is "alright"?


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## CamKawa (19 May 2009)

Temjin said:


> I'm at a total lost at the kind of statement these vested interest stupid people can put out.



I'm at a total loss as to why the media keep printing it.


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## singlefished (19 May 2009)

The latest nail in the coffin....



> *Aussie banks warned to reduce lending*
> 
> Australia's big banks will join Canada's major lenders in the single A credit rating ranks and risk copping higher wholesale funding costs unless they pare back lending.
> 
> ...


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## singlefished (19 May 2009)

What's this!!! Pent up demand has apparently run it's course now...



> *Affordable housing strategy working: Stanhope*
> 
> http://au.biz.yahoo.com/090519/31/26fbx.html
> 
> ...




or more likely, trying to put a positive spin on a dismal house and land release...

It could also be that the politicians are now starting to soften up the masses for further price declines...


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## gfresh (20 May 2009)

yup.. property is a poor place to be at the moment for investment.. as the bears stated it would be 12 months ago

http://www.businessspectator.com.au...eturns-hit-16-year-low-IPD-S8ARU?OpenDocument



> Total returns for Australian property hit a 16-year low in the latest quarter as capital values continued to drop, property research firm IPD said.
> 
> *Total returns, which include income and capital growth, for all property types tumbled to a negative 1.5 per cent for 12 months to March, the worst performance since December 1993.* Annualised capital growth dropped to a minus 7.6 per cent, the fifth consecutive quarterly fall, compared with a positive 11.6 per cent return a year ago.
> 
> ...





Banks are going to be forced to reduce their lending to maintain AA ratings, and to obtain reasonable cost of finance from o/s... This is now, so this will be going forward. Credit rationing has taken a bit longer than expected in Australia, but we are only a few months into this factor so far..

http://www.businessspectator.com.au...too-far-pd20090520-S7T8D?OpenDocument&src=sph



> Australia prides itself on the fact that we have four banks with AA credit ratings. Yet Citi analysts say we are in danger of losing those ratings because our banks, led by the Commonwealth, have over-expanded lending, particularly in housing...


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## singlefished (20 May 2009)

gfresh, you might consider updating your footer to include the latest Housing NSW figures...

According to Housing NSW, Sydney down 12.3% for the year to December 2008.

http://www.housing.nsw.gov.au/About+Us/Reports+Plans+and+Papers/Rent+and+Sales+Reports/Latest+Issue



> Sales statistics are derived from information provided on the ‘Notice of Sale or Transfer of Land’ form that is lodged with the Land and Property Information NSW at the Department of Lands.


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## CamKawa (26 May 2009)

A good article for the boffin’s amongst us.

*If the banks get tougher, will prices start falling?*

If you take a look at Robertson's graph below, you see that a $40,000 deposit can leverage itself into a $800,000 loan with a 95% LVR, a $400,000 loan with a 90% LVR but only $200,000 with an 80% LVR. 

Quite a dramatic difference, don't you think?


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## Beej (26 May 2009)

CamKawa said:


> A good article for the boffin’s amongst us.
> 
> *If the banks get tougher, will prices start falling?*
> 
> ...




This analysis makes a simple, and very incorrect assumption that loan serviceability is not taken into account at all!

Try going to a bank, with say a $40k deposit, and an income of say $50k, and see if they will lend you $800k! Fat chance......

So, garbage in = garbage out.....

Cheers,

Beej


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## MACCA350 (26 May 2009)

Beej said:


> This analysis makes a simple, and very incorrect assumption that loan serviceability is not taken into account at all!
> 
> Try going to a bank, with say a $40k deposit, and an income of say $50k, and see if they will lend you $800k! Fat chance......
> 
> ...



Yes, but I think that graph is simply showing the maximum possible loan given a constant deposit amount against different LVR percentage.

It is an interesting graph as just by the banks lowering the LVR from 95% to 90% they effectively half the maximum amount someone can borrow given the same deposit and house, to get the same loan amount the applicant would need to double their deposit. 

cheers


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## satanoperca (26 May 2009)

Beej said:


> This analysis makes a simple, and very incorrect assumption that loan serviceability is not taken into account at all!
> 
> Try going to a bank, with say a $40k deposit, and an income of say $50k, and see if they will lend you $800k! Fat chance......
> 
> ...




The graph simply demonstrates LVR ratio to a sample size deposite, no more no less. 

If the banks reduced down the LVR to 85% min, then prices will be affected down. Easy credit has resulted in higher prices for the short term. How the decade of easy credit affects us in the next decade is unknown.

I am lead to believe that South African government has imposed a x3 primary income earners limit to borrowing in an attempt to stop property bubbles occurring and to bring prices back into line with affordability criteria. S.A has had a huge property boom over the last decade, unfortunately prices have come down due to this restriction on lending.

Cheers


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## CamKawa (26 May 2009)

Another way to look at it may be to go the How Much Can I Borrow? Calculator and wack in all the variables to find out how much you can borrow, then go back and leaving all the other variables constant just change the size of the deposit amount, say by half, you'll see the amount of money you can be lent half.

So, Property spruiker in = garbage out.....


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## Temjin (26 May 2009)

Beej said:


> This analysis makes a simple, and very incorrect assumption that loan serviceability is not taken into account at all!
> 
> Try going to a bank, with say a $40k deposit, and an income of say $50k, and see if they will lend you $800k! Fat chance......
> 
> ...




Reasonable enough if you use $40k deposit. But again and again, you are completely ignoring the UNDERLYING MESSAGE. (and again, there is a rational reason why you do so because you don't like what you are hearing anyway) 

So let's ignore the 95% LVR Ratio on the same 40k deposit and only focus on 90% to 80%. The difference is still, nonetheless, dramatic right? $400,000 to $200,000. If LVR was further reduced to 75%, then it's only $160k. 

You cannot argue against the maths.

I'm sure you can find instances in history, both in Australia and in developed countries around the world, that such LVR for residential property was THE NORM for banks. 

Read up on the history of credit bubble, the introduction of securitisation, the role of central bankers in "regulating" the bank industry to take on more leveraging (therefore, giving the banks' CEOs the motivation to genereate more short term profit) and you will understand why LVR was significantly increased over the past 2 decades. 

The ability to sustain the property bubble will largely depend on the availability of credit. The recent trend has been the gradual decrease in LVR amoung the major banks and smaller credit unions.


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## Beej (26 May 2009)

Temjin said:


> Reasonable enough if you use $40k deposit. But again and again, you are completely ignoring the UNDERLYING MESSAGE. (and again, there is a rational reason why you do so because you don't like what you are hearing anyway)
> 
> So let's ignore the 95% LVR Ratio on the same 40k deposit and only focus on 90% to 80%. The difference is still, nonetheless, dramatic right? $400,000 to $200,000. If LVR was further reduced to 75%, then it's only $160k.
> 
> ...




In response to Temjin above and others who responded to my comment:

No, I cannot argue with the basic maths, but I can argue with the use of the maths to suggest a little tightening of LVRs will have that big an effect on the property market. Here's why:

I'll start with a few facts:

1) LVR restrictions are usually only an issue for FHBs, as others have much lower LVRs to the extent that loan serviceability is the ONLY issue for them.

2) FHBs make up only ~25% of the market right now, and that's above the long term trend of ~20%. So really this discussion only concerns 1/4 of the total market in terms of any impact, albeit an important segment with respect to it's potential flow through effects.

3) Average FHB loan is currently $280k (RBA stats). Average FHB home purchase price is historically about ~85% of the median house price, so let's say that's about $350k. Therefore, AVERAGE FHB deposit (including grants etc of course) must be around $70k. of course SOME buy with less, and some more, but that IS the average figure.

4) Therefore the average LVR for a FHB is around 80%

Given the above, as interesting as the maths might from a theoretical stand point, unless the banks tighten to the point where there maximum LVR is under 80% (highly unlikely IMO), then it's a moot point in terms of significant impact on the market, and it's serviceability assessment/criteria that is the major determining factor still right now. Even at 80% LVR, that would only cause 1/2 of current FHBs (or 1/8 of the total current market) to have to save a bigger deposit or see prices fall by the equivalent amount to normalise things - and the market has got along just fine in the past with FHB levels much lower than right now. So you do the rest of the maths from there! 

Cheers,

Beej


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## Temjin (27 May 2009)

Beej said:


> In response to Temjin above and others who responded to my comment:
> 
> No, I cannot argue with the basic maths, but I can argue with the use of the maths to suggest a little tightening of LVRs will have that big an effect on the property market. Here's why:
> 
> ...




Unfortunately, this is not a fact. LVR restrictions, in an addition to other credit tightening methods, have been placed ACROSS for ALL BORROWINGS for ANY type of assets regardless on the creditworthiness of the borrowers. 

To suggest that the credit tightening has only applied to FHBs would mean the current crisis had very little impact on credit growth. Which, in contrary to your believes, have collapsed in recent times.







Like I said, the credit tightening applies NOT ONLY FOR residential properties, but for commercial properties and small businesses who have reported having a hard time in borrowin (including some high profile failures, both local and oversea) 

The banks have already spoken (and with actions) that they are tightening their credits standard, period. They will NOT BE returning to pre-crisis level credit borrowing standard which have fuelled the pricing boom of ALL assets right across the entire planet. 



> 2) FHBs make up only ~25% of the market right now, and that's above the long term trend of ~20%. So really this discussion only concerns 1/4 of the total market in terms of any impact, albeit an important segment with respect to it's potential flow through effects.




Since your first "fact" has been disputed and decisively flawed, then this second "fact" is equally flawed. The credit tightening is widespread across all asset borrowings. 



> 3) Average FHB loan is currently $280k (RBA stats). Average FHB home purchase price is historically about ~85% of the median house price, so let's say that's about $350k. Therefore, AVERAGE FHB deposit (including grants etc of course) must be around $70k. of course SOME buy with less, and some more, but that IS the average figure.




Again, you are making up statistic to back up your own opinion". Where is the fact that the average FHB deposit is around $70k? 



> A survey by Fujitsu Consulting (which has consistently produced realistic and empirically grounded reports on economic and financial issues) found that 30 percent of First Home Buyers had loan to valuation ratios of 95 percent (Australian Financial Review, March 21-22 p. 20). Only 12.5% of First Home Buyers had a loan to valuation ratio of under 80% (Fujitsu Consulting February 2009 Stress-O-Meter Update, p. 39). Together with anecdotal evidence that The Boost has ignited activity in the sub-$500,000 price range, *this implies that the average First Home Buyer is relying upon the government grant for more than 50% of the deposit.*




http://www.rgemonitor.com/asia-monitor/256120/fhb_boost_is_australias_sub-prime_lite

Read through the Fujitsu Consulting report. The average FHB is relying upon the government grant for more than 50% of the deposit. That means the average DEPOSIT for FHBs is less than $42,000. 



> 4) Therefore the average LVR for a FHB is around 80%




As aboave, the averave LVR for FHB is definitely not around 80%. It's FAR HIGHER than that. Using your average FHB loan of $270k ($280k on Fujitsu report), that means the average LVR for FHB is 85%+. And THAT INCLUDES the grant.

Imagine if the grant is removed. Of course, the industry with vested interest always say the residential property market is PERFECTLY STABLE and THERE IS NO REASON FOR PANIC that it will crash or drop in value at any time. But then they argue that the first home buyer grant is EXTREMELY IMPORTANT to support the housing industry. Such irony...



> So you do the rest of the maths from there!
> 
> Cheers,
> 
> Beej




I sure did. The maths show that the FHG is understating the degree of leverage the FHBs are in with their recent purchases. It also understate how leveraged the banks are with residential loans. Along with their tiered level 1 ratio of 8 (which is still high from global average), even a minor writedown in loan losses will more than enough to scare the **** out of the banks to increase assets and further tightening lending criteria.

This is exactly what's happening in the US/UK right now. You can be sure that it will happen here sooner or later.


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## Beej (27 May 2009)

Temjin said:


> Unfortunately, this is not a fact. LVR restrictions, in an addition to other credit tightening methods, have been placed ACROSS for ALL BORROWINGS for ANY type of assets regardless on the creditworthiness of the borrowers.




No you are misunderstanding what I have written. People buying their 2nd/3rd properties etc, whether upgrading or buying for investment, already typically have loads of equity from their first purchase (which can be used to fund the deposit for an investment purchase, or pay for a big chunk of the new house). So they are usually on LVRs of 50% or less, certainly less than 80%. So therefore their ability to obtain finance is unaffected by a policy change by their bank to require a 95%/90%/85% etc maximum LVR.

Get it?

So you built a straw man and then used that to try and dispute my other facts, which ARE fact. The $280k average FHB figure comes from RBA figures published last week and discussed at length here. The median house price comes from ABS and other stats. This government report here (http://www.aph.gov.au/library/pubs/rn/2006-07/07rn07.htm) has figures that show that the average first home purchase is around 85% of the median house price figure (partly because FHBs often purchase units which as we know aren't included in median house price figures). So therefore the average FHB deposit IS about $70k, perhaps even slightly more.

So those ARE facts. My analysis stands - try again after understanding my first point properly.

EDIT: And PS; re your credit growth chart - how about posting the one that shows lending growth for residential housing only?? The banks have been rationing in the commercial sector while the residential housing finance sector has been GROWING for the past 6 months right? Do you dispute this? (See http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0).

Cheers,

Beej


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## Temjin (27 May 2009)

Beej said:


> No you are misunderstanding what I have written. People buying their 2nd/3rd properties etc, whether upgrading or buying for investment, already typically have loads of equity from their first purchase (which can be used to fund the deposit for an investment purchase, or pay for a big chunk of the new house). So they are usually on LVRs of 50% or less, certainly less than 80%. So therefore their ability to obtain finance is unaffected by a policy change by their bank to require a 95%/90%/85% etc maximum LVR.
> 
> Get it?




I'm sorry, but I thought we were discussing the FHB's ability to finance their purchase with further credit tightening from their bank through LVR change. (and along with proof of genuine savings of course, which has become a renewed trend laterly on top of the government grant) 

No one is disputing that on average, the established home owners who have significant equity in their house (largely thanks to the credit boom which fuel up house prices of course) will have the ability to extract that equity as a deposit for a second purchase. I'm sure anyone who has purchased a house from the 1990s will have enough asset to fund a deposit even if the LVR reached as low as 70%! Of course, whether they will extract their equity to fund a purchase NOW in order to continue to pop up the market is another thing. 

The FHB surely do not have such equity and/or large enough savings to not be affected by the LVR. The joint JPMorgan and Fujitsu Consulting report did an interesting sentiment survey which show that 70% of the respondents said the first home owner grant was "vital" to their decision to purchase one. 

Remove the grant, and you will remove that 70% from buying because they do not pass the bank's stricter criteria. 



> So you built a straw man and then used that to try and dispute my other facts, which ARE fact. The $280k average FHB figure comes from RBA figures published last week and discussed at length here. The median house price comes from ABS and other stats.




Please read my comments carefully. I had never disputed the $280k average loan figure from RBA, the Fujitsu report had a $270k figure, which is probably right because the report was done back in the late 2008 and the FHB market have become hotter and hotter since then. 

I'm only disputing the average $70k deposit. 



> This government report here (http://www.aph.gov.au/library/pubs/rn/2006-07/07rn07.htm) has figures that show that the average first home purchase is around 85% of the median house price figure (partly because FHBs often purchase units which as we know aren't included in median house price figures).
> 
> So therefore the average FHB deposit IS about $70k, perhaps even slightly more.
> 
> So those ARE facts. My analysis stands - try again after understanding my first point properly.




If the average purchase price for FHB is indeed 85% of median house price figure, which you say is $350k and the average deposit including FHG is $70k, then the average LVR is 80%. 

I understand how you came to the $70 figure, but the report clearly disputes this when only 12.5% of the FHB respondents had a loan to valuation ratio of under 80%. In addition, 30% of the FHBs had LVR between 95% to 100% and another 27% had between 90-95%.

By using the US Federal Reserve definition of subprime, where regardless of the borrower's creditworthness, a loan security with a LVR of more than 90% is regarded as SUBPRIME!!! So over 57% of the FHB's loans are considered subprime. 



> EDIT: And PS; re your credit growth chart - how about posting the one that shows lending growth for residential housing only?? The banks have been rationing in the commercial sector while the residential housing finance sector has been GROWING for the past 6 months right? Do you dispute this? (See http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0).
> 
> Cheers,
> 
> Beej




Ahhh, no one is disputing that we have had a boost in residential housing in recent months largely thanks to the rapid reduction of interest rates and the boost in FBG. 

But what does this tell you? What have caused this when like you have said, the banks are rationing investment loans (commercial properties and small businesses) as well as private loans? 

http://www.abs.gov.au/ausstats/abs@...ummary&prodno=5609.0&issue=Mar 2009&num=&view=

If credit growth in the residential property has rapidly risen in the past 6 months, then what should happen to housing prices?






Check out the chart again, there has been a sharp drop in the early 2008 and then a sharp rise again from mid 08. If you compared the rate of growth from the bottom level, wouldn't the growth in house prices be as strong as what was seen back in 2004 to 2006?

Now what happened to house prices? A total collapse in the upper end market but a rise in the lower end (where most FHBs would be buying). 

The fact is that the low interest rate policy and the government intervention with boosting the grant has caused a rush in FHB to buy houses where they could otherwise CANNOT AFFORD TO. (based on the survey that the grant was vital to their purchase)

Remove the grant and see what will happen. The lower end market is on a life support right now and is distorting the whole statistic picture. 

Then when the interest rate inevitably rise again and unemployment rate is certainly expected to rise significantly, the FHBs will be in deep trouble. 




Like again in past discussions, I do not expect you to agree with me at all. Remember what I said about the psychological bias and your emotional investment in your own house. There is really little benefit for me to continue to try to "convince" you because it serve no purpose to me.

So you can believe what you want.  

We can all argue with our own source of information, but the true answer will only come in a few years time.


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## robots (27 May 2009)

hello,

look out the date has been pushed out another 2 years Beej for the end of the world, this is fantastic

thankyou

associate professor robots


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## Beej (27 May 2009)

Temjin said:


> I'm sorry, but I thought we were discussing the FHB's ability to finance their purchase with further credit tightening from their bank through LVR change. (and along with proof of genuine savings of course, which has become a renewed trend laterly on top of the government grant)




Yes - but my point here is that the 75% of the market on any weekend would be unaffected by whatever LVR tightening may or may not be occurring.



> No one is disputing that on average, the established home owners who have significant equity in their house (largely thanks to the credit boom which fuel up house prices of course) will have the ability to extract that equity as a deposit for a second purchase.......




Ok good. I would dispute though that the main source of existing equity is from the credit boom pushing up prices. There is such a thing as actually paying off your mortgage you know....I have paid off 2 completely (not through sale but by paying off with income until living rent/mortgage free), and won't have my current one around for much longer either (very very low LVR). So regardless of price growth or not, for whatever reason, most existing owners will always have low LVRs as they upgrade up the property ladder.



> I'm only disputing the average $70k deposit.




OK well that's good - here is the only point of real disagreement then surrounding the facts. You may be right, however, if the average deposit is in fact less than $70k, then the actual average purchase price for FHBs must also be lower than $350k, as we know for a fact that the average first mortgage is $280k - agree? 

Therefore, whatever changes may or may not occur re required LVR, will only really have an impact in the sub $300k range, where it doesn't take that much extra saved to make up the difference anyway, therefore I still argue that LVR tightening down to a 90% level will have little impact on the market over-all, if any.



> By using the US Federal Reserve definition of subprime, where regardless of the borrower's creditworthness, a loan security with a LVR of more than 90% is regarded as SUBPRIME!!! So over 57% of the FHB's loans are considered subprime.




That's not the normally accepted definition of sub-prime in the US. It's all about borrowers with poor credit history and a whole range of other factors, not just the LVR! From wikipedia (http://en.wikipedia.org/wiki/Subprime_lending)




> The fact is that the low interest rate policy and the government intervention with boosting the grant has caused a rush in FHB to buy houses where they could otherwise CANNOT AFFORD TO. (based on the survey that the grant was vital to their purchase)
> 
> Remove the grant and see what will happen. The lower end market is on a life support right now and is distorting the whole statistic picture.
> 
> Then when the interest rate inevitably rise again and unemployment rate is certainly expected to rise significantly, the FHBs will be in deep trouble.




This is again where we disagree; I think the grant has provided an incentive, in addition to the prime drivers of low interest rates and flat/lower prices, for large numbers of people who have felt priced out for many years to feel the time is right to come into the market. FHB participation was below trend for 5+ years so that is the basis for my view, backed up by loads of anecdotal evidence amongst extended family, friends and colleagues who fit into this category. So really it's all about pent up demand being brought forward. When the grant is removed the market will be fine as all the activity at the lower end of the market will flow through; this takes 1-2 years to work through the market fully - wait and see!

The economic doom and gloom plus rising unemployment will stop any great boom from developing, but the fundamental factors that have been at play for the past 12-18 months will continue to shield the bulk of the AU market from any precipitous wholesale falls - certainly the major cities such as Sydney and Melbourne.

As you say you can believe what you want to believe as well! Time will tell...

Cheers,

Beej


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## Temjin (27 May 2009)

This can go forever.  

I wouldn't go commenting on the rest of your points. (with the exception of one thing that I find interesting) There is alot more I can contribute but consolidating the information I have collected so far in here would be extremely time consuming. However, I would still comment that it is totally irrational to believe any increase in LVR across the industry will not AFFECT the housing market at all. Ask someone in the mortgage loan industry and see what would be his reaction if this was the case. 

Another excellent question for someone to answer is, why the banks are increasing the LVR anyway? It's certainly not in their interest to lend LESS MONEY out, because this is how they make money in the first place! 

If anyone feel that he/she needs to commit themselves (using large amount of savings and accepting a repayment level 50%+ to their income) in order to enter the first home buyer market for fear that they will be priced out forever, then be prepared to take responsibility of anything that might happen to you. Do not assume the interest rate will remain low forever or your job is 100% safe. 

So be rational and think DIFFERENTLY. 



> That's not the normally accepted definition of sub-prime in the US. It's all about borrowers with poor credit history and a whole range of other factors, not just the LVR! From wikipedia (http://en.wikipedia.org/wiki/Subprime_lending)



Here is an interesting table from the US Federal Reserve.







If I quote the report again, 57% of the FHB has a LVR above 90% INCLUDING the GRANT. One can go ahead dispute their findings, but I am not in the position to do so. Based on their reputation of producing excellent reports, used both by the government and professional around the world and with little vested interest, I would conclude their study to be fairly accurate at this point of time. 

Now if the FHB only represent 25% of the entire residential mortgage market, then does that mean the Australia banking system are holding 14.25% of subprime grade loans? I'm sure this number would be higher if we leave the grant out. (or maybe I'm wrong that the FHB loans DO NOT represent 25% of the market)

An interesting comparison would be the subprime loan at peak only represent 20% of the entire lending market in the US in 2006. 




> As you say you can believe what you want to believe as well! Time will tell...
> 
> Cheers,
> 
> Beej



Yep, and I'm sure time will REALLY tell soon enough.


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## robots (27 May 2009)

hello,

yes its fairly evident people may request another 2 yrs for the "belief's" to come true:

Harry Triguboff 3rd BRW Rich List 2009, top effort man

and then another 2 yrs, another 2 yrs, another 2 yrs

thankyou
associate professor robots


----------



## Soft Dough (27 May 2009)

Temjin said:


> Yep, and I'm sure time will REALLY tell soon enough.




I agree, the time is near.

I make it within the next 12-24 months when the real picture from America and China becomes known, and the real effects of overgearing and unemployment are felt.

As for AP Robots and the 2 year statement, I hope we are all still around here in 2 years to compare notes, I look forward to either serving up or eating humble pie


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## nunthewiser (27 May 2009)

hehehehehe

guess what folks?

Geraldton WA just voted best city to invest in re property in the whoile of OZ 

its true! i just saw it on tv !


walkin tall man anyone wanna buy one  ?


thankyou


----------



## dhukka (27 May 2009)

Let's cite some figures on Housing credit growth from Beej's favourite source, the RBA:

Housing credit growth up *7.2%* year over year, the slowest rate of growth since Feb 1983. 

Owner occupier housing credit growth up *8.5%* year over year, the slowest since June 1999.

Investment housing credit growth up *4.2%*, the worst ever recorded (stats back to 1990). 

April stats due out Friday.

FHB's now account for *27.3%* of housing finance, the highest ever recorded and 37% higher than the long term average. 

No bubble here in the FHB market, it's all good brothers.

carry on 

professor kuntbots


----------



## kincella (28 May 2009)

now some information to cheer you up regarding anticipated falling prices...

on aca the other night, Las Vegas houses that were selling for 1 million are now selling for 100k....unbelievable...and 25,000 people living in tents...??? what the... they cannot even afford to buy a 100k house at 5%, or 100pw
no....go on pull the other leg....oh and did you notice thats a fall of 90%or the 100k houses are now selling for 20k....at 5% is 1000 pa.....thats 20pw interest  only....what they cannot afford that either....go on...pull both legs...see if that works....
no...you did see flying pigs.....hohoho...I bet you did

if I did not dislike the place so much I could be tempted to go and buy a heap of houses over there....but then again the taxes are several thousand dollars a year....but the interest is deductible for income tax....

wonder why some of you  are still here in oz...why not go over and get yourself some real bargains over there....90% off is some discount....stunning 2 story mansions....grand stair case etc...I would love to buy something like that here in OZ...oh well...
hope that cheered you all up now...guess you will be waiting for oz houses to slide 90%.....after seeing that...anything is possible...
cheerio then


----------



## MrBurns (28 May 2009)

Anyone see the program on Detroit the other night ?

The freeking place is empty, you wouldn't believe it unless you saw it.

Here's their main railway station - abandoned ....................


----------



## kincella (28 May 2009)

its certainly a majestic building...wonder if they want to sell that off now...
now there are no car makers left


----------



## nunthewiser (28 May 2009)

MrBurns said:


> Anyone see the program on Detroit the other night ?
> 
> The freeking place is empty, you wouldn't believe it unless you saw it.
> 
> Here's their main railway station - abandoned ....................





wanna go halves and turn it into a crackhouse?


----------



## MrBurns (28 May 2009)

> Here's another of deserted housing, some cheap ones there no doubt.




Whoops sorry that not Detroit it's actually a projected visual of Ackland St St Kilda after the crash.


----------



## robots (28 May 2009)

hello,

i hope there a Walmart somewhere to get a glock 9mm, taser, ak47, 3030, bullet proof vest, tank, shotgun Mr Burns

planes are still going to the US if you so fascinated with the joint

thankyou
associate professor robots


----------



## MrBurns (28 May 2009)

robots said:


> hello,
> 
> i hope there a Walmart somewhere to get a glock 9mm, taser, ak47, 3030, bullet proof vest, tank, shotgun Mr Burns
> 
> ...





Well I might be going there next month, I'll tell the FBI all about your facination with their gun laws


----------



## robots (28 May 2009)

hello,

take some ear plugs with you to cut out all the propaganda

thankyou
robots


----------



## MrBurns (28 May 2009)

robots said:


> hello,
> 
> take some ear plugs with you to cut out all the propaganda
> 
> ...




Propagnda ??? no no, it's all true it must be, I saw it on TV !!!


----------



## robots (28 May 2009)

hello,

video Cops tonite 12pm ch10 for some real life and times in good ol' United States of America

representation of EVERY street in that joint

thankyou
associate professor robots


----------



## centex (28 May 2009)

robots said:


> hello,
> 
> video Cops tonite 12pm ch10 for some real life and times in good ol' United States of America
> 
> ...




You think that's bad. Have you ever driven throught the northern suburbs of Adelaide? I had the pleasure today. Scary by daylight!


----------



## centex (28 May 2009)

robots said:


> hello,
> 
> video Cops tonite 12pm ch10 for some real life and times in good ol' United States of America
> 
> ...




You think that's bad. Have you ever driven through the northern suburbs of Adelaide? I had the pleasure today. Scary by daylight!


----------



## kincella (5 June 2009)

its become very quiet on here now...maybe busy working or trying to hold onto their jobs...or back at school
nothing much to say now...since there are no falls in prices worth mentioning...except the ones below 1% that are taken at 10 times greater .07% as 7% etc
oh well it was fun while it lasted
looking at the stockmarket..one would think the GFC is behind them all now...
I am off to enjoy the sun in Melb today
oh and my 5.2% rates...that one in a 50 year window of opportunity...
I guess its quiet because of the holiday weekend.....
cheerio


----------



## robots (5 June 2009)

hello,

gee its a bit quiet around here at the moment,

probably all back at school or just thrown the arms up in the air, all to hard at the moment, given up

thankyou
robots


----------



## satanoperca (5 June 2009)

The eye of the storm!!!!!


----------



## satanoperca (5 June 2009)

But a sea of red.

http://www.globalpropertyguide.com/investment-analysis/House-price-falls-during-year-to-end-Q1-2009-the-worst-ever


----------



## Temjin (6 June 2009)

satanoperca said:


> But a sea of red.
> 
> http://www.globalpropertyguide.com/...lls-during-year-to-end-Q1-2009-the-worst-ever




nice summary table.

Latvia is in such a mess, just read the press about it. If they devalue, it could be up to 30%. A spectacular example of over-speculations. 

I'm surprised Singapore dropped more than US though but no surprised German fared pretty well since their house prices have only tracked inflation almost perfectly during the last 100 years of data. (whereas, Australia have risen way above inflation rate since the 1990s)


----------



## CamKawa (10 June 2009)

So what do you think, are they like lambs to the slaughter?







Source: First-home buyers at all-time high


----------



## Beej (10 June 2009)

CamKawa said:


> So what do you think, are they like lambs to the slaughter?
> 
> 
> 
> ...




Funny that they "forgot" to note the most important factor on the graph - interest rate reductions!

It just so happens that the big interest cuts started in Oct/Nov 08 as well as the intro of the FHBG boost. Prior to Sep 08 variable mortgage interest rates were at a 15 year high of 9.5%.... 2 BIG cuts came in Oct (1%) and Nov (0.5%).

Cheers,

Beej


----------



## lasty (10 June 2009)

Lambs to the slaughter? Perhaps some of them.

What I would be more concerned about is the cost of building a new one once the rise in commodity prices hits.

Here we are sitting in the middle of a global recession and oil has jumped 50pct from its lows.


----------



## nunthewiser (10 June 2009)

lasty said:


> Lambs to the slaughter?
> Here we are sitting in the middle of a global recession and oil has jumped 50pct from its lows.





sure is a worry..... especially for those cash strapped new home buyers paying there way on that plastic and driving them new flash credit cars to tow that credit floated boat ...... bought in at record low intrest rates , with record bags of bonuses , stimulated by there stimulisation packages ...

oops ang on .........sounds like the great ozzie dream there 

intrest rates rise ..never ........

unemployment rising................never .......

both parents working fulltime to keep afloat on all them bills .............never 

unemployment hits 10%.....lol nah never 

sunshine and lollipops boys and gals 

i love a sunburnt country


----------



## Green08 (10 June 2009)

Beej said:


> It just so happens that the big interest cuts started in Oct/Nov 08 v (0.5%).




I wonder how many % actually locked in to the high rate say, 6 months before the fall?


----------



## robots (10 June 2009)

hello,

they going to be on the ride of life in the not to distant future, 5yrs, 10yrs, 15ys+ gone before your eyes

and slowly but surely building up the prize asset all for just by putting the key in the door and saying "i am home love"

playing a bit of driveway cricket, sitting back on the patio, getting the fire going in the shed

well done to those represented, tax free and do as you please

anybody know if we at ZERO interest rates yet?

thankyou
associate professor robots


----------



## MACCA350 (10 June 2009)

robots said:


> hello,
> 
> they going to be on the ride of life in the not to distant future, 5yrs, 10yrs, 15ys+ gone before your eyes
> 
> ...



I don't think anyone has ever disputed the tangible lifestyle benefits of owning your own home............so I fail to see the relevance..........or is this just one of those silly sunshine and lollipop posts

cheers


----------



## robots (10 June 2009)

CamKawa said:


> *So what do you think, are they like lambs to the slaughter?*
> 
> 
> 
> ...




hello,

in reply

thankyou
associate professor robots


----------



## MrBurns (10 June 2009)

Property prices always go up, so far, but the rise is always interrupted by crashes from time to time, this one is overdue and imminent.


----------



## Soft Dough (10 June 2009)

robots said:


> hello,
> 
> in reply
> 
> ...




Your graph is but a nipple on the bubble of housing.


----------



## robots (10 June 2009)

hello,

no bubble anywhere in australia

plenty who dont have the income to afford things, 

anyone have any data on Surrey Hills units in NSW?

thankyou
associate professor robots


----------



## robots (10 June 2009)

hello,

*oops*, found it:

"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/sna...iew&source=apm)." Thanks Beej


another sunshine & lollipops moment

thankyou
associate professor robots


----------



## Soft Dough (10 June 2009)

robots said:


> hello,
> 
> no bubble anywhere in australia
> 
> ...




You can't see the bubbles for the nipples


----------



## CamKawa (12 June 2009)

Oops! I thought the credit crunch was over?

CommBank lifts rates in surprise move

"The rise is a consequence of higher funding costs facing the banking sector as cheaper-priced money borrowed by the country's main lenders over the past few years rolls over to be replaced by more expensive debt being charged for by international credit markets"


----------



## kincella (12 June 2009)

I think that is rubbish...excuse by the monopolistic...overseas rates are lower than ours...who are they trying to kid..they will get away with it...no competition anymore....and this was allowed to happen........


----------



## MrBurns (12 June 2009)

kincella said:


> I think that is rubbish...excuse by the monopolistic...overseas rates are lower than ours...who are they trying to kid..they will get away with it...no competition anymore....and this was allowed to happen........




and Swan will say thats naughty,and the other banks will follow and the FHB's will suffer, hopefully before they have a chance to vote on if they return the little faggot (ooohh thats nasty but it feels good)


----------



## CamKawa (12 June 2009)

I think it's all good stuff. Hopefully it'll give those lemming FHOG buyers a kick in the nuts.


----------



## MrBurns (12 June 2009)

CamKawa said:


> I think it's all good stuff. Hopefully it'll give those lemming FHOG buyers a kick in the nuts.



who will hopefully pass it onto the Kruddster, suck on that sauce bottle you Aussie impersonator !


----------



## nunthewiser (12 June 2009)

its all sunshine and lollipops i heard from a confidential chatroom sauce


----------



## Soft Dough (12 June 2009)

kincella said:


> I think that is rubbish...excuse by the monopolistic...overseas rates are lower than ours...who are they trying to kid..they will get away with it...no competition anymore....and this was allowed to happen........




But their base rate is lower too.

the difference here in both magnitude and percentage is lower.

So in reality, we have one of the most competitive, fair and reasonable banking systems around.... but then again the average house punter/gambler has no idea of this do they?


----------



## Beej (12 June 2009)

CamKawa said:


> Oops! I thought the credit crunch was over?
> 
> CommBank lifts rates in surprise move
> 
> "The rise is a consequence of higher funding costs facing the banking sector as cheaper-priced money borrowed by the country's main lenders over the past few years rolls over to be replaced by more expensive debt being charged for by international credit markets"




Wow! A whole +0.1%! Huge credit crunch there.....not....

 I note also that CBA standard rate was lower than some others (ANZ for example was/is at 5.81%, CBA now at 5.74% so still cheaper). Of course a lot of people don't pay the standard variable rate anyway, and some banks (like ANZ) offer better discounts/packages for more sophisticated customers than do CBA.

But never let a few simple facts get in the way of a bit of credit crisis hysteria! It's all storm clouds and vinegar sticks!

Cheers,

Beej


----------



## nunthewiser (12 June 2009)

whats a vinegar stick ?


----------



## Beej (12 June 2009)

nunthewiser said:


> whats a vinegar stick ?




I tried to imagine the opposite of a lollipop - frozen vinegar on a stick should do the trick! Amen!


----------



## nunthewiser (12 June 2009)

LOL ..i reckon you should go sit next to kincella in the drug testing tent 

have a great day


----------



## MrBurns (12 June 2009)

nunthewiser said:


> whats a vinegar stick ?




Not too sure but I think KRudd has had too many of them.


----------



## nunthewiser (12 June 2009)

MrBurns said:


> Not too sure but I think KRudd has had too many of them.





what a great leader 

walking tall doing the thing 

probably lives in st kilda on the weekends 

thankyou


----------



## kincella (12 June 2009)

I hate that you put his picture there...it should be a link so I can choose to view it or not.....I cannot stand to watch any of that crowd...they all seem so fake.
oh and when I do see him...I often  wonder if he  is a cross dresser ...something feminine about the face and facial expressions...as in an old woman...
and keep on about the drugs fool....
a little alcohol...but not drugs...freaken difference


----------



## Quincy (12 June 2009)

Beej said:


> Wow! A whole +0.1%! Huge credit crunch there.....not....




The +0.1% is not in itself the "big" issue. However it may well be the beginning of more to come which is what Swan is obviously worried about. The Banks have taken the reins now. Just how far they go with ad hoc interest rate increases is the worry for Swan & co.


----------



## Beej (12 June 2009)

Quincy said:


> The +0.1% is not in itself the "big" issue. However it may well be the beginning of more to come which is what Swan is obviously worried about. The Banks have taken the reins now. Just how far they go with ad hoc interest rate increases is the worry for Swan & co.




Did you read the bit though about how CBA were the lowest though? They may have just been "buying" market share during the current FHB frenzy.....

Also, it is not uncommon historically for banks to move rates out of line with RBA official cash rate movements, it's just that we haven't seen a lot of it for the past few years until recently. Ultimately there are still 4 big banks (and their fully owned smaller subsidiaries - St George, Bankwest etc) competing for the HUGE mortgage business. It doesn't take much for one of them to break ranks if things go to far and under-cut the rest, if of course the conditions exist to allow it.

Cheers,

Beej


----------



## kincella (12 June 2009)

I thought this was funny
http://www.theaustralian.news.com.au/gallery/0,26637,5024287-20581-2,00.html


----------



## Quincy (12 June 2009)

Beej said:


> Did you read the bit though about how CBA were the lowest though? They may have just been "buying" market share during the current FHB frenzy.....
> 
> Also, it is not uncommon historically for banks to move rates out of line with RBA official cash rate movements, it's just that we haven't seen a lot of it for the past few years until recently. Ultimately there are still 4 big banks (and their fully owned smaller subsidiaries - St George, Bankwest etc) competing for the HUGE mortgage business. It doesn't take much for one of them to break ranks if things go to far and under-cut the rest, if of course the conditions exist to allow it.
> 
> ...





Yes true. Under the current financial climate though, it is an "interesting" decision by CBA.

Time will tell obviously and we will just have to wait and see how it pans out.


----------



## CamKawa (12 June 2009)

Hear we go, the government is blaming the banks and the banks may soon blame the government. What a comedy act.

Rudd savages Commonwealth over rate rise

How about we all rejoice the fact the deposit rates are rising and congratulate those few Australians that have chosen to live within their means?


----------



## Trevor_S (12 June 2009)

Property no longer as safe as houses


----------



## Mc Gusto (16 June 2009)

interest rates on the rise. chk chk boom


----------



## MrBurns (16 June 2009)

Westpac, NAB raise fixed rates

http://www.abc.net.au/news/stories/2009/06/16/2599124.htm

How dare they ! 

Kevin and Wayne will be just livid


----------



## Julia (16 June 2009)

MrBurns said:


> Westpac, NAB raise fixed rates
> 
> http://www.abc.net.au/news/stories/2009/06/16/2599124.htm
> 
> ...



Does this now make CBA the good guys again?


----------



## MrBurns (16 June 2009)

Julia said:


> Does this now make CBA the good guys again?




What a hoot, if they went bersek at the CBA they will be totally out of control with rage over this, or they'll have to appear so.
I can hardly wait for the news tonight.
What a side show, and the banks are watching these 2 ants leaping about from their offices on the 85th floor of some building they own laughing their heads off.


----------



## CamKawa (16 June 2009)

MrBurns said:


> What a hoot, if they went bersek at the CBA they will be totally out of control with rage over this, or they'll have to appear so.
> I can hardly wait for the news tonight.



It'll get a mention on the news tonight but I don't know that Wayne will go mental over it because they have raised fixed rates not the variable lending rate. Time will tell though.


----------



## MrBurns (16 June 2009)

From Crikey - note the link to 
http://sqmresearch.com.au/ 
this looks interersting.




> BIS Shrapnel property assessment BS
> Adam Schwab writes:
> 
> 
> ...


----------



## kincella (16 June 2009)

ants is really too nice a description for them...ants are actually hard working and smart...whereas those 5 idiots Krud, swan, tanner  silliard and pong...are plain con artists, deceitful....and various more accurate words to best describe them.....

the govt will not admit its guarantee is causing the problems with the banks....so who will face off and win this bout....the banks have put it up there in their face....by raising rates.....its up to swan and tanner now to drop the guarantee.....grrrrrrrrrrrrrrrrrrrrrr

oh and btw....NSW govt offer of incentives to new home buyers...and still 3000 for fhb for a new house still in place......

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


----------



## Aussiejeff (16 June 2009)

kincella said:


> ants is really too nice a description for them...ants are actually hard working and smart...whereas those 5 idiots *Krud, swan, tanner  silliard and pong*...are plain con artists, deceitful....and various more accurate words to best describe them.....




Dear kincella,

Please refrain from using silly names and instead address these pre-eminent pollies by their proper names in future, ergo... *Kruddud, Schwonk, Tanher, Blowhard and Pwong*.

Thank you.

The Thought Pullees


----------



## Aussiejeff (16 June 2009)

MrBurns said:


> What a hoot, if they went bersek at the CBA *they will be totally out of control with rage over this*, or they'll have to appear so.
> I can hardly wait for the news tonight.
> What a side show, and the banks are watching these 2 ants leaping about from their offices on the 85th floor of some building they own laughing their heads off.




Hark!

Do I hear piercing, shrieking, gurgling noises from the general direction of CanBurYa?

Mmmm.

Muzak to mine ears....


----------



## CamKawa (16 June 2009)

Thank God this idea died a thousand deaths. Just how low will Rudd go to keep the hot air in the housing bubble?

'Ruddbank' defeated in Senate


----------



## MrBurns (16 June 2009)

CamKawa said:


> Thank God this idea died a thousand deaths. Just how low will Rudd go to keep the hot air in the housing bubble?
> 
> 'Ruddbank' defeated in Senate




The absolute truth of the matter is that the longer he keeps it going the worse the end result will be.


----------



## aleckara (17 June 2009)

CamKawa said:


> Thank God this idea died a thousand deaths. Just how low will Rudd go to keep the hot air in the housing bubble?
> 
> 'Ruddbank' defeated in Senate




The answer should be obvious. The Government would probably resort to printing money if necessary to keep it going I believe. I wish this were not true but it is. Of course the government would paint it as 'saving the economy' or something like that. After all if our houses are worth nothing this country has nothing left besides a few holes in the ground. Our houses are our main investment despite the fact that is really is just debt money churning around.


----------



## Quincy (17 June 2009)

As stated by Swan in the referenced article : - 

http://www.abc.net.au/news/stories/2009/06/16/2600073.htm



> Federal Treasurer Wayne Swan says the Opposition is risking the livelihoods of thousands of people by voting against it.
> 
> Mr Swan says the Senate's actions mean that thousands of Australians involved with the commercial property sector could lose their jobs including plumbers, electricians and carpenters.




No need to worry about the underlying risk / cost that "RuddBank" posed to tax payers, no need to worry about the commercial property sector being accountable for its own destiny, no need to worry about the details. It's ALL about and ONLY about (according to Swan) - jobs, jobs, jobs (spin, spin spin).


----------



## Julia (17 June 2009)

Quincy said:


> As stated by Swan in the referenced article : -
> 
> http://www.abc.net.au/news/stories/2009/06/16/2600073.htm
> 
> ...



Ditto the situation in Qld where the govt itself predicts it will be eight years before they are likely to be out of deficit, but don't you worry about that, as Joh would have said, it's all to protect jobs, jobs, jobs.


----------



## Mc Gusto (23 June 2009)

weekend results are scary,. Punters with auction fever. Recession? Bust all done and time for boom again? Seriously question the current 'bubble' and those buying in it. Things are going to get very rough


----------



## Taltan (23 June 2009)

It seems based on the latest auction clearance rates and new car sales many are not feeling or expecting this recession. So I guess either things aren't that bad or there are a lot of FHB out there.

Regarding BIS I notice they dont give the real expected rise in median prices but rather what the actual price will be. I think in Melbourne they are expecting the median to bo $507,000 in 2012. Now do they tell us what inflation rate they are expecting? Govts have thrown a lot of money at the GFC so we are now in a period where it is very difficult to predict what inflation will be in 2012. We all know at some point debt needs to be repaid and interest rates will rise but how BIS or anyone knows when that point is I am very skeptical about. Are they saying 2010 or 2014 when they predict the 2012 price?

You cannot forever get out of debt by incurring more debt.


----------



## explod (23 June 2009)

Julia said:


> Ditto the situation in Qld where the govt itself predicts it will be eight years before they are likely to be out of deficit, but don't you worry about that, as Joh would have said, it's all to protect jobs, jobs, jobs.





and "dont' you worry about that"  it is about jobs jobs and more jobs.   Where I live in a fairly new estate every second household relies on a building trade job as the prime wage earner.




> weekend results are scary,. Punters with auction fever. Recession? Bust all done and time for boom again? Seriously question the current 'bubble' and those buying in it. Things are going to get very rough




and the scenerio is scary.   We have put too many eggs in the one basket.


----------



## Mc Gusto (23 June 2009)

explod said:


> and "dont' you worry about that"  it is about jobs jobs and more jobs.   Where I live in a fairly new estate every second household relies on a building trade job as the prime wage earner.
> 
> 
> 
> ...





Agreed - this market is going to find a lot of buyers in the current market in negatibe equity by 2010...In my opinion


----------



## CamKawa (27 June 2009)

Some interesting reading here, apparently house prices are falling according to the Valuer-General Robert Marsh.

Pressure to slash land tax

"You would expect the median house price in metropolitan Melbourne to be down in the order of 10 to 15 per cent from the last valuation," Mr Marsh said. "All indications are that the impact on commercial and industrial (property) has been greater than residential."

Mr Marsh said he expected Melbourne house prices would have fallen from the current median of $411,500 to about $370,000, once the new valuations were finalised. Land tax bills will be issued again by March, but it will be 18 months from now before the reduced values register on notices because of a time lag.

"Those suburbs that went up the most in the boom are also those that have gone down the most," Mr Marsh said. "The decreases are significantly higher in the inner ring, meaning within 10 kilometres of the city. When it comes to the outer ring, 20 kilometres plus, around all the new estates and the urban growth boundary, you will actually see increases, stimulated by the first home buyers initiatives. Inner councils like Melbourne, Port Phillip, Stonnington, Boroondara, Glen Iris, they're the ones that are going to have to make some decisions about their rates in the dollar, based on the fact their house price market has been affected more than some of their outer suburban neighbours."


----------



## wayneL (27 June 2009)

Mc Gusto said:


> Agreed - this market is going to find a lot of buyers in the current market in negatibe equity by 2010...In my opinion



The latest from Blighty:

http://www.dailymail.co.uk/news/art...-15-Prime-mortgages-fall-negative-equity.html



> The Middle Britain debt trap map: Curse of negative equity hits one in ten
> By OLINKA KOSTER
> Last updated at 7:27 PM on 24th June 2009
> 
> ...


----------



## gfresh (27 June 2009)

..meanwhile, Australia continues not to experience the great housing crash that the rest of the world has, setting up for our own large one in a few years time. I think we are putting down the seeds for some rampant speculation in the next 10 years in property.. "property was the only safe investment during the crash of 07/08/09", perpetuating the myth that house prices can never fall significantly. Going to be a doozy... 



CamKawa said:


> Land tax bills will be issued again by March, but it will be 18 months from now before the reduced values register on notices because of a time lag.




How nice of them... up here they decided to stop valuing things for a while, to avoid nasty hits to council coffers due to falling values. It seems you only value on the "up", not on the way down.


----------



## Gordon Gekko (27 June 2009)

I tried to buy a house in Queenstown N.Z last year. Beautiful house over looking the lake.
It had a counsil valuation of 610k but the vender wanted 500k. I offered 440k and raised it to 450k but it fell apart after that.
I just saw the new counsil valuation for Mar 09 and its now valued at 450k
160k drop!

Glad I didn't get it!

G


----------



## kincella (27 June 2009)

obviously this rich kid thinks differently.....and most of you have such a small time frame...one year..two years...and look how much you have saved....but forget how much rent you are paying....
hehehehehe.................................:sheep:

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


----------



## robots (28 June 2009)

knocker said:


> Well some good news for robots beej et al. I've decided this thread is a waste of time effort and money. So I would just like to say, that any numbnut who thinks that property will boom within the next 5 years needs their head read.
> 
> thankyou
> 
> Good bye Good riddance.




hello,

just amazing, i have suffered mental illness for many years as well, life goes on man its no big deal

thankyou
professor robots


----------



## kincella (28 June 2009)

I think they now say 1 in 3 suffers some form of mental illness....probably brought about by all that dope they smoked for years......I never did...and no dementia history in my family...but I took up the grog after being a tee totaller most of my first 40 years....
back on topic.....see all those fools paying a million more for a property here in Melbourne above the listed price.....
property has been skyrocketing in Melb....have to be blind not to see that


----------



## robots (28 June 2009)

hello,

looks like the credit crunch is over in the UK,

the internet is back up and running, credit flowing 

fabulous, now for that 50% drop in St Kilda units

thankyou
associate professor robots


----------



## wayneL (28 June 2009)

robots said:


> hello,
> 
> looks like the credit crunch is over in the UK,




There has been some increased buying of property and the media is crowing about green shoots and and end the recession.

The signals are mixed however, unemployment is still rising and many businesses are suffering, the high street looks like bar-room brawler with missing teeth everywhere (empty shops), but the pubs (in my area at least) are full and there are heaps of people out seemingly shopping. 10% of mortgage holders are in negative equity.

There are still poisons in the mud however that still may hatch.

Catastrophe has been averted by hocking up future British generations, but credit is still tight. Government will have to curtail spending and taxes will increase.

This is not a recipe for a strong recovery or a return to "abnormal". 

I'm holding my opinion, I'm not convinced.


----------



## robots (28 June 2009)

hello,

no worries WayneL, 

some shopping strips are as you mentioned, in particular a couple of sections of Toorak Rd, Sth Yarra are struggling

we just plodding along here man, Kevin, ministers and the community doing a great job

paradise

thankyou
associate professor robots


----------



## kincella (28 June 2009)

Toorak rd, struggles due to the lack of parking and freeway timetables, and other reasons., like it is so overpriced in what it offers, living off the name location, reliant on tourists only ...its never been strong.....I would never buy there
look at chapel st...its fine,
always will be...its youthfull, vibrant and not over priced...
if you can find a bargain priced shop in Chapel St ...go for it....
there is a huge difference...do the research and know the location...it makes all the difference in making money or struggling....


----------



## wayneL (29 June 2009)

wayneL said:


> There has been some increased buying of property and the media is crowing about green shoots and and end the recession.
> 
> The signals are mixed however, unemployment is still rising and many businesses are suffering, the high street looks like bar-room brawler with missing teeth everywhere (empty shops), but the pubs (in my area at least) are full and there are heaps of people out seemingly shopping. 10% of mortgage holders are in negative equity.
> 
> ...




Update:

http://business.timesonline.co.uk/t.../construction_and_property/article6600881.ece



> Weak mortgage lending hits UK housing recovery
> Elizabeth Judge
> Hopes of a recovery in Britain's battered housing market were dealt a setback today when new data for May revealed a weaker than expected number of mortgage approvals and the lowest rise in lending on record.
> 
> ...




This is all part of the conflicting signals. Scarcely anyone can get a mortgage based on the new criteria (actually, it's the old criteria, before bubblicious bubble blowing).

Estate agents have unquestionable been busier over the late spring (the traditional buying season), must all be cash buyers I guess. The acid test is what happens as autumn sets in IMO.


----------



## Trevor_S (30 June 2009)

http://seekingalpha.com/article/145883-time-to-start-worrying-about-australian-banks



> The inevitable question that results from this observation has to do with whether or not New Zealand (hereinafter NZ) and Australia (hereinafter AU) are in for a similar decline in prices but are just a few years behind the US in the process.
> 
> If that is the case, then the resulting shock to the local banks that serve this region could be just as dramatic as the impact that the ongoing housing price spiral has had on the US banking system. Specifically, the reason it is especially important to focus on housing in these countries is that, on average, among the seven banks I analyzed, 60% of their loan books consist of residential mortgages (and securitizations).
> 
> Also, the primarily focus should be on AU, as 85%+ of the banks’ loan portfolios are made up of AU-located loans.


----------



## CamKawa (9 July 2009)

It'll be interesting to see what happens won't it?

Low-end house prices 'to fall 10pc'


----------



## Aussiejeff (9 July 2009)

CamKawa said:


> It'll be interesting to see what happens won't it?
> 
> Low-end house prices 'to fall 10pc'




Naaah.

IMO KRudd'nCo will counter by extending their beloved FHBG "boost" indefinitely.

After all, they promised "whatever it takes".

RE Nirvana for years to come.


----------



## CamKawa (9 July 2009)

Aussiejeff said:


> Naaah.
> 
> IMO KRudd'nCo will counter by extending their beloved FHBG "boost" indefinitely.
> 
> ...



I wouldn't be surprised if Kevin got the credit card out just one last time Johnny Farnham style. I just hope that Turnbull has got the tyres on the debt truck pumpted up to about 50psi to handle all the weight.


----------



## explod (9 July 2009)

Where's that Professor, what's is name, Robo..... no.. Rouge oh, ......oh.. I remember now, the self styled associate Professor Robots.  Missing for a number of days now.  Damn'ed tenant problem I suspect. 

This thread has gone very sad on low volume, are we finally realising the world financial system has a problem.


----------



## tech/a (9 July 2009)

Havent been here for a while.

Still waiting for the bottom I see.
Meanwhile my portfolio has increased in value 13% since the start of this thread.

Will finish building my own Ponderosa in August and now actively looking for a developement property.


----------



## robots (9 July 2009)

hello,

good evening and welcome back Professor Robots

apologies to all, have been in sunny Mt Martha for some commitments in the area

took a drive thru the Tanti Estate for a bit of humour Explod

i am actually surprised to see this thread hasnt been closed considering the current situation

well done Tech

thankyou
professor robots


----------



## kincella (9 July 2009)

well the prices keep going up...just goes to show how wrong some people are
been having the  same argument on another forum....its become tiresome...
but here is my reply to the naysayers...doomsters today....

first lesson for you....when you want to look forward....first you have to look back to history...since 1986 and houses were oh was it 80,000 or 86,000....20 years later they were about 400,000...
there were quite a few crisis in that 20 year period, high unemployment, high interest rates...
and still houses gained 5 times..the 86 price...

the next 20 years to 2026 they could be 2,000,000 or more
based on the past history....

what is the aust wide median house price now is it 479,000 or there abouts....thats almost another 20% above the 2006 figure...yes 7% pa over the last 3 years sounds about right
...and whoa this was in the middle of the GFC which commenced to hit aus about june 2007...
hehehehehe
I have been very conservative with my forecasts and expectations over the last 20 years...and keep hitting the nail on the head...
but hey to each their own, oh and I dont really care if my figures are wrong, I cannot be bothered sifting through pages and pages of stuff on the net...just to be exact...the prices keep going upwards....and will do for the next 50 or more years...thats all I care...miss a couple of years, no worries...its the long term outlook that interests me....
cheers 

--------------------------------------------------------------------------------
.
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..


----------



## wayneL (9 July 2009)

UK update:

http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=348556



> House prices were on the decline again in June, reverting back to their downward trend after a one-off rise in May.
> The Halifax House Price Index said prices dipped by 0.5% in June, to leave the average cost of a property at £157,713, 15% down on last year's figure.
> May's reading had indicated that house prices had climbed by 2.6%, but the figure was greeted with scepticism and was widely labelled nothing more than a one-month anomaly, rather than an indication that the market had bottomed out.




House prices are down 18 or 20% from the peak, yet still overvalued by traditional vectors. Much hinges on now on the inflation/deflation argument. I'm leaning slightly towards inflation atm, but I think it may take a year or three to start showing up... plenty of time for more tankage.

Only cashed up/low LTV property investors are surviving in comfort. The geared up ones are dieing by a thousand cuts. These are going broke in their thousands.

Meanwhile lenders haven't learnt their lesson:

http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=348747



> Nationwide has started offering 125% mortgages to customers in negative equity in order to allow them to move home if their circumstances require it.
> In a move which will raise concerns about lending practices, Nationwide said it had been offering home loans worth up to 125% of the value of the new property to a select few of its customers who are in negative equity but need to move.
> Under the deal, borrowers in negative equity can get a new mortgage worth 95% of the value of the new property. They have to fund the remaining 5% in the form of a deposit, but then they can also carry over negative equity in their original home. The 'value' of the negative equity they carry over can be worth up to 25% of the total cost of the new property.




Fracking insane IMO. A massive bet that we are at a housing bottom... in fact an economic bottom. Neither may be the case.


----------



## kincella (9 July 2009)

and they scoffed at that response...said prices cannot repeat as per the last 20 years...they have to crash some time....
so I followed it up with this post....................

well we could go back another 16 years to 1970....friends and I paid 12,000 for our houses....they climbed to was it 80k or 86k in 16 years...increased by 6.5 times then

the rise is partly caused by the devaluation of the dollar,it just keeps buying less and less over the years,
and with all the huge money being printed now....it can only get worse...not better


----------



## grace (9 July 2009)

CamKawa said:


> I wouldn't be surprised if Kevin got the credit card out just one last time Johnny Farnham style. I just hope that Turnbull has got the tyres on the debt truck pumpted up to about 50psi to handle all the weight.



I thought your message was very funny even if you didn't know that truck tyres need at least 100psi (unless they are flat of course).


----------



## SBH (11 July 2009)

kincella said:


> and they scoffed at that response...said prices cannot repeat as per the last 20 years...they have to crash some time....
> so I followed it up with this post....................
> 
> well we could go back another 16 years to 1970....friends and I paid 12,000 for our houses....they climbed to was it 80k or 86k in 16 years...increased by 6.5 times then
> ...




Its hilarious how bulls would rather quote ancient history australia than modern day UK or US. The fact UK housing has crashed and is crashing surely has some relevance! no no no they say, here in oz its business as usual... we just keep extrapolating the graph upwards.
Unfortunately for bulls we are clearly at the top now. Interest rates low, grants are out, everyone with grey hair and a pulse is a property investor, every idiot FHB couple who wants a mortgage now has one. It only has one way to go unless more structural interference is brought in by the government. Its so unbelievably obvious. Just look to UK to see what happens next. Ruddy did! Hence he got scared and gave handouts. The new trend (down) will be back soon enough!


----------



## Dowdy (11 July 2009)

our housing market is going to crash the opposite way the US did. In the US housing crashed, then commercial, then retail.

Our market will be the opposite to that:
First retail - which we are starting to see
Then commercial - had a look around the commercial/light industrial estates, alot of them have 'For Sale' or 'For Lease' signs on them
Then housing

The only reason it's going to be like that is because the housing market is heavily manipulated by the government so it takes longer but will ultimately be worst in the end.


----------



## wayneL (11 July 2009)

SBH said:


> *Its hilarious how bulls would rather quote ancient history *




Agree in principle, but it's relatively recent history they prefer to quote, a period of very high inflation and the demographical influence of the post war baby boom. If they looked further back to "ancient history", they possibly could be more cautious. 

The baby boom/high inflation/credit bubble conditions made it possible to just buy a house, gear it up and make money. My folks made buckets of money on property *by accident*, just by moving up the housing ladder... more money than they did in their very successful business in fact.

Simple extrapolation and basic mathematics... and a little help from MS excel shows this cannot continue ad infinitum. 

Inflation may help things along in the future, inflation helps the geared property investor. So essentially from here forward, IMO, geared housing investment is a bet on inflation. But other hard assets may perform just as well... perhaps better.

Without inflation kicking in, there will be a world of pain for the *overly* geared.


----------



## robots (11 July 2009)

hello,

yeah man, low inflation (and low interest rates) is going to get us, yeah right

it was no accident on your parents part, it is being in there, being part of it all, no fluke, it was hard work and reaping the benefits

thankyou
associate professor robots


----------



## MrBurns (11 July 2009)

Lets face it house prices go up and down but over the long term it's all up, you just have to be careful you dont gear yourself up in a high phase.
Right now we're due for a large correction down made worse by KRudd.


----------



## wayneL (11 July 2009)

robots said:


> hello,
> 
> yeah man, low inflation (and low interest rates) is going to get us, yeah right
> 
> ...




1/ robots, stop being disingenuous and consider what I actually am saying. Overvaluation + deflation + overgearing = financial fatality.

It's happening in accelerating numbers over here. Consider also what I have said that those with more conservative gearing are very comfortable, many of those are adding to their PF if they can get attractive yields.

2/ You know my parents better then me?  They hated property as investment (wrongly, for the time). They bought houses to live in. The investment value was irrelevant to them. It was only after they retired did they realize...

I tried to get them in property in the mid-late 90s... nup, still can't get my mum to consider property investment even now even though there are some brilliant yields available in selected areas.


----------



## CamKawa (12 July 2009)

An interesting article on Domain of all places, I think Enzo will have to pick the phone and have a little chat to the editor about this one.

*Oz house prices: a Ponzi scheme waiting to collapse?*


----------



## tech/a (12 July 2009)

> Without inflation kicking in, there will be a world of pain for the overly geared




Solution is pretty simple.
Dont be overly geared and in the property market.
Increase your property portfolio based on short term gearing longterm reduction of gearing. If your not currently in the position to do this then dont wade into the market.

If you are then build and sell your brains out!

Its really not that hard.


----------



## wayneL (12 July 2009)

tech/a said:


> Solution is pretty simple.
> Dont be overly geared and in the property market.
> Increase your property portfolio based on short term gearing longterm reduction of gearing. If your not currently in the position to do this then dont wade into the market.
> 
> ...



That's not what VIs and gurus teach and you know it.


----------



## kincella (12 July 2009)

Warning quote following.....blogs following the article on the ponzi scheme....
.................................
"Not if money supply keeps increasing and that's the real Ponzi !! Unless there is an over supply of houses or major calamity where existing owners dump houses large scale I doubt prices will go down.


Posted by: Jake at July 7, 2009 11:58 AM 
Unlike any other "investment", housing is driven primarily by necessity. Absolutely none of us is forced to buy shares, or gold, or antiques, or tree plantations. But we are forced to buy or rent the place we live in. The reference to Glen Stephens , "Even Glen Stephens (Reserve Bank) has suggested Australians need to moderate their expectation that we can all become wealthy by paying ever-increasing prices for each others homes", is true. We are possibly entering a new phase where, as in a lot of other major cities in the world, some people NEVER buy a property. They rent !!! Why ??? Not because they can't afford a property. But because they can't afford a property in the area they want to live in"


----------



## kincella (12 July 2009)

lets talk  about divorce and property....and its impact on housing....

reminded by an associate....who was divorced many years ago, he walked out of the home, spouse bought him out....15 years later he is still renting...he earns 100k pa....he just cannot move on, and get back into property ....he cannot believe the prices....he refuses to pay more for a house than the one he lost...all those years ago...in the meantime, he has paid over 300,000 in rent...has nothing to show for it......
I get the same vibe from those bloggers who admit they are divorced.....they are wishing for a house crash crisis to restore them back into a house....

I was thinking about why so many are narky on property...and yes, all those divorcees out there, losing their homes.... 
I am divorced.....feel lucky I escaped from the marriage as early as I did...and have had a wonderful post marriage life....love my single life

on a another note....not sure how many divorces pa in Au....but it means instead of 2 persons per house...suddenly one needs 2 houses to house the separated adults.....that puts pressure on the market....


----------



## Mc Gusto (13 July 2009)

MrBurns said:


> Lets face it house prices go up and down but over the long term it's all up, you just have to be careful you dont gear yourself up in a high phase.
> Right now we're due for a large correction down made worse by KRudd.




absolutely agree it is simply a matter of time and how far it corrects...will be interesting when it does. we should see the start of it near the end of this year in my opinion


----------



## Mc Gusto (13 July 2009)

house prices affordable in australia?

http://www.demographia.com/dhi-ix2005q3.pdf

might be some interesting reading for some..


thanks

gusto


----------



## Mc Gusto (13 July 2009)

kincella said:


> Warning quote following.....blogs following the article on the ponzi scheme....
> .................................
> "Not if money supply keeps increasing and that's the real Ponzi !! Unless there is an over supply of houses or major calamity where existing owners dump houses large scale I doubt prices will go down.
> 
> ...




pretty selective quoting there Kincella.

the idea of ever increasing wealth especially in the current economic times is beyond belief. Companies are not only freezing pays they are cutting them. therefore an evert increasing housing market in current conditions is just not sustainable.


thanks

gusto


----------



## MACCA350 (13 July 2009)

Mc Gusto said:


> house prices affordable in australia?
> 
> http://www.demographia.com/dhi-ix2005q3.pdf
> 
> ...



Your joking aren't you........look at table 5...........we have the highest median unaffordable rating in all the nations with 3 in seriously unaffordable and 24 in severely unaffordable.



> Australia: The Median Multiple in Australia is 6.0, double the 3.0 historic maximum norm and well above levels of just a decade ago (Figure 1).12 Among the larger metropolitan markets, Sydney remained the worst, at 8.3 (down from 8.6). Median house prices dropped in Sydney and Perth. Perth’s Median Multiple dropped from 7.6 to 6.4, reflecting not only the price decline, but strong income growth. At the same time, Adelaide’s already serious housing unaffordability worsened, with
> its Median Multiple rising from 6.5 to 7.1. The Sunshine Coast (Queensland) replaced Mandurah as the nation’s most unaffordable surveyed market, with a Median Multiple of 9.3. All markets in Australia were rated as “severely unaffordable” except Wagga Wagga (New South Wales), Bendigo and Ballarat (Victoria), which were rated “seriously unaffordable” (Median Multiple between 4.1 and 5.0).
> Unlike the other national markets in the Survey ¸ Australia has thus far been able to avoid material house price declines. It seems likely that, sooner or later, the inherent instability and unsustainability that characterizes bubbles will lead to house price declines in Australia. However, were it possible for Australia to retain its highly over-valued house prices, there would still be a significant cost. Future generations would pay far more for housing than in the past, and Australia’s relative standard
> of living would decline.




And why are you referencing that article anyhow..........last time it was brought up we were berated for doing so, saying it was a worthless methodology using phrases like "anyone who reads that rubbish" and "complete load of rubbish" 

cheers


----------



## Mc Gusto (13 July 2009)

MACCA350 said:


> Your joking aren't you........look at table 5...........we have the highest median unaffordable rating in all the nations with 3 in seriously unaffordable and 24 in severely unaffordable.
> 
> 
> 
> ...




mate i was pointing to the fact that it states we are off the scale unaffordable..that is why i questioned in my post 'house prices affordable?' however i didnt realise it had already been debated.

thanks

gusto


----------



## Taltan (13 July 2009)

Interesting articles. 
Kincella - You are incorrect in that people must invest in housing but not stocks. As you say someone can rent their whole life to provide for housing, likewise everyone needs banks, resource companies etc. You may never buy a bank share but you need to realise that as their customer (and the big 4 rip you off pretty good in Aus) you are helping their shareholders in exactly the same way as the renter/owner scenario.

A good point however is whether Sydney & Melbourne can follow NY in that house prices keep rising until the average person rents. Do you not think we are there already? How many people under 35 own a detached house in Toorak, Sth Yarra, Brighton, Malvern, Camberwell etc. that they did not inherit?


----------



## kincella (13 July 2009)

am wondering about the implications of China on our resources stocks...since the Rio guy was detained.....?????
I guess some will scoff...no implications...
but look at all the silly ones buying the old GM shares last week...they thought it was the new GM shares...which are not listed....
property keeps looking safer all the time...resources to china .....there are problems in store...
safest investment atm.....housing.....
this thread is almost obsolete.....prices have not been falling the past year...but rising...
cheerio


----------



## MACCA350 (13 July 2009)

Mc Gusto said:


> mate i was pointing to the fact that it states we are off the scale unaffordable..that is why i questioned in my post 'house prices affordable?' however i didnt realise it had already been debated.
> 
> thanks
> 
> gusto



Yeah I should apologise for the tone of my post, I originally thought Kincella wrote it and was giving him heaps for referencing an article that he had berated myself and others for bringing up.........only after I posted it did I realise he didn't write your post.........I edited it, but obviously not enough


.........btw I do agree with the jist of the article.........that's why I brought it up earlier

cheers


----------



## MACCA350 (15 July 2009)

Spoke to someone at Simmons and they mentioned that if FHB don't sign in the next two weeks they probably won't have enough time to get the July-Sep boost, also mentioned their start build dates for Feb are filling up. Not sure if this is common to many of the larger building groups, but if it is we might start seeing the effects of the FHB boost in the new housing sector taper off soon.

cheers


----------



## MrBurns (15 July 2009)

MACCA350 said:


> we might start seeing the effects of the FHB boost in the new housing sector taper off soon.
> cheers




Unless KRudd the wrecker is feeling insecure and extends it again


----------



## Lancelot (17 July 2009)

MACCA350 said:


> Your joking aren't you........look at table 5...........we have the highest median unaffordable rating in all the nations with 3 in seriously unaffordable and 24 in severely unaffordable.




BAH
Forget that, this shows housing prices in Australia are clearly affordable.  If they weren't affordable who is buying?


----------



## kincella (17 July 2009)

baa baaa from me too....do some research on the group demographia....they have another agenda, which apparently is not clear to you....
and to say places like Bundaberg, Albury Wodonga and any other small regional city in australia is more unaffordable than Los Angeles etc is sooo ridiculous....(I cannot be bothered to check again...it may not be Los Angeles but a similar big town)
its all about city boundaries...demographia want them extended...check out todays news....Vic Govt report states it costs 4 billion more to build new suburbs, than to change rules to build in established suburbs....but taxpayers wear the cost...so who cares
of course Atlanta is now affordable....they dont make a zillion cars a year there now.....all the people unemployed....its a pretty ugly place actually, doubt many here would like to live there

traps for players ,and some of you guys fall into the trap every time....
of course it suits your attitude...to say housing is unaffordable....regardless if the real facts are ignored......
demographia is similar to Al Gore...and his inconvenient truth......
unfortunately, one day you will look again, only to find that house in the inner city that you wanted for a song, is so far out of your reach....
you will have to finally change your attitude....and do the right thing....go find a house further out...that you can afford...then live happily ever after...
*** I say there are affordable places available year round....but its not a huge house on a quarter acre block, in the inner suburbs in Melb or Sydney...
its half an hour away...or 30-50 klms....
ps you will find more sympathy over at the global house crash sites.....
 oh, and when interest rates start to rise again in a few years time....house prices will slow again....just like they did last year...but the cost to you will be the same....now 400k @ 5% = 20,000 interest pa........or 300k @ 7% = 21,000 interest pa.........its 6 of one...or half a dozen of the other....
I am not saying for a moment that prices will drop 100k......its just a very simple example of the affects of interest rates....
cheers
oh and watch out for some of the old bulls.....they have been gored, gut wrenching stuff...the missus took it, bit like watching an old lion, after the young lions came in and gave them a hiding,....took over the pride, the old lion cast out...its a sorry sight.......


----------



## MACCA350 (17 July 2009)

Lancelot said:


> BAH
> Forget that, this shows housing prices in Australia are clearly affordable.  If they weren't affordable who is buying?



Let me see:
Lowest interest rates in 50 years
Largest government incentive ever
LVR rates still at subprime levels
Belief that if you don't get in ASAP you'll be locked out of the housing market forever as they'll get even more unaffordable.

Who's buying..........looks like every man, woman and child. Why........because they believe if they don't now they never will be able to.

I have friends who had resigned themselves to renting forever........that was until the above conditions occurred.........now they can't get in quick enough. They are aware they may be in trouble if things change, but they're too scared of missing out that they're willing to risk it.

cheers


----------



## kincella (18 July 2009)

here is an article that should make you all happy...vindicated

Port Douglas investors are rushing to offload units

Bridget Carter | July 16, 2009 
Article from:  The Australian 
UP to a third of the 3000 holiday apartments in Port Douglas are for sale, with one unit recently fetching about $177,000 after selling for $366,000 six years ago, according to local agents.

Villas at the Juniper Sea Temple in Port Douglas are down by 20-30 per cent.
Newly built units are flooding the market, with more than half of the apartments in the town's Lagoons@port development owned by failed property developer and pub baron Tom Hedley to be offered for sale by receiver Ernst & Young in coming weeks. 
Phil Holloway, principal licensee of the Port Douglas Century 21 office, said he would put in a submission to receivers to market Mr Hedley's units. 

"The last price received for one of the apartments was $345,000 and Hedley wasn't able to go below that because it wasn't economical," he said. 

http://www.theaustralian.news.com.au/business/story/0,28124,25787721-25658,00.html


----------



## matty2.0 (18 July 2009)

MACCA350 said:


> Let me see:
> Lowest interest rates in 50 years
> Largest government incentive ever
> LVR rates still at subprime levels
> ...




Nothing wrong with renting forever. So long as you're a good investor and can get high returns on your capital.

Long term fixed rates by the banks for home loans are in the 7-9% range. Not exactly a great time to buy is it? There is no doubt that interest rates will rise in the next 5-10 years. Variable or fixed, you're still looking at about 8%+ rates long term.
The banks will take you to the cleaners if you give them a chance. We've got a stable big 4, but with that comes a price.


----------



## MrBurns (18 July 2009)

kincella said:


> here is an article that should make you all happy...vindicated
> 
> Port Douglas investors are rushing to offload units
> 
> ...




Thats what I was waiting for, I'll be on a plane soon, wait another month or 2, wonder how the rental market is ?


----------



## cutz (18 July 2009)

matty2.0 said:


> Nothing wrong with renting forever.




And be at the mercy of some tightarse incompetent landlord / property investment guru. Forget about it, owning over renting anyday.


----------



## MACCA350 (18 July 2009)

MrBurns said:


> Thats what I was waiting for, I'll be on a plane soon, wait another month or 2, wonder how the rental market is ?



Careful..........I smell a trap........Kincella wouldn't post bearish info without something up his sleeve:

cheers


----------



## johnnyg (18 July 2009)

Some good posts in here. And hopefully I can add to them. Today I went with a friend to look at some housing. Below is a chart (reasonably rough) of the # of people that attended each open house (went to 4) and the price of each house.

Now this is only a tiny example. However I feel its valid and expresses whats happening with house prices. Entry level homes  ~ 150-200K attract extreme amounts of interest (# of people per open house) where as the more expensive homes 250K+ attract very few.

There is a clear divergence between # of people per open house and the price of the house.


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## matty2.0 (18 July 2009)

cutz said:


> And be at the mercy of some tightarse incompetent landlord / property investment guru. Forget about it, owning over renting anyday.




If you're not a good investor/trader then residential is for you I guess. But I stand by my firm belief that if you're a good investor/trader and can get 10-20% returns on capital then there is no reason why you should be purchasing real estate, which is after all ... just another investment. All depends how good you are with capital and where you want to put it.


----------



## cutz (18 July 2009)

matty2.0 said:


> If you're not a good investor/trader then residential is for you I guess. But I stand by my firm belief that if you're a good investor/trader and can get 10-20% returns on capital then there is no reason why you should be purchasing real estate, which is after all ... just another investment. All depends how good you are with capital and where you want to put it.




Hi Matty2.0,

I wouldn't consider owning your own home an investment, it's a lifestyle choice, a choice not to be done over by some clown. Also acts as a hedge against hyper inflation which is a bonus.

Each to their own i guess, i would never consider buying a second house because i consider it a waste of resources, I'm also sure that many here own homes and also pull 10-20% return on capital.

BTW, releasing equity from a home for investment strategies is an option, ( obviously within reasonable limits), best of both worlds are possible.


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## knocker (18 July 2009)

Interest rates on 2.79% here. Australian rates are too high. And property over valued. Buy overseas.


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## tehnoob (18 July 2009)

knocker said:


> Interest rates on 2.79% here. Australian rates are too high. And property over valued. Buy overseas.




I fail to see how you can claim interest rates in Australia are too high just because Bernanke and Greenspan cut the rates in the US, thus inflating asset prices. And then go on to say that prices are too high here... Hrmm, would lower interest rates not send prices higher?


----------



## MrBurns (18 July 2009)

MACCA350 said:


> Careful..........I smell a trap........Kincella wouldn't post bearish info without something up his sleeve:
> 
> cheers




Ok now I'm paranoid


----------



## kincella (18 July 2009)

well spotted.......hahahahaha....question now is ...what does kincella have up his sleeve......


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## MrBurns (18 July 2009)

I think I'm going all Ned Flanders, buy or sell diddly diddly diddly diddly....


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## MACCA350 (19 July 2009)

MrBurns said:


> I think I'm going all Ned Flanders, buy or sell diddly diddly diddly diddly....



<In best Elmer Fudd voice>

Be vewy vewy quiet, Kincella's hunting pwoperty bwears!, He-e-e-e-e!

cheers


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## satanoperca (19 July 2009)

Prestige home prices tumble 40pc

http://www.theaustralian.news.com.au/story/0,25197,25799089-601,00.html

Top 100 discounted properties

http://www.theaustralian.news.com.au/files/house_prices.pdf

One piece of the puzzle is coming together for prof. Steve Keen.

Interesting to see over the coming year if decreasing demand at the top end trickles down to other segments of the market.

Cheers


----------



## kincella (19 July 2009)

this is last weeks news from Morrell and Koren..buyers advocates in Melb

20 Ross Street, Kew Land value – always the litmus test – sold last year for $1,901,000, sold last weekend for $2,335,000. 20%+ profit for doing … absolutely nothing. 
4 Cross Street, Toorak a modern spec house on 620 sq metres sold via an expression of interest campaign for $5,250,000. Not a big block, yet there were several disappointed punters. 
Alexandra Avenue, South Yarra. New apartment, very busy location, also sold through an expression of interest campaign: $3.8 million. 
The next few weeks? At the top end, the truffle-hunt continues. At the lower end, investors are flocking back in droves. Where were they six months ago when the real estate market was on its knees?

David Morrell

Something to say? Your comments are welcome. Click on “Comments” below.


Bayside: Auction clean-sweep pales before private sales
Melbourne’s top five auction sales for the week were all in Bayside. That’s a clean sweep which indicates the strength of the resurgence in the beachside suburbs.

It’s in stark contrast to less than six months ago when Bayside (Brighton in particular) was consigned to basket-case status with allegedly financially stressed vendors and a complete absence of buyers.

180-182 The Esplanade, Brighton a mortgagee-instructed auction last sold in November 2008 for $3.55 million. It’s 840 sq m. and includes a tired pair of maisonettes which will be demolished, yet two keen bidders pushed the price to a very strong $4,105,000.

Nearby, in leafy Sandringham, 43 Victoria Street, set in park-like grounds of 2600 sq m, sold for a more than respectable $3,350,000. Soon after, 163 Beach Road, Sandringham (on a more modest 616 sq m) was knocked down for $1,800,000.

Even discreet and private Black Rock made a podium appearance: 52 Stanley Street, an 8 room rendered house on a 453 sq m, sold for $1,440,000.

1B Lucas Street, East Brighton, in a classic example of underquoting, made it into the top five results for the week. Touted as $950,000+, the property attracted four bidders before being knocked down for $1,260,000, a mere $310,000 over the “quote” or close to 33%! Arrogant? Disrespectful? Mismanagement? Agents guilty of being so wide of the mark have little to be proud of. Their regard for buyers is clearly wanting.

And then came a couple of private sales …

1 Bay Street, Brighton finally changed hands for a price understood to be in the vicinity of $12 million. It’s over 2,000 sq m, it’s on the foreshore, it overlooks the yacht club. The new owners plan to build six luxury apartments and a penthouse.

A few hundred metres away at 25-27 Glyndon Avenue, a local buyer has forked out $15.5 million for a Jon Friedrich house with court and pool on 1500 sq m. It has uninterrupted views to the city, across the bay and down to the Brighton yacht harbour. This shatters the previous record price for a beach front property in Brighton by over $3 million and makes a strong statement about the health of the local market.
Damian Taylor

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


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## kincella (19 July 2009)

and look at this....family's pooling together  to buy propes up 300%
Enquiries for joint mortgages up 300% Australians are ignoring warnings about entering into joint property ownership with friends or family, a lender says.

Text size + 
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19.07.2009 10:48 AM 

Australians are ignoring warnings about entering into joint property ownership with friends or family, a lender says.

The warning follows the release of data by direct lender MyRate.com.au showing a 300 per cent rise in the share of properties brought by groups of friends or family over the past six months.

MyRate.com.au managing director Kevin Sherman said the increase in joint ownership had been spurred by the gradual phasing out of the boost to the first home owners grant from October 1.

Tighter criteria for lending had also played a part in the rise of joint buying.

http://www.thebull.com.au/articles_detail.php?id=4768


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## johnnyg (19 July 2009)

satanoperca said:


> Interesting to see over the coming year if decreasing demand at the top end trickles down to other segments of the market.
> 
> Cheers




That's exactly what myself and my friend witnessed yesterday. Absolutely no demand for the higher prices houses.

Surely for these higher priced homes to sell their prices will have to come off, which in turn _may_ take down the lower end of the market as well.


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## CamKawa (23 July 2009)

*Grants fuel first-home buying frenzy*

More than 5,000 Victorian first-home buyers entered the real estate market last month in a buying frenzy fuelled by the first-home owners grant.

A record 5,193 first home purchases were made in June, including 1,489 newly constructed dwellings, which attract higher government incentives.
The Federal first-home buyers grant boost has been extended until the end of September, while the state bonus will last until at least June next year.

*All up, first-time buyers purchasing new homes in Melbourne are eligible for as much as $32,000, and $36,500 in regional areas.*

Lesser amounts are available for existing homes.
Victorian Premier John Brumby said housing construction was the best way to stimulate jobs and boost the economy but refused to be drawn on whether the state bonus would be extended beyond mid-next year.

''I'm not going to make commentary now about the budget next year,'' he said. ''The appropriate time to do that will be closer to the budget, but certainly I think the plans that we've put in place, there's no doubt they're working and working spectacularly well.''

*Mr Brumby said there was no evidence the grants were inflating house prices and competition was giving buyers value for money.*
--------------------------------------------------------------------

Question is what planet is Brumby living on?


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## MACCA350 (23 July 2009)

CamKawa said:


> *Mr Brumby said there was no evidence the grants were inflating house prices and competition was giving buyers value for money.*



What a crock. June I got a quote from Metricon to build for $271k ...........last week I asked again and was quoted $281k........$10k increase in one month! Which just so happened to be when the total VIC grants went from $26k to $32k

I want what Brumby's smokin'

cheers


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## MrBurns (23 July 2009)

Brumby, Rudd and all the labor bastards havent got a clue or just lie through their teeth.


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## MACCA350 (23 July 2009)

CamKawa said:


> More than 5,000 Victorian first-home buyers entered the real estate market last month in a buying frenzy fuelled by the first-home owners grant.
> 
> A record 5,193 first home purchases were made in June, including 1,489 newly constructed dwellings, which attract higher government incentives.



Would be interesting to see the number of overall sales for June. 
REIV states 358 Auctions plus 777 Private sales for WE 19 July........that's 1135 total sales for the week...........at that rate it's about 4900 total sales for a month.

5000 FHB for june..............4900 extrapolated total sales for a month...........Are we looking at a near 100% FHB market wait till the grant runs out!!


...........I must have missed something, coz that should be impossible

cheers


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## Gundini (23 July 2009)

MACCA350 said:


> 5000 FHB for june..............4900 extrapolated total sales for a month...........Are we looking at a near 100% FHB market wait till the grant runs out!!
> 
> 
> ...........I must have missed something, coz that should be impossible
> ...




Stop it! You are getting me excited.... I completed the final sale of my sub $500K houses 3 weeks ago. 

So now I'm homeless, after living in one of them. (Bloody expensive to rent back at $420pw)

The funny part was the last property. We asked $499 and was happy with $456, so that we netted $450 after commission. (Go Gecko, no affiliation) We got $498! Couldn't believe it, and could have got more but started to feel sorry for the buyers...

Gotta leave something for the next guy


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## Beej (24 July 2009)

Gundini said:


> Stop it! You are getting me excited.... I completed the final sale of my sub $500K houses 3 weeks ago.
> 
> So now I'm homeless, after living in one of them. (Bloody expensive to rent back at $420pw)
> 
> ...




And you post this on the "prices to fall for years" thread that has been going for over 1 year??? This should be on the "prices to rise" thread, as you have just shown that they have! 

Beej


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## CamKawa (24 July 2009)

A bit of property spruiking going here

Land prices bounce back

Have a look at how the volume of sales has fallen off a cliff. I don't reckon there's much strength in these prices.


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## matty2.0 (24 July 2009)

http://www.smh.com.au/national/rentals-tightest-in-cheap-suburbs-20090722-dtmr.html

_Rentals tightest in cheap suburbs
Clancy Yeates
July 23, 2009

THE rental market remains as tight as ever in Sydney's most affordable suburbs, offering scant relief for tenants, a report says.

Despite the flood of first-home buyers who have stopped renting, figures published today by SQM Research show the number of houses for rent in the western suburbs is shrinking.

In Liverpool and Bankstown, vacancy rates were 1.6 per cent in June and had not eased in the past year, SQM said. This bucks the trend across Sydney, which has the nation's highest vacancy rate of 4 per cent, fuelled by young people exploiting record low interest rates and buying property.

The managing director of SQM, Louis Christopher, said the low vacancy rates would push up rents further in the more affordable suburbs. "It is … worrying how the affordable end of the rental market is not recording any great relief, and we believe rents in this part of the market are likely to record increases in the foreseeable future," he said.

The trend is in contrast to past property downturns, when vacancy rates have eased as first-home buyers stopped renting and developers kept building.

"This time around I'm a bit concerned that we're not getting the same supply response that we had last time," Mr Christopher said. Tighter credit standards from banks were the likely cause for the shortage, he said.

In another sign that rents had failed to cool down as much as other prices, yesterday's consumer price index showed rents across Sydney rose 7.1 per cent in the year to June and 1.5 per cent in the quarter. The broader index of consumer goods and services rose 0.5 per cent in the quarter.

In contrast to the trend in outer suburbs, SQM's figures showed areas close to the city such as Leichhardt, Newtown, Surry Hills recorded higher vacancy rates of close to 5 per cent. A senior policy officer at the NSW Tenants Union, Chris Martin, said outer-Sydney suburbs could be showing tighter vacancy rates because tenants in these areas had fewer alternatives.

"Maybe there's less demand for inner-city accommodation as people live with their parents or stick with housemates," he said._


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## MrBurns (24 July 2009)

kincella said:


> 20 Ross Street, Kew Land value – always the litmus test – sold last year for $1,901,000, sold last weekend for $2,335,000. 20%+ profit for doing … absolutely nothing.
> http://www.morrellandkoren.com.au/topend/




Lost interest say $90,000
Stamp duty say - $105,000
Rates ? say $5000
Selling costs including ads and commission say - $50,000

Profit -          $434,000
Less costs      $250,000

Profit =           $184,000 less tax

less legals in and out say $4000 all up = $180,000

Thats less than 10% with a fair bit of risk (a lot actually)


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## MrBurns (24 July 2009)

CamKawa said:


> A bit of property spruiking going here
> 
> Land prices bounce back
> 
> Have a look at how the volume of sales has fallen off a cliff. I don't reckon there's much strength in these prices.




I think the main reason we aren't aware more of a crunch is because the media just ignore it.


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## explod (24 July 2009)

MrBurns said:


> I think the main reason we aren't aware more of a crunch is because the media just ignore it.




Mainstay of revenue, Real Estate Classifieds.

They are not going to shoot the golden goose and news will be biased on the bull side.

Da poor mugs at do bottom of da food chain are the ones being screwed.


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## MrBurns (24 July 2009)

explod said:


> Mainstay of revenue, Real Estate Classifieds.
> 
> They are not going to shoot the golden goose and news will be biased on the bull side.
> 
> Da poor mugs at do bottom of da food chain are the ones being screwed.




Yes and it's not just that .......much of te media are property bulls, perhaps because of their own mortgages but there are few realists out there.


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## Trevor_S (24 July 2009)




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## CamKawa (25 July 2009)

Rush rush rush. OMG check out the media hype. 

Grant deadline nears for property virgins

Like lemmings off a cliff.


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## Knobby22 (25 July 2009)

The govenrment should definitely not continue with these grants now the economy has turned. Let's see how fiscally responsible Rudd really is.


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## kincella (25 July 2009)

Survey finds more expecting to buy first home
Posted 3 hours 44 minutes ago 

A new survey of almost 1,000 people has found close to 60 per cent of those who do not own homes expect to buy in the next 12 months.

The survey by Bankwest and the Mortgage and Finance Association of Australia says this is up from 39 per cent last November.

The association's chief executive, Phil Naylor, says the surge seems to be because of low interest rates rather than the first home owners grant.

"[That] is interesting because when we did the same survey about a year ago, people were saying the home buyers grant was an attractive point for them," he said.

"Obviously as time has gone by and even though they've had the experience of that, it's really the low interest rates that is the clincher."

Only 6.2 per cent of respondents said the first home owners grant was an incentive to buy now.
"The interest rate is the more attractive point because that's an ongoing thing," Mr Naylor said.

"It enabled you to make decisions about what sort of loan you can service and so forth and I think that's probably the driving force."

http://www.abc.net.au/news/stories/2009/07/25/2636216.htm


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## CamKawa (25 July 2009)

kincella said:


> The survey by Bankwest and the Mortgage and Finance Association of Australia.



That's about as impartial as the HIA saying there's an acute housing shortage and we all need to desperately build more houses. 

Permabull spruiking personified.


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## MACCA350 (25 July 2009)

kincella said:


> "The interest rate is the more attractive point because that's an ongoing thing," Mr Naylor said.



Ongoing my a$$.............do they think we'll have a 3% cash rate for the next 30years or so

..........so what's the chances those extra 20% of people jumping in because of low interest rates(and the rest taking on extra debt due to the same reason) end up hitting the wall when rates climb..........that along with the still high LVR.........are we being set up for a subprime crisis on the scale of other countries around the world that started this whole financial crisis?

Seems to me that we've weathered this financial crisis well compared to other countries, though many have taken advantage of the low rates and ongoing easy credit to increase debt.........I'd have thought we should be doing the opposite to ensure we don't get stung as the crisis recovers.........

Then again maybe the RBA will not be able to increase rates when needed due to the detrimental effect it will have on the local market, but wouldn't this kill our economy if our rate stays low when others increase? Wouldn't inflation run rampant? or would the AUD become worthless? Any economist's care to comment?
I have no idea what the effects would be but I get the sense were setting ourselves up for trouble 

cheers


----------



## kincella (25 July 2009)

could we keep the posts going, without using the bad language.....

now my thoughts are......the economy is not in good shape....its going to go sideways for a long time....it will not be a V shaped recession....or even a W shape...more like a vvvvvvvv.....for another 3 years....
when interest rates go up ...only the banks pocket our money.....but the government needs your money more than the banks....to pay off that huge deficit......
they will have to keep the interest rates low...to keep the economy rolling along.....its on a knifes edge at the moment.....
people can buy the houses, using the low rates.....but they will need to hang onto them for the 5-10 years...like a prudent property investor would....

where are the ...scaredy cats...like when the recession first started over 2 years ago......with all that screaming about another 1930's depression was on us.....
its not like that at all......but not unlike another 1990's style recession

I have to wonder...with all that money rushing back into the stockmarket...as if nothing had happened and its all roses again.....seems to me to be more like a huge gamble...nothing like investing


----------



## knocker (25 July 2009)

MACCA350 said:


> Ongoing my a$$.............do they think we'll have a 3% cash rate for the next 30years or so
> 
> ..........so what's the chances those extra 20% of people jumping in because of low interest rates(and the rest taking on extra debt due to the same reason) end up hitting the wall when rates climb..........that along with the still high LVR.........are we being set up for a subprime crisis on the scale of other countries around the world that started this whole financial crisis?
> 
> ...




Tha au dollars is way too strong at the moment. I am waiting for it to tank so I can move back home and make a killing on a slumped property market. Only a few more years to go


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## Mc Gusto (27 July 2009)

some perspective from a first home buyer...

http://www.theaustralian.news.com.au/story/0,25197,25839573-5006786,00.html

'False boom' a sign of real estate madness

ANGUS Bissland thought he would have a relatively easy time buying his first home after working in Britain and the US and witnessing the impact of the global financial crisis.

But the 30-year-old, who works in finance, could not believe the state of the property market when he got home. 

He thinks the combination of low interest rates, the first-home buyer grants and people still borrowing more than they can afford has created a false property boom that could come crashing down. 

As Kevin Rudd warns of higher interest rates, Mr Bissland says he is concerned about buying in Melbourne at the height of what he calls a "false economy" and then seeing the market decline because of the impact of any rate rises. 

"Melbourne is the only market in the world that is going up," he said. "The city is a great place to live, but that is still a real concern for me." 

Mr Bissland and his partner, Saskia Hammond, have been looking for five months for a house in Melbourne's inner south and bayside suburbs. They hope to spend about $600,000. 

"It's just madness at the moment," he said of the city's record 87 per cent clearance rates for the year. 

Mr Bissland said the first-home buyers grant was artificially pushing house prices up and he was worried about the impact on the market when it ends. 

"I call it the first-home sellers grant," he said. "It has led to a real sellers market and that is something of a false economy. It has pushed houses that used to be $500,000 over $500,000." 

Mr Bissland said the low interest rates also meant more people who could not afford to take large mortgages were doing so to get into the property market.


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## robots (27 July 2009)

hello,

fantastic article, but its even more simple than Angus writes:

you want my house you can give me the $, dont pay then dont get it

no big deal right, plenty to rent

thankyou
professor robots


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## ands (27 July 2009)

Anyone know any good, free property data websites for Brisbane?


----------



## CamKawa (28 July 2009)

Even Stevo's jumping on the band wagon.

RBA warns of housing bubble risk


----------



## CamKawa (28 July 2009)

Ripped from tonight's ABC news.

Check out the size of our bubble compared to the US.


----------



## satanoperca (28 July 2009)

The only thing that comes to mind when viewing that graph is that we are certainly different here in Aus, bigger and better at creating bubbles.

KRUDD has surely got a solution to this problem, put the nation in debt, that's what got us into this situation so logic says it must be what gets us out, proving the saying that two wrongs can make a right.

Cheers


----------



## Beej (29 July 2009)

Why does rising prices over time of a scarce commodity/asset with large demand automatically =  a bubble???? I think bubble is becoming a way over-used term.....

All that Kohler graph tells me is that the US has suffered a systemic financial crisis due to lax regulation and insane financial/banking practices, resulting in a house price crash due to an almost unprecedented wave of foreclosures and forced selling + previous massive over-building. This then even fed a negative feedback loop due to it being the root cause of the subsequent US economic contraction = rising unemployment = further sapping demand for housing + increase in the foreclosure rate. So their market has over-shot massively to the down-side - it's not a "normal" situation.

Australia has not experienced these problems, as demonstrated by the difference in performance of the 2 residential housing markets! QED. Our market has behaved more "normally". The US market fall is not permanent - it will rise again soon as sure as night follows day, as it crashed. It will rise much faster than our market will - and when that happens will everyone here be wondering why our market is not increasing at the same rate? I can't wait to make graphs starting at 2008/2009 that will show our market massively under-valued compared to the US in a few years 

Cheers,

Beej


----------



## Beej (30 July 2009)

So is it nearly time to shut this thread down???

http://news.smh.com.au/breaking-new...-jump-33-in-second-quarter-20090730-e1r4.html



> House prices jump 3.3% in second quarter
> July 30, 2009 - 1:04AM
> 
> House prices have recorded their strongest growth since late 2007, rising, on average, by 3.3 per cent in the second quarter of this year, a national survey shows.
> ...




And this bit - so much for the top end tanking; it's over people - you had your chance to get into the top end at historically low prices late last year and maybe earlier this year. Prices probably still off the peaks in this segment, but not for long:



> .....
> 
> "The national housing market has experienced its strongest quarterly growth in both house and unit prices since the global financial crisis took hold late in 2007," Mr Bell said in a statement.
> 
> ...




So it's no longer just about FHBs and grants etc (as has been pointed out by many here on ASF for the past several months), and median prices in nearly all capital cities now equal to or greater than their late 2007 peak - so much for prices to fall for years..... looks like Steve Keen better be getting his winter woollies ready for a very cold walk to the top of Mt Kosciusko! 

Cheers,

Beej


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## MrBurns (30 July 2009)

It's all FHB bribes and low interest rates, both will be over very soon, then you can close this thread down and start another one called - 

"House prices to crash for years"


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## wayneL (30 July 2009)

Beej said:


> it's over people



Nothing's ever over.

The housing has had a massive adrenaline shot to save its life. It's feeling fab at the moment. But the patient still has the same problem.


----------



## kincella (30 July 2009)

just a little reminder...it was the current US president himself who started the ball rolling for the NINJA loans...the brief summary....when black americans without a job, or income were knocked back for a loan from the banks....Barack Obama and his team at ACORN accused the banks of racism....so the banks were forced to lend the money, now known as NINJA loans...which contributed significantly to the GFC

and the group ACORN which I believe Obama is still a member of...consequently received over 140 billion dollars of taxpayer money from their GFC
extracts..........................

In the 1980s, groups such as the activists at ACORN began pushing charges of "redlining"-claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation.


In fact, minority mortgage applications were rejected more frequently than other applications-but the overwhelming reason wasn't racial discrimination, but simply that minorities tend to have weaker finances.


ACORN showed its colors again in 1991, by taking over the House Banking Committee room for two days to protest efforts to scale back the CRA. Obama represented ACORN in the Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994 suit against redlining.  Most significant of all, ACORN was the driving force behind a 1995 regulatory revision pushed through by the Clinton Administration that greatly expanded the CRA and laid the groundwork for the Fannie Mae, Freddie Mac borne financial crisis we now confront. Barack Obama was the attorney representing ACORN in this effort. With this new authority, ACORN used its subsidiary, ACORN Housing, to promote subprime loans more aggressively.Barack Obama, the Cloward-Piven candidate, no matter how he describes himself, has been a radical activist for most of his political career. That activism has been in support of organizations and initiatives that at their heart seek to tear the pillars of this nation asunder in order to replace them with their demented socialist vision. Their influence has spread so far and so wide that despite their blatant culpability in the current financial crisis, they are able to manipulate Capital Hill politicians to cut them into $140 billion of the bailout pie!http://www.americanthinker.com/2008/09/barack_obama_and_the_strategy.html


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## Beej (30 July 2009)

MrBurns said:


> It's all FHB bribes and low interest rates, both will be over very soon, then you can close this thread down and start another one called -




What? FHBs using grants to buy $1M++ properties are they? Did you read the article? Top end increasing at DOUBLE the rate of the low end.

PS: It was your hero JW Howard who first introduced the FHB grant and supposedly ushered in low interest rates anyway! Do you loath him for it??? 



wayneL said:


> Nothing's ever over.
> 
> The housing has had a massive adrenaline shot to save its life. It's feeling fab at the moment. But the patient still has the same problem.




Just to keep the context, my comment "it's over" was referring more to the top end tanking - which I believe now has been and gone. Of course anything can happen in the future, but I think the "patients problem" has been massively over-stated and their potential rate of recovery under-estimated.....

Cheers,

Beej


----------



## MrBurns (30 July 2009)

Beej said:


> What? FHBs using grants to buy $1M++ properties are they? Did you read the article? Top end increasing at DOUBLE the rate of the low end.
> PS: It was your hero JW Howard who first introduced the FHB grant and supposedly ushered in low interest rates anyway! Do you loath him for it???




Thats all real estate industry BS I know for a fact the opposite is the case, upper end properties are off by at least 20% in Melbourne and I dont give a root what John Howard did I'd give a months pay to have him back now.


----------



## gfresh (30 July 2009)

Don't worry Mr Stephens will save the day  Except nobody has really worked out how.. 

Not suprisingly an article on how raids have been recently conducted on realestate agents in Victoria by Fair Trading on rampantly underquoting receives little note:

http://business.theage.com.au/busin...-consumer-affairs-victoria-20090729-e0eo.html

Also worth a watch if you missed it.. Fairfax funded junketts for the realestate industry. Always helps when you have a fair press 
http://www.abc.net.au/mediawatch/transcripts/s2637817.htm



> ...But by that afternoon, all but fifteen of those posts had mysteriously disappeared. And soon afterwards, so did the article itself - from the websites of The Age, The SMH, the Brisbane Times and WA Today.
> 
> So what happened?
> 
> ...


----------



## kincella (30 July 2009)

lets keep overlooking the facts to push your case....
the FHB grant was introduced to overcome the extra cost of the GST, on building new homes....the average cost of building a new home then was estimated at 140,000 (excludes land) hence the 14,000 to cover the GST
it was a good idea, but dont get so high and mighty about the grant, the state govt takes back almost immediately anywhere between 25,000 and 50,000 or more...for new homes......

at about the same time Costello introduced the baby bonus of $5000 to encourage our population growth, as future taxpayers....

parents now received tax free family benefit payments of about 185 pf per child.....its all free money, or so it seems...for the middle to lower end earners

so for the kids buying a 2nd hand house they get 14,000, soon to be phrased back to 7000, its really a tiny amount in the greater scheme of things...
if the median house in Melb is now 472,000 does 14,000 really make any difference


----------



## Beej (30 July 2009)

MrBurns said:


> Thats all real estate industry BS I know for a fact the opposite is the case, upper end properties are off by at least 20% in Melbourne




You know for a fact? Are you sure that's not yesterday's news? Maybe they are now only off 10% - and in another 3 months won't be down at all? All the data seems to be painting that picture! Stay in denial if you like though! Just like you do over your hero Mr Howard and all his short-comings 

Cheers,

Beej


----------



## Beej (30 July 2009)

MrBurns said:


> Thats all real estate industry BS I know for a fact the opposite is the case, upper end properties are off by at least 20% in Melbourne




Oh further to this: Check this chart out incorporating the RP-Data for June also released today (which confirms the APM data as well by the way - see http://www.businessspectator.com.au...s-back-pd20090730-UF3VL?OpenDocument&src=is):







As you can see - the top 20% of the market bottomed in Dec/Jan and has been rising ever since. The other 80% of the market is now past where it was at the late 07/early 08 peak. I think your "facts' ARE yesterdays news Mr Burns....

PS: This thread is done - over to the "prices to rise for years" thread from now on!

Cheers,

Beej


----------



## MrBurns (30 July 2009)

Beej said:


> Oh further to this: Check this chart out incorporating the RP-Data for June also released today (which confirms the APM data as well by the way - see As you can see - the top 20% of the market bottomed in Dec/Jan and has been rising ever since. The other 80% of the market is now past where it was at the late 07/early 08 peak. I think your "facts' ARE yesterdays news Mr Burns....
> 
> PS: This thread is done - over to the "prices to rise for years" thread from now on!
> 
> ...




You're obsessed with this Beej you'll need a lot of drugs when the truth hits home.

I live in the inner east of Melbourne I know whats happened to the top end and I know what will happen accross the whole market when the BS FHB boost ends and interest rates start to rise again.
I dont care what RP Data says, I live there and I was an agent for 25 years.

Dont show me anymore dodgy graphs please or I'll be forced to contrive a few of my own.


----------



## Buckeroo (30 July 2009)

kincella said:


> so for the kids buying a 2nd hand house they get 14,000, soon to be phrased back to 7000, its really a tiny amount in the greater scheme of things...
> if the median house in Melb is now 472,000 does 14,000 really make any difference




Actually, this money went from the Government to the seller - the kids just passed it on & got no real benefit due to prices rises. In the case of a new home, it lined the builders & developers pockets.

Good to see our taxes are being used responsibly

Cheers


----------



## kincella (31 July 2009)

buckeroo, you still dont 'get it'....the builders had to pay the govt GST, and were forced to charge the new home owners GST....so only the govt got the money back...back then everyone was scared of the GST, the govt feared people would not buy new homes because of the GST, so they gave the FHB the grant to cover the GST, then the govt feared everyone would only buy a new house, so they gave another reduced grant to FHB to buy the 2nd hand houses....
its a pittance imo....
so lets summarise, govt gives fhb grant of 14,000 to cover the GST on new homes, the kids hand over the money to the builder, the builder gives it back to the govt....so where is the benefit....the govt appears to look good to fhb's.....but its all just a round robbin affair....the govt ends up with the money back


----------



## MrBurns (31 July 2009)

Buckeroo said:


> Actually, this money went from the Government to the seller - the kids just passed it on & got no real benefit due to prices rises. In the case of a new home, it lined the builders & developers pockets.
> 
> Good to see our taxes are being used responsibly
> 
> Cheers




*EXACTLY* - this is what I've ben saying all along but it just goes over the permabulls heads.
The increase in the FHBG has just fed real estate agents and property owners wanting to offload at good prices, the FHB has got nothing but stuck in an overinflated property mortgaged up to his eyeballs just waiting to go broke when the market turns, as it will, but *HEY !* who gives a stuff ?, Rudds popularity is up, that's what this was all about anyway wasn't it ?


----------



## gfresh (31 July 2009)

FHB didn't go to the wall in 07 (high interest rates), 08 (falling values) and now 09, but it's going to all start next year? Somehow bringing the middle and top layers down with them? Even though I was bearish when things were falling last year, I've had the sense to step back and realise the worst hasn't happened, and doesn't seem likely to happen. 

Even if the FHOG it is simply a pass of money from the hands of the bottom up to the top, what does the top do with it all? Spend it, invest it, do something with it, it's not necessarily going to blow up in everybody's face just because it's not helping the people it claims to help. 



			
				MrBurns said:
			
		

> Rudds popularity is up, that's what this was all about anyway wasn't it ?




.. and something about keeping the economy from crashing, seems to be working so far? Maybe nothing to do with him at all, but all his rheotoric seems to be working on the confidence factor.. Look at Turnbull, the electorate won't even give him the time these days. The Libs were strangely quiet on the FHOG, why might that be ? Because they 100% supported the very same policy and would have done exactly the same if in power! Labor is going to get in next election with 3/4 of the seats in parliament.. How do you feel about that?


----------



## kincella (31 July 2009)

you all talk about someone getting that fhb money....the govt gets it, 10% of almost everything, except govt charges...so in the end it just goes back to govt coffers.....
none seem to scream about the same FHB, get $5000 for each kid they produce, then once its born they get about 200 pf for each one...
and that fhb grant is nothing to the govt taxes that are applied to new housing and development....say on average min 25,000 for each block of land, charged and passed onto the new owners, whether they are fhb's or not...
its just a round robbin affair, but the govt gets the most money from all this...well mainly the state govt.s, they get the biggest share
and when you compare aus to the us, over there the owners pay the govt on average 8000 per year in taxes....no wonder so many in the us found owning their own home, was not such a good thing...


----------



## Buckeroo (31 July 2009)

kincella said:


> you all talk about someone getting that fhb money....the govt gets it, 10% of almost everything, except govt charges...so in the end it just goes back to govt coffers.....
> none seem to scream about the same FHB, get $5000 for each kid they produce, then once its born they get about 200 pf for each one...
> and that fhb grant is nothing to the govt taxes that are applied to new housing and development....say on average min 25,000 for each block of land, charged and passed onto the new owners, whether they are fhb's or not...
> its just a round robbin affair, but the govt gets the most money from all this...well mainly the state govt.s, they get the biggest share
> and when you compare aus to the us, over there the owners pay the govt on average 8000 per year in taxes....no wonder so many in the us found owning their own home, was not such a good thing...




I can see what your saying Kincella, but the tax hasn't gone up, only the property values since the latest increase in the grant. The tax has been largely static over this period (except for the increase of GST, due to the increase in the cost of new homes).

Its a shame the states never played ball when the GST came in, the overall tax burden would now be a lot less when buying a home - removing this would have been a better way to go rather than the housing grants to first home buyers.

Cheers


----------



## CamKawa (10 August 2009)

Aren't the media in a frenzy. What's the meaning of all this?

Becoming a property mogul

Auction punch-ups as real estate soars

Beachfront sizzle on auction front


----------



## satanoperca (10 August 2009)

It's a housing led recovery, hasn't someone told you.


----------



## nunthewiser (10 August 2009)

> In its latest assessment of the Australian economy, the International Monetary Fund (IMF) has warned that Australian house prices are overvalued by up to 20 percent and that low rates, government subsidies and ongoing strong immigration will continue to push house prices higher. However a "sharp fall in house prices" remains a risk. The problem is being exacerbated by a growing gap between household incomes and house prices, the IMF said.




sunshine and lollipops i heard


----------



## gfresh (10 August 2009)

So they are saying prices could go up or down.. smart guys the IMF.


----------



## CamKawa (11 August 2009)

As I was saying yesterday, I was a little perplexed by the recent media property mega-spruiking.

This may be the answer.

Safe as houses

Source: Best of the ABC


----------



## MACCA350 (11 August 2009)

CamKawa said:


> As I was saying yesterday, I was a little perplexed by the recent media property mega-spruiking.
> 
> This may be the answer.
> 
> ...



Yep, saw that last night

cheers


----------



## Mofra (11 August 2009)

Buckeroo said:


> I can see what your saying Kincella, but the tax hasn't gone up, only the property values since the latest increase in the grant. The tax has been largely static over this period (except for the increase of GST, due to the increase in the cost of new homes).



Gummints' are a cunning lot though Buckeroo - bracket creep is a phenomenon that is factored into every economic model I've seen (granted I've never had access to the kind of detailed info treasuries have).


----------



## Buckeroo (12 August 2009)

Mofra said:


> Gummints' are a cunning lot though Buckeroo - bracket creep is a phenomenon that is factored into every economic model I've seen (granted I've never had access to the kind of detailed info treasuries have).




Ok, yes governments do benefit from increasing house prices (stamp duty) & some of the FHB etc goes back to the Government through GST. And even income tax bracket creep?

My point was that because the government has continued blowing up the housing bubble with handouts, house prices have escalated which in turn has made investors, real estate agents and developers richer at the expense of the young people who can't really afford the properties.

Sadly, in the end we all lose when the bubble does finally burst or house prices stagnate for the next 10 years

Cheers


----------



## gfresh (12 August 2009)

What better way to bid up the price of expensive housing than steal the money! Why didn't I think of it earlier?! 

http://business.theage.com.au/business/peeters-left-reeling-by-20m-sting-20090811-egz2.html


----------



## explod (12 August 2009)

gfresh said:


> What better way to bid up the price of expensive housing than steal the money! Why didn't I think of it earlier?!
> 
> http://business.theage.com.au/business/peeters-left-reeling-by-20m-sting-20090811-egz2.html




Thieving b..ch, probably following one of those shiny pants property spruikers from the other property up thread.

Notice they jawboning a stronger US dollar probably be able to up interest rates a bit and send a few more households to the cleaners over there.


----------



## Mofra (12 August 2009)

Buckeroo said:


> Ok, yes governments do benefit from increasing house prices (stamp duty) & some of the FHB etc goes back to the Government through GST. And even income tax bracket creep?



I guess I should have been a bit more expansive - by bracket creep I am referring to stamp duties as there are price brackets for calculating the stamp duty that are not reset in line with rising prices, average annual incomes nor were state mortgage stamp duties abolished immediately after the introduction of the GST as they were meant to.


----------



## satanoperca (13 August 2009)

http://www.theage.com.au/national/jobless-claims-rise-50-in-southeast-20090812-eibt.html

Significant rising in unemployment in the last few months. 

One trigger for a drop is underway - unemployment. Less people employed, less money being spent, greater drain on government resources
Second one - IR rates moving up is only months away.

Lets hope the government is right and the worst is behind us.


----------



## aleckara (13 August 2009)

satanoperca said:


> http://www.theage.com.au/national/jobless-claims-rise-50-in-southeast-20090812-eibt.html
> 
> Significant rising in unemployment in the last few months.
> 
> ...




This won't create a drop in house prices to a large extent unless everything else is falling and people are actually suffering to a large extent. As long as things are going "as normal" houses in this country can't fall, borrowers that are employed can pick up the slack if there is still a lot of demand for housing to take up the stock freed up by defaulting mortgages. "Normal" as you say is an increase in credit or borrowings as a country. We haven't really had the "deleveraging" that other developed countries have experienced hence we have seemed to gotten through the recession relatively unscathed. Economists like Keen relied on this phenomena to occur to support their theory which hasn't occured. What he didn't count on is the mass moral hazard that governments have done to bail out investments just because a lot of the older population relies on them and the jobs in this country need an increase in the amount of houses for perpetuity despite the consequences. Is there a time when the building can stop? When can we stop building houses and consuming land? 

Because of governments. They have applied mass incentives to get demand for housing up as well as give banks money to keep credit flowing to houses (i.e buying mortgage securities of small banks, government guarantees, mass migration to keep locals out of the housing market etc). The poor young people of this country - really can't get a break can they since the government is making it so much harder to get a home.

Until people are forced to save and pay off their loans the housing bubble will continue. Can't have the worst behind us and have a fall in house prices.


----------



## Beej (13 August 2009)

satanoperca said:


> http://www.theage.com.au/national/jobless-claims-rise-50-in-southeast-20090812-eibt.html
> 
> Significant rising in unemployment in the last few months.
> 
> ...




The incorrect assumption you are making is expecting to see a significant rise in interest rates while unemployment is still rising. The worse thing the RBA might do is tick the rates up 0.5-1% tops when they think unemployment might be topping out, but until we have either rising inflation or a booming economy or both, interest rates will not reach "high " levels.

Also, even though unemployment is increasing, it is mainly due to new entrants in the work-force. The actual level of employment has been fairly constant for the past 6-9 months. Some full time jobs have gone but been replaced by part time one. Average household income has been nudged down a tiny amount by that effect, but in the meantime average full-time wages are still rising - driven mainly by the public sector at the moment though! But they still buy houses!

PS: I thought this thread was over anyway? 

Cheers,

Beej


----------



## gfresh (13 August 2009)

UK outlook on interest rates.. 

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axScd7eCGFIU



> Aug. 12 (Bloomberg) -- Bank of England Governor Mervyn King said inflation may miss the central bank’s target over the next three years, signaling investors may have to rein in expectations for interest rate increases.
> 
> *King said it’s “likely” that inflation will slow below 1 percent this year and stay below the bank’s 2 percent goal until at least the end of 2012.* The bank’s forecasts showed that an increase in the benchmark rate above 1 percent in the second quarter from the current record low of 0.5 percent would ensure inflation trails the target. Bond yields fell.
> 
> *“The clear upshot of the bank’s inflation projections is that the market is getting ahead of itself in pricing in rate hikes over the short to medium term,”* said Richard McGuire, an economist at Royal Bank of Canada in London.





US outlook on interest rates.. 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGVqgVC7POF0



> Officials left the benchmark interest rate between zero and 0.25 percent after their two-day meeting. *The FOMC said economic conditions mean the rate will stay “exceptionally low” for an “extended period.”* The decision was unanimous.
> 
> Policy makers said the economy is “likely to remain weak for a time” and projected a “gradual resumption of sustainable economic growth.” Employers cut fewer jobs last month, and the unemployment rate dropped, encouraging analysts to project an annual growth rate of at least 2 percent in the second half of 2009.




So while the some of largest 10 economies in the world keep rates low as they struggle against low growth for the forceable, RBA is still likely to be cautious in raising our rates. Maybe a little to cut some speculation, but they'll be watching the housing market once the FHOG ends, just like everybody else to see where it's going. Up -- rates may increase, flat to down - rates aren't going anywhere. So I think caution on raising rates is going to remain well until 2010.. after that, maybe this global inflation will break, but for now, looks pretty calm.


----------



## satanoperca (13 August 2009)

Beej said:


> PS: I thought this thread was over anyway?




Why? Because house prices according to the ABS have shown a positive result in the last qtr out of the last four qtrs but still negative YoY.

Unemployment is still rising and the threat of IR is looming. Government & the RBA may not be in total controll of IR's given the huge amount of overseas borrowing that is needed to support our rising debt levels. 
If credit dries up, it may be necessary for IR's to increase to raise funds from global sources.

And while some might believe the worst is behind us, please do not forget the huge deficit on beloved leader has racked up in the last 18 months. This will be a drag on the growth of the economy for many years to come and can only be paid back by increasing taxes, decreasing services and/or inflate it away.


----------



## CamKawa (24 August 2009)

Look what happens when gov't bribes are pulled. I wonder if house prices will suffer a similar fate.
 
Motor vehicle sales in sharp slowdown


----------



## Mc Gusto (24 August 2009)

CamKawa said:


> Look what happens when gov't bribes are pulled. I wonder if house prices will suffer a similar fate.
> 
> Motor vehicle sales in sharp slowdown





saw that...pretty funny how dramatic a change.

imagine where we'd be without all the public spending. I work at australias most cash company...one that is in a far better position than most yet we are cut backs cut backs cut backs..i wonder whether private investment will pick up when public runs out..?


----------



## satanoperca (24 August 2009)

Or a few more facts get proven as myths, like the chronic housing shortage.

http://www.dailyreckoning.com.au/property-spruikers-claim-australia-suffers-from-a-chronic-housing-shortage/2009/08/24/

Cheers


----------



## satanoperca (29 August 2009)

http://www.theaustralian.news.com.au/business/story/0,28124,25998050-36418,00.html


> "A strong housing market is critical for underpinning confidence and supporting jobs in the Australian economy as we battle the worst global recession in 75 years."




If this is the main stream thought we are fu?\!!!d.

Cheers


----------



## wayneL (29 August 2009)

satanoperca said:


> http://www.theaustralian.news.com.au/business/story/0,28124,25998050-36418,00.html
> 
> 
> If this is the main stream thought we are fu?\!!!d.
> ...



It's true. Anglo economies have been built upon rising house price for the last few years. Think about how much consumption has been driven by mortgage equity withdrawal to get an idea.

If house prices continue to tank the economy will suffer heavily. This is the reason for the outrageous measures by gu'ments to prop them up.


----------



## gooner (29 August 2009)

wayneL said:


> It's true. Anglo economies have been built upon rising house price for the last few years. Think about how much consumption has been driven by mortgage equity withdrawal to get an idea.
> 
> If house prices continue to tank the economy will suffer heavily. This is the reason for the outrageous measures by gu'ments to prop them up.




House prices are too high. The economy is in trouble if they collapse. IMHO, best solution is that they stay where they are for 10 years, whilst incomes catch up. Personally I think the FHOG was an unnecessary boost - would have been better to allow some moderate falls instead.

As Wayne said, when prices rise, people draw down on equity, or just feel richer and spend more and save less. Hell, the bull market last few months has made me much looser with the old wallet. Let the wife buy a new dish scourer the other day


----------



## robots (29 August 2009)

hello,

yeah that extra 7k is having a huge impact, righto

thankyou
professor robots


----------



## wayneL (29 August 2009)

robots said:


> hello,
> 
> yeah that extra 7k is having a huge impact, righto
> 
> ...




Plus the rest.

If it's insignificant, let's take it away and see what happens.


----------



## Dowdy (29 August 2009)

wayneL said:


> Plus the rest.
> 
> If it's insignificant, let's take it away and see what happens.




plus the interest rates that WILL rise.


PS
Anyone else getting phone calls from guys trying to sell property? 

Looks like to me that even the developers (or whoever is calling) are getting worried and trying to sell their assets before they lose money


----------



## robots (29 August 2009)

wayneL said:


> Plus the rest.
> 
> If it's insignificant, let's take it away and see what happens.




hello,

no rest, for existing homes it went from 7k to 14k, new builds from 7k to 21k

now many have shown the majority is going to existing property so 7k extra propping up? no just reality

sorry sorry, i know  i know unemployment is going to hit 20%, interest rates going up to 20%, soup kitchens on the street, tent city at the Peanut Farm Oval in St Kilda

thankyou
professor robots


----------



## robots (29 August 2009)

hello,

hey hey:

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

another fine day in paradise, yes we different from the UK, US, India, China, Bulgaria, The horn

we Australia brothers

must be time for shut down on this thread

thankyou
professor robots


----------



## wayneL (29 August 2009)

robots said:


> hello,
> 
> no rest, for existing homes it went from 7k to 14k, new builds from 7k to 21k
> 
> ...




What's the point of it then? Let's ditch the policy and restore interest rates to sensible levels that don't screw savers to prop up the profligate.

Easy test isn't it? No FHOG and interest rates @ 6-8%.

Let's see what happens.


----------



## wayneL (29 August 2009)

The fact is, government policy is to prop house prices, so enjoy it while it lasts.

Over and out.


----------



## satanoperca (29 August 2009)

From the above link - figures can be construed to give a image of what ever you want.


> Weekly Auction & Sales Results, Market Overview
> Saturday 29 August 2009
> 
> A total of 436 of the 620 auctions reported to the REIV sold resulting in a clearance rate of 85 per cent.




From my calculation 436/620 = 70% clearance rate not 85% but then again they include an addition 100 properties sold before auction in the clearance results to get this figure.

Cheers


----------



## rahman (29 August 2009)

I agree with your sentiments wayne..this retail consumption driven economy of ours is just belony.Interest rates have to go higher and stay higher to reduce consumption spending on goods primarily from overseas.We are a very lucky country because of our resources but we should not offset this by thinking we can live this airy fairy consumption economy..


----------



## Glen48 (29 August 2009)

I see Baby Co have tanked one would think with the FH Bribe and baby bonus they would be on a winner are things that bad out there already?


----------



## knocker (29 August 2009)

Well my timing is sh!tful


----------



## kincella (30 August 2009)

satan opera....you guys really need a Plan B, if you are going to own a house sometime in the future....
I am afraid if you are pinning your hopes and dreams on articles as per your reference earlier this thread, and are reliant on a dramatic change in house prices, and massive change in government policy, to save you all....so you too can buy that inner city pad at a 50% discount...then I believe you will never get a house if you continue with those thoughts.....

psst stacks of those silly FHB's moved on, they went out into the suburbs, changed their plans, from having a similar attitude to most of you here, that absolutley house prices must come down, because you say so, to what a window of opportunity, how can I use it,......so creative and lateral thinking played a part....and rather than argue and debate....they got their houses....

another poster in response to that outlandish article summed it up nicely....

"Chris is drawing on the data and research that is available, and that data is showing a supply shortfall of about 40,000 dwellings per year. The research he presents from several independent sources comes to a similar conclusion. Against this you have an article full of misrepresentations (e.g. 830,000 empty dwellings and no evidence of a housing shortage) written by a cfd salesman."
here is the business spectators response to kris sayce....hmmm same initals as steve keen...

http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail

obviously the negative house people need to change their thought process....instead of continually arguing against a trend thats been going on for over 70 years.....adapt that trend to suit your purpose....how about doing some reading of Edward DeBono with his lateral and creative thinking tools

http://www.edwdebono.com/debono/msg001.htm...

I would be interested if any of you on this thread actually have a plan B, and what plan B is.....oh and waiting for the house price crash is not considered a plan B......


----------



## Dowdy (30 August 2009)

satanoperca said:


> Or a few more facts get proven as myths, like the chronic housing shortage.
> 
> http://www.dailyreckoning.com.au/property-spruikers-claim-australia-suffers-from-a-chronic-housing-shortage/2009/08/24/
> 
> Cheers





It's what i've been saying...

There's not a shortage of houses - there's just an oversupply of speculators


----------



## michael_t_f (30 August 2009)

http://http://www.news.com.au/business/money/story/0,28323,26001514-5013952,00.html


----------



## robots (30 August 2009)

hello,

hahaha. an article from a CFD salesman, man this is great stuff

if you want to get on board with the true purveyors of originality and forecasters then look out for posts from people like: Kincella, Beej, Professor Robots, Tech, 

the ones who got it right

anyone know if the internet is back up and running in Brisbane yet?

thankyou
professor robots


----------



## billv (30 August 2009)

Dowdy said:


> There's not a shortage of houses - there's just an oversupply of speculators




Actually right now there is a shortage of both because the No Doc loans are gone and borrowers have to show loan servicebility plus savings history or they can't get finance


----------



## kincella (30 August 2009)

Morning Robots,
the cfd salesman, or the broker, or anyone else wanting to use your money to fatten their pockets....they are easy to pick, and the gullible go for it....that bloke wants the kids to play, gamble with cfd's and derivatives....easiest way to lose their money...he does not want them buying houses (that would mean they are being responsible with their money, not gambling it away) hence the rant.

I also noted in his article that he had changed the govt reports and stats, to suit his theme......wonder if he had permission to copy the copyrighted material....oh and when you do have permission to use it...you cannot change it or modify it in anyway.....hmmm interesting...or just plain stupid....

apparently he is very excited with the responses he received.......so just how many gullible people are actually out there ?

oh and thanks again for the thumbs up.....
I listened to Edward De Bono on BBS radio this morning....I feel the need to revisit some of his teachings....so I may relay it to some on this subject....not just creative or lateral thinking...but how to move from arguing and debating to an alternative thought process ...so everyone wins...
I need to listen to parts of the interview again....
cheers and have a great Sunday today


----------



## robots (30 August 2009)

hello,

yes the CFD man is hunting for that "disposable" income for sure

thanks, yes will have a great day down Chapel St for a couple of latte's, have a bowl of pasta at Old Pepper, probably go on and ride the trams around Melbourne, its a great network

$3 all day travel, anywhere, anytime today, paradise

thankyou
professor robots


----------



## kincella (30 August 2009)

billv....where is your proof or source that low do, or no doc loans are gone ???
I am not aware of any reduction, or that they became extinct, apart from media articles, and that is not necessarily truthful....oh, and all the banks offer them now...
I know of a few cases recently where low doc, no doc loans were rolled over, no problems, nothing changed, easy peasy....to new financiers.....
but hey, I live in a different world to the rest of you don't I.....


----------



## kincella (30 August 2009)

I get a pitza at the Old Pepper now and again rated 6/10...or La Porchetta in Sth Yarra 7/10...his are better...the  best pitza's are in Carters Avenue in Toorak...the italian place...9/10 rating...
the dog, had her eye operation on friday, only just back to normal last night...a full 24 hours later than the vet expected....her eye is now a massive black eye and swollen....she is very traumatised by operations...
they take the eye out of the socket, to sew the 3rd eyelid back in...

did I tell you about last week at the dog wash, near the Prahran Market...I left the keys in the car, while I had a quick chat with the owner....the dog was frantically scratching at the window to get out and come with me...she pressed the door lock....I had to wait for the RACV to come and rescue us...
thought it was funny at the time...until I realised I was locked out...
I would have put her in a dog house if we had one....but she shares my house
cheers
ps I wonder if the govt should do a suvey on the number of vacant dog  houses.....


----------



## kincella (30 August 2009)

we are all a little bit poorer after losing a giant...Ted Kennedy...what an inspirational man he was...the Lion of the US Senate...I will be looking to read some of his speeches, and any books about his life...

hint...might be a good idea for some out there, to read and follow the ideas of a great man,  instead of following the scaremongering media....who look for the 'strange but true' erronous predictions of some of late....initials with SK or KS spring to mind...relative to this thread
cheers
ps let them introduce pay per view for their rubbish articles...I will not bother to pay  a cent...I will find another way to waste my time instead


----------



## satanoperca (30 August 2009)

kincella said:


> satan opera....you guys really need a Plan B, if you are going to own a house sometime in the future....
> I am afraid if you are pinning your hopes and dreams on articles as per your reference earlier this thread, and are reliant on a dramatic change in house prices, and massive change in government policy, to save you all....so you too can buy that inner city pad at a 50% discount...then I believe you will never get a house if you continue with those thoughts.....




No kincella, I am not hoping that property falls 50% my ears would burst from all the winging property owners.

I have owned in the past and will own again in the future. I am simply in a position with no debt, cashed up and waiting for a low risk entry back into the property market.

I simple do not support the idea that RE should be a place for speculation, it provides nothing beneficial for greater society with exception of making bankers fatter than they already are.

I do find it amusing that Steven Keen keeps getting mentioned, if people do not like what he has to say then do not listen - it is just another perspective and one that is probably above the common mans interlect and hence why you see some many misguided comments about his work.

For every SK there are a million others pushing the other direction, property to double every 10 years, 20% increase of the next 3 years etc etc etc. Borrow borrow borrow, being grossly indebted is the only way to go.

Cheers


----------



## 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?


----------



## knocker (30 August 2009)

bowseruni said:


> 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?




Look, if you like the home as a home  and can afford to service the loan, bearing in mind its value is overinflated, rates will probably rise etc, then of course buy it.

Just remember it will be a long term thing and there will be plenty of bargains coming up very soon.


----------



## knocker (30 August 2009)

Dowdy said:


> It's what i've been saying...
> 
> There's not a shortage of houses - there's just an oversupply of speculators




Heaps of house sitting empty in all major cities.


----------



## robots (30 August 2009)

hello,

yeah, so what Knocker? amazing how people think they have to right to something because it isnt used,

get out of here, they just holding holding and holding fabulous isnt it

and all the bludgers want to get their hands on it for free

thankyou
professor robots


----------



## kincella (30 August 2009)

spot on again Robots....

oh and satanopera....you said... "my ears would burst from all the winging property owners."
winging means as if to fly...your right there...we are flying

1a:  to fit with wings b : to enable to fly or move swiftly
2 a : to traverse with or as if with wings b : to effect or achieve by flying

or did you mean whinging...like whining....or howling...
whinge intr.v. Chiefly British. , whinged , whinging , whinges . To complain or protest, especially in an annoying or persistent manner.

guess am not surprised with the spelling I see on these forums....bit like the ones who call others loosers..rather than losers....
you dont have to spell correctly, or cross the t's and dot the i's...in life..but then you may expect unintended consequences...if you cannot pick up the finer details...in life...


----------



## satanoperca (30 August 2009)

kincella said:


> spot on again Robots....
> 
> oh and satanopera....you said... "my ears would burst from all the winging property owners."
> winging means as if to fly...your right there...we are flying
> ...




I am just not that anal in my life to comment on someone mistyping a word.


----------



## knocker (30 August 2009)

robots said:


> hello,
> 
> yeah, so what Knocker? amazing how people think they have to right to something because it isnt used,
> 
> ...




Amazing how low people stoop when the chips are down :


----------



## knocker (30 August 2009)

robots said:


> hello,
> 
> yeah, so what Knocker? amazing how people think they have to right to something because it isnt used,
> 
> ...




There's nothing wrong with squatting. In fact I daresay a lot of people will be doing it soon if they follow your advice Prof lol


----------



## nunthewiser (30 August 2009)

kincella said:


> I get a pitza at the Old Pepper now and again rated 6/10...or La Porchetta in Sth Yarra 7/10...his are better...the  best pitza's are in Carters Avenue in Toorak...the italian place...9/10 rating...
> the dog, had her eye operation on friday, only just back to normal last night...a full 24 hours later than the vet expected....her eye is now a massive black eye and swollen....she is very traumatised by operations...
> they take the eye out of the socket, to sew the 3rd eyelid back in...
> 
> ...




wtf?


----------



## nunthewiser (30 August 2009)

knocker said:


> Heaps of house sitting empty in all major cities.





rents falling in wa .......


----------



## wayneL (30 August 2009)

nunthewiser said:


> rents falling in wa .......



Nun,

I was talking to a friend in Gero recently and he said there were A LOT of layoffs at the mines... a lot of unemployed miners in Gero.

True?


----------



## nunthewiser (30 August 2009)

wayneL said:


> Nun,
> 
> I was talking to a friend in Gero recently and he said there were A LOT of layoffs at the mines... a lot of unemployed miners in Gero.
> 
> True?





VERY 

MMX skeleton crew .. went from 24 hr rotaing shifts to a 12hr  day to bugger all at present 

mgx skeleton crews 

MIS/SINOSTEEL , layoffs 

golden grove formerly owned by OZL , mass layoffs only kept the cream of the bunch 

cobra machinery ( providing heavy machinery hire ) .yard full no work

coates hire same yards full of equipment 

tru blue hire same

ILU looking at closing ALL midwest ops IF conditions dont change shortly . huge layoffs ,

twomeys (mining maintenance and services )skeleton crews . only got work because of pipe supplies for karratha

the list goes on mate 

but apparently all sunshine and lollipops  in the great midwest

big difference in what you read to whats actually happening up here

good opportunity to pick up some cheap maloo utes and other financed toys tho


----------



## knocker (30 August 2009)

nunthewiser said:


> VERY
> 
> MMX skeleton crew .. went from 24 hr rotaing shifts to a 12hr  day to bugger all at present
> 
> ...




don't know about the loo but the place to be is  IBIZA  party on dudes


----------



## wayneL (30 August 2009)

Jesus! 

**wonder what bargains will be had in Wandina etc if this continues.


----------



## nunthewiser (30 August 2009)

wayneL said:


> Jesus!
> 
> **wonder what bargains will be had in Wandina etc if this continues.




there was blocks being auctioned in the wandina area by a "developer " recentlt at a 1/3-1/2 the price of market prices right next door in seacrest /mt tarcoola ..

LOTS of brand new houses been up for sale in this area in the last 6 months and not moving 

BUT established homes in the older areas holding there prices fairly well so far at present and moving slowly 

lot of pain involved with the "mining /mining reliant workers " up here at present and hates to think what will be the go once intrest rates start moving north again 

hey i could be wrong and everything will be fine for them ...... on a humility aspect i truly hope it is 

on an investment view point ....... bring it on i say


----------



## trainspotter (30 August 2009)

LOL ... Good on ya nunthewiser. I have just committed to 10 units in Seacrest for construction of 2.5million. Gee ... I hope I sell them now ??? Price and product mate. Majority of stuff currently on the market here has been bought by greedy real estate agents looking for listings. Not worth what they reckon IMO. No point listing a place for 535k when it aint worth 480k? True they might have achieved price consideration 12 months ago due to rising market (housing bubble) and slightly overheated players delving where they shouldn't but like everything in the real estate world, if it is priced right and it is presented well ..... IT WILL SELL. Nuffin wrong with making a "little" profit on property, lets say 30k per transaction? Do it 10 times a year and it soon adds up. Take away the interest component (if you have to) plus stamp duties etc and a nice little earner is out there. But what would I know? Milk the cow slowly and it will deliver you cream. LOL


----------



## nunthewiser (30 August 2009)

trainspotter said:


> Price and product mate.
> 
> No point listing a place for 535k when it aint worth 480k?
> 
> if it is priced right and it is presented well ..... IT WILL SELL. Nuffin wrong with making a "little" profit on property, lets say 30k per transaction?





totally agree with all of the above 

BUT theres places up around seacrest and behind in that maze of new subdivisons that were being built with moneys that ppl borrowed to the hilt at the height of the prices ........ LOTS of young crew helped with the handouts , earning top dollar working out at the many mines and suppliers here that all of a sudden found themselves with no work .... they cant even currently get work at gull tarcoola /440 drummonds  . young "turbo" (family owner) has got a list 3 ft long of applicants to work at both servos from newly out of work new residents to town that came here from other areas to make there future and reap the mining dollars.

LOL i dont think you got too much to worry about with ya development , plenty of demand for unit rentals i hear. 

i own property and land in Geraldton also and regard them as great investments , BUT im am not in a position where i have to sell them to try and clear debts i cannot cover anymore 

big difference


----------



## trainspotter (30 August 2009)

WOW ... a few of us seem to be missing the point here. Owning property is just like buying derivatives and CFD trading and the stock market in general. You just don't go out and buy the first thing that throws it's head up at you? Surely research and motions of discovery have something to do with it? May as well put it all on the craps table at the Casino instead. I dunno about you guys but after a lot of research and indicative responses I will buy shares at a certain time due to current undervalue or future prospect releases etc. Same as I buy property in certain areas due to infrastructure programmes in the area or undervalued. IMO. Stick to what you know. If property works and you like green titles in the safe then go for it. If you have a penchant for ascertainable risk then go and buy shares. There are THREE sustainables out there that make money. Shares ... Interest ... Property. SIP ... In that order. Looky looky shares have gone up to record 10 month highs, what do you reckon is going up next? Ohhhhhhhhhhhhhhh I dunno? Interest rates maybe? Ooooooooooer ... logical that property will follow. How much you ask? Why ... 8% per annum is a standard rule of thumb. If you are clever there are areas that will crack 20%. Not the startling 159% like MMR and BUY and such but it suits "others" investment strategies. 

So lets lay off the playground **** and add some real hot topic discussion to the forum. Australia is a big country so don't just look in your own backyard. Go to Karratha, Townsville, Collie, Adelaide, Hobart, even bloody Meekatharra has blocks for 10 grand for crying out loud. Download Google Earth and have a bloody look around. Get onto the Govt website and look for infrastructure spending in the areas. 

Rant over .... normal transmission to resume.


----------



## nunthewiser (30 August 2009)

lol


----------



## trainspotter (30 August 2009)

nunthewiser said:


> totally agree with all of the above
> 
> BUT theres places up around seacrest and behind in that maze of new subdivisons that were being built with moneys that ppl borrowed to the hilt at the height of the prices ........ LOTS of young crew helped with the handouts , earning top dollar working out at the many mines and suppliers here that all of a sudden found themselves with no work .... they cant even currently get work at gull tarcoola /440 drummonds  . young "turbo" (family owner) has got a list 3 ft long of applicants to work at both servos from newly out of work new residents to town that came here from other areas to make there future and reap the mining dollars.
> 
> ...




True to all of the above. Misguided CUB's earning too much money did not help the situation at all. Once again I reiterate, they are the ones who put the noose around their necks with no escape route. Buying a house is a big investment and to not think through the consequences of non payment due to loss of income is just plain stoooooooopid in my book. 

It will turn around eventually and in the meantime if there are any repo sales that look like a worthwhile dabble I will keep the chequebook at the ready. The other ones I like are the marriage breakdown situations. House has just gotta sell. LOL. All is fair in love and business I say.


----------



## nunthewiser (30 August 2009)

trainspotter said:


> It will turn around eventually and in the meantime if there are any repo sales that look like a worthwhile dabble I will keep the chequebook at the ready. The other ones I like are the marriage breakdown situations. House has just gotta sell. LOL. All is fair in love and business I say.





amen


----------



## billv (31 August 2009)

kincella said:


> but hey, I live in a different world to the rest of you don't I.....




your words not mine 
You can always cross over to the other side and join us


----------



## Early Bird (2 September 2009)

so, would it be fair to say... in summary... that there is disagreement as to the immediate future direction of house prices? 

there seem to be good arguments on both sides, and i suppose a lot depends on the overall economy, which in itself could be affected by any new crisis in the global economy.

personally i think nothing too dramatic will happen either way, as there is plenty of scope to use interest rates to either stimulate or dampen the housing market depending on its next move.

having said that i predicted the UK housing market would not crash a few years ago, and it did a few months later!

confused!!!


----------



## Glen48 (3 September 2009)

Will the crash has started:
His best-value tips were houses in Double Bay, where prices fell 35 per cent in the past 12 months, North Avoca, on the central coast, Bellevue Hill, Palm Beach and Seaforth, where values dropped fell between 26 and 28 per cent.

The best-value locations for apartments were Ultimo in inner Sydney, where prices fell 43 per cent, and Avoca Beach, Balmain East, Milsons Point and Mona Vale, where prices fell between 21 and 27 per cent.

However, Mr McGrath said, prices for units, particularly in locations such as Ultimo, would recover more slowly with the first-home owners grant being wound down this year.

Mr McGrath expected rising interest rates and the end of the first-home owners grant to dent, but not reverse, the lower end of the housing market, but the million-dollar-plus homes sector would strengthen in line with the improved economic outlook.

Read the full story in The Australian.

The First Home Bribe drops back next Month , the 0.6% growth figures are rubbery and 3 months out of date all ready, IR expected to rise by .25% next month. If you haven't sold by now it is to late.


----------



## Early Bird (3 September 2009)

Glen48 said:


> Will the crash has started:
> His best-value tips were houses in Double Bay, where prices fell 35 per cent in the past 12 months, North Avoca, on the central coast, Bellevue Hill, Palm Beach and Seaforth, where values dropped fell between 26 and 28 per cent.
> 
> The best-value locations for apartments were Ultimo in inner Sydney, where prices fell 43 per cent, and Avoca Beach, Balmain East, Milsons Point and Mona Vale, where prices fell between 21 and 27 per cent.
> ...




i think you are mis-representing that article a little... he is saying that there were big drops in 2008 but market is now rising. 

the first sentence in the article is:

_CAPITAL city housing markets have shrugged off the global financial crisis, with values rising 5.9 per cent in the first seven months of the year_

and then goes on to say there are still bargains to be had due to earlier falls...

so to headline you're extract with "the crash has started" seems a little misleading to me?


----------



## satanoperca (7 September 2009)

The only way is up!

*One-third of nation at risk of loan default*

http://www.theaustralian.news.com.au/story/0,25197,26036211-2702,00.html



> 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.




What with government stimulus and handouts, lowest interest rates in 46 years and low unemployment. How can this be?



> "As a country, we have amassed a lot of debt. Each person has $160 of credit for every $100 earned. If unemployment rises or interest rates increase, we will see a significant fallout."






> "Between the last recession and now, we have over-borrowed as a nation. Consumer debt has increased 400 per cent and 500per cent for NSW. That is where the risk is."




That could be the reason.


----------



## gav (7 September 2009)

Satanoperca, what criteria must be met to make the "high risk" category of financial stress?


----------



## satanoperca (7 September 2009)

Gav, have no idea, but it does make for great sensational journalism.

I would like to see an analysis based on current default rates, those behind in mortgage payments etc. 

What exactly is financial distress? I am financially distressed that I cannot afford a new sport scar this year, but are far from going hungry.


----------



## gav (7 September 2009)

Yes I am financially distressed as well as I want to buy a WRX or perhaps a Golf GTI, but seeing as I am the only person contributing to the mortgage at the moment, it would be a silly thing for me to do.


----------



## So_Cynical (7 September 2009)

NSW legal aid have a "mortgage stress" handbook  http://www.legalaid.nsw.gov.au/mortgagestresshandbook/

The definition of mortgage stress is when more than 35 per cent of household income is used to pay the loan....i spose there are other factors, still there would be lots of households where over 50% of household income goes on the mortgage.


----------



## Mofra (8 September 2009)

So_Cynical said:


> The definition of mortgage stress is when more than 35 per cent of household income is used to pay the loan....i spose there are other factors, still there would be lots of households where over 50% of household income goes on the mortgage.



I'm technically stressed in terms of investment debt then. 
Wouldn't swap my life with anyone's.


----------



## gav (8 September 2009)

So_Cynical said:


> The definition of mortgage stress is when more than 35 per cent of household income is used to pay the loan....i spose there are other factors, still there would be lots of households where over 50% of household income goes on the mortgage.




I take it that is total household income, eg. my income before tax is taken out?  If so, my mortgage only equates to 18% of my income.  Don't know how ppl have kids and manage to live when in "mortgage stress"   Unless of course they mean income AFTER tax is taken out, which makes my mortgage just under 23% of my income. 

And I should say thank-you, because I had to check my mortgage account online to calculate that - which led me to notice that I believe CBA over charged me in interest last month.


----------



## Lancelot (11 September 2009)

So_Cynical said:


> The definition of mortgage stress is when more than 35 per cent of household income is used to pay the loan.



What a stupid definition. I have over 50% of my household income going into a mortgage but I also have more than the average Australian wage left over for beer money.

Am I supposed to feel stressed?


----------



## Gone Fishin (11 September 2009)

Lancelot said:


> What a stupid definition. I have over 50% of my household income going into a mortgage but I also have more than the average Australian wage left over for beer money.
> 
> Am I supposed to feel stressed?




No just sounds like you have a drinking problem.


----------



## So_Cynical (11 September 2009)

Lancelot said:


> What a stupid definition. I have over 50% of my household income going into a mortgage but I also have more than the average Australian wage left over for beer money.
> 
> Am I supposed to feel stressed?




More than the average wage left over?...clearly puts u in the above average bracket...please continue to spend with abandon. :


----------



## Lancelot (14 September 2009)

So_Cynical said:


> More than the average wage left over?...clearly puts u in the above average bracket...please continue to spend with abandon. :




How do you figure that?
The post said household income , so 2 average wages makes $120k.
A median $460k house with 10% deposit equals a loan of $414,000 at 8% p&i is $38k/year.

Simple maths shows an average wage plus some left over.


----------



## CamKawa (25 September 2009)

Some interesting viewing. Check out his first question to Tanya.

http://www.cnbc.com/id/15840232?video=1268590873&play=1


----------



## satanoperca (6 October 2009)

Just thought I would revive this thread with the shock that interest rates are on the way up again.

0.25% could not hurt anyone as people in Australia are not over leverage with mortgage debt or are they.

Unemployment figures out Thursday, I'm predicting a slight increase, just following the trend.

Got to love this great country and the RBA for showing some leadership.

Oh and FHBG reducing further incoming months.


----------



## robots (6 October 2009)

hello,

yeah top effort RBA, once again we leading the way

thankyou
Grandmaster Robots


----------



## CamKawa (6 October 2009)

Yes it's good to see rates going up and the FHOG going out the door.


----------



## robots (6 October 2009)

hello,

First Home Owners Boost out the door, yeah and everything is going up

see its all a zero sum game brothers

thankyou
Grandmaster Flash


----------



## nunthewiser (6 October 2009)

robots said:


> hello,
> 
> 
> see its all a zero sum game brothers
> ...





yep 

sum will end up with zero once this cycle has done its rounds

sunshine and lollipops brother flash


----------



## MACCA350 (6 October 2009)

Were talking to Porter Davis this morning about the Marriot and the fellow mentioned that their base price has dropped over the last year(I didn't ask by how much)......not to mention they have upped their 'luxury upgrade package' from $53k(cost $3k) to $72k(cost $5k).........that makes two builders that I know of now(Henley as I mentioned earlier "Double story discount has gone from $15k to $30k with $50k worth of 'luxury' upgrades for free(previously cost $3k), I dare say more will follow and deals will get better as grants reduce. These price reductions and increased inclusions far exceed the current $7k drop in FHBG Boost

So as far as building new homes.........prices seem to be dropping and inclusions seem to be increasing.

Building contracts take about 2-3 months to generate, so most volume builders need FHB to sign now to guarantee contracts before Dec 31. I'd say there are a number of FHB who decided to purchase existing properties rather than build because of this lag time 

Porter Davis(Vic) lock in max 20 build start dates each month, about 2-3 months ago I was told their earliest start dates were in Feb 10'........Today 2-3 months later I was told there are still 4 start date openings for Feb. So it would seem new home building buyers are/have been slowing down, hence why they are dropping prices and increasing their inclusions.

I have a mind to wait till later in the year or early next year, I have no doubt they'll be hurting even more by then and they'll need to throw more freebies in and/or drop prices even more............that is if Krudd keeps his meddling fingers out of the pie

cheers


----------



## Soft Dough (6 October 2009)

MACCA350 said:


> Were talking to Porter Davis this morning about the Marriot and the fellow mentioned that their base price has dropped over the last year(I didn't ask by how much)......not to mention they have upped their 'luxury upgrade package' from $53k(cost $3k) to $72k(cost $5k).........that makes two builders that I know of now(Henley as I mentioned earlier "Double story discount has gone from $15k to $30k with $50k worth of 'luxury' upgrades for free(previously cost $3k), I dare say more will follow and deals will get better as grants reduce. These price reductions and increased inclusions far exceed the current $7k drop in FHBG Boost
> 
> So as far as building new homes.........prices seem to be dropping and inclusions seem to be increasing.
> 
> ...




But how is this possible?

I mean, there are some on this forum who almost believe that developers run on razor thin margins, FHBG was not used with leverage to artificially pump up prices, and that, you know we are different here.


----------



## Beej (6 October 2009)

So is it rising interest rates that are going to crash the housing market now is it? You mean like we had back when this and the other housing threads on ASF were started? Everything has come full circle! Let the debate rage for another 3 years then!

Cheers,

Beej


----------



## satanoperca (6 October 2009)

Beej,

Interest at there peak last year certaintly slowed the market and in some areas saw a decent pullback on prices.

0.25% is tiny, but as the RBA has noted it is going to gradually ease interest rates back to normal levels. 

Reduced FHBG and interest rates back to norm will certainly put the brakes on the market.

Beej, you are in Sydney. Hasn't Sydney prices stagnated for the last six years.


----------



## michael_selway (6 October 2009)

satanoperca said:


> Beej,
> 
> Interest at there peak last year certaintly slowed the market and in some areas saw a decent pullback on prices.
> 
> ...





The real question is how high the RBA will lift interest rates in this cycle?




thx

MS


----------



## Aussiejeff (7 October 2009)

michael_selway said:


> The real question is how high the RBA will lift interest rates in this cycle?
> 
> 
> 
> ...




Maybe the difference in that graph is simply down to the (relatively) massive immigration & foreign student numbers the Oz gummint continues to pump-prime the housing/rental market with?

Simple numbers game really. If local housing market & prices start to dip, just pump up the jam a bit more to keep the souffle rising? 

Anyway, it seems the gummint has no concerns at all about rising interest rates if their responses to the first eensy-weensy tick up is anything to go by. They still seem chuffed by whatever moves the "market" might make, whether that be up or down. It's ALL positive, dudes!


----------



## satanoperca (15 October 2009)

As posted in the other thread but more appropriate in this one:

http://www.theaustralian.news.com.au/business/story/0,28124,26213424-5018001,00.html

Rapid interest rate rises. It cannot be, it is unfair, it is not right. Crickey we shouldn't have taking out such a large mortgage. Govnuts please save us, we have been brainwashed by sundry and all that house prices never fall.

Oh, I can hear the cries of pitty already and it has only just begun.

Swanny will be out telling the RBA how to do their job any minute now.

And an article about WA.

http://au.news.yahoo.com/thewest/a/-/wa/6219758/first-home-buyers-free-up-rental-properties/



> New REIWA president Alan Bourke said with a slack vacancy rate and substantial number of new homes just finished or being built, Perth did *not have a housing shortage* like the east coast.




Time will tell if the same applies to the east cost.

The next six months will be interesting  with rising interest rates and FHBG being reduced again. Govnuts should not medal in markets, they only make things worse.

Cheers to all.


----------



## explod (15 October 2009)

> satanoperca
> 
> 
> The next six months will be interesting with rising interest rates and FHBG being reduced again. Govnuts should not medal in markets, they only make things worse.




The top wealthy classes control the banks and in many respects the governments.    It will pan out for the wealthy only and no amout of jawboing will make a fiddlers  .........


----------



## MrBurns (15 October 2009)

satanoperca said:


> As posted in the other thread but more appropriate in this one:
> 
> http://www.theaustralian.news.com.au/business/story/0,28124,26213424-5018001,00.html
> Rapid interest rate rises. It cannot be, it is unfair, it is not right. Crickey we shouldn't have taking out such a large mortgage. Govnuts please save us, we have been brainwashed by sundry and all that house prices never fall.
> ...




No worries everything will be fine , the arrogant little ponce will be happy to prop everything up with your money until after the next election.

But it is looking ominous for housing market isn't it, wont hurt the OS investors who probably used cash but the young Aussie couples who mortgaged to the hilt having all faith in Rudd will learn that he and his pack of drones like all other Labor Govts will let their supporters down then run and hide in the obscurity of opposition.


----------



## satanoperca (15 October 2009)

MrBurns said:


> But it is looking ominous for housing market isn't it, wont hurt the OS investors who probably used cash but the young Aussie couples who mortgaged to the hilt having all faith in Rudd will learn that he and his pack of drones like all other Labor Govts will let their supporters down then run and hide in the obscurity of opposition.




I couldn't agree more, except Labor will blame it on the Lib's.

One positive from Labor is that they gave the money to the people and not the banks like the US. Economic modelling has shown this to be far more effective at reducing unemployment and stimulating the economy than feed fat bankers more lunch.


----------



## Soft Dough (15 October 2009)

satanoperca said:


> One positive from Labor is that they gave the money to the people and not the banks like the US. Economic modelling has shown this to be far more effective at reducing unemployment and stimulating the economy than feed fat bankers more lunch.




Krudds spending was stimulatory for the extremely short term ( a few months ).  Now that we purchased $900 TV from China with taxpayers money, we now have to pay it, and the interest on it back to them.

Seems like we are starting to have to pay for it now, and so we should.

If we had no real effect from the economic downturn, it is sensible to allow interest rates to do what they are meant to do, and it seems that the Reserve bank has decided that enough is enough for the housing market, considering that analysts have said 20% increases over the next couple of years with inflation low.

Looks like we have been correct in saying that the increased FHBG was not necessary and a waste of money which could have gone to creation of jobs rather than lining of developer's pockets.


----------



## satanoperca (15 October 2009)

Soft Dough,

I was approving of the governments actions, but modelling shows that giving the money to the people as apposed to giving it to the financiers that caused this problem gives more bang for the buck.

Unfortunately the FHBG is going to have a negative end result.

Cheers


----------



## TOBAB (15 October 2009)

michael_selway said:


> The real question is how high the RBA will lift interest rates in this cycle?
> 
> 
> 
> ...




Just had a quick look at the average income in the US. Currently $33k. Roughly half of Australia. Our tax rates are comparable (perhaps Aust slightly better in that range). I would really like to know net family income after tax and mortgage paid. I think that would answer where our property prices are headed. Because based solely on av incomes the price of property would seem about right in relative terms, infact maybe even a little low in Aust.


----------



## cutz (15 October 2009)

TOBAB said:


> Just had a quick look at the average income in the US. Currently $33k. Roughly half of Australia. Our tax rates are comparable (perhaps Aust slightly better in that range). I would really like to know net family income after tax and mortgage paid. I think that would answer where our property prices are headed. Because based solely on av incomes the price of property would seem about right in relative terms, infact maybe even a little low in Aust.




Don't think so dude,

The ratio of average house price to average income has increased to ridiculous levels, especially around the inner city. 

It can't be sustained, prices have to crash.


----------



## TOBAB (15 October 2009)

cutz said:


> Don't think so dude,
> 
> The ratio of average house price to average income has increased to ridiculous levels, especially around the inner city.
> 
> It can't be sustained, prices have to crash.




I agree that prices do see extremely high. But I need some decent stats to convince me not general assertions. I think a packet of chewing gum at $1.20 is expensive when 20 years ago they were 30cents. But money doubling every 10 years means, yeah, $1.20 is about right. Inner city property has slightly more than doubled in the past 10 years. Not much though. I have bought and sold 3 places in that time so should know. With the average wage doubling also in that period, again, it woudl seem our proprty prices are in a somewhat logical place. There may be a correction, who really knows (max 15%) but a crash I severely doubt. Certainly not whilst we have all the resources we possess and a ready mkt to purchase them


----------



## lukeaye (15 October 2009)

TOBAB said:


> I agree that prices do see extremely high. But I need some decent stats to convince me not general assertions. I think a packet of chewing gum at $1.20 is expensive when 20 years ago they were 30cents. But money doubling every 10 years means, yeah, $1.20 is about right. Inner city property has slightly more than doubled in the past 10 years. Not much though. I have bought and sold 3 places in that time so should know. With the average wage doubling also in that period, again, it woudl seem our proprty prices are in a somewhat logical place. There may be a correction, who really knows (max 15%) but a crash I severely doubt. Certainly not whilst we have all the resources we possess and a ready mkt to purchase them




I tend to agree with you. there is record migration occuring at the moment, and those migrants need somewhere to live. I am of the opinion that inner city apartments are undervalued. i live in brisbane, and what i was able to purchase in proximity to the city compared to other places is very very cheap. if house prices were going to crash it would have occured 1 1/2 years ago, not now.

Like anything its supply and demand, and there is virtually no supply but plenty of demand. I hear in QLD that we are 30,000 homes short a year to the demand. 

The US is not like us, they have plenty of supply just no demand, because nobody has any money. everyone in aus still has money, and is spending, hence the interest rate rise. 

We have first home owners grants, and all sorts of tax incentives, so why wouldnt people buy?


----------



## Soft Dough (15 October 2009)

TOBAB said:


> I agree that prices do see extremely high. But I need some decent stats to convince me not general assertions. I think a packet of chewing gum at $1.20 is expensive when 20 years ago they were 30cents. But money doubling every 10 years means, yeah, $1.20 is about right. Inner city property has slightly more than doubled in the past 10 years. Not much though. I have bought and sold 3 places in that time so should know. With the average wage doubling also in that period, again, it woudl seem our proprty prices are in a somewhat logical place. There may be a correction, who really knows (max 15%) but a crash I severely doubt. Certainly not whilst we have all the resources we possess and a ready mkt to purchase them




You are not using the correct stats. You need to look at median house prices as a multiple of median income and take that into context when looking at




and understand that it is not incomes that are driving housing growth alone, but increases in gearing.

Hence why a 0.25% interest rate hike hurts a lot more now than it did previously.

Oh and I'm pretty sure that average wages have not doubled over the past 10 years, more like 60% ( ABS may 2009 vs ABS may 1999 ).

What has changed is that the 60% is being geared against more highly than in recent history at the very least.


----------



## TOBAB (15 October 2009)

Softdough I agree it is gearing that has caused price increases. My point is that the staples in life have not incerased as much as our incomes therefore we are able to take on more gearing and not be overly affected. I am talking about the middle to top end rather than the low end. Obviously low end any roi increase hurts. It is the low end where most of the % price increases have occurred in the past 6 mths, however, it is the middle to top where increases are now likely to occurr due to increases in wages, bonuses etc.


----------



## Soft Dough (15 October 2009)

TOBAB said:


> Softdough I agree it is gearing that has caused price increases. My point is that the staples in life have not incerased as much as our incomes therefore we are able to take on more gearing and not be overly affected. I am talking about the middle to top end rather than the low end. Obviously low end any roi increase hurts. It is the low end where most of the % price increases have occurred in the past 6 mths, however, it is the middle to top where increases are now likely to occurr due to increases in wages, bonuses etc.




So do you think that if wages growth falls into line with inflation that there will be a corresponding fall in house prices and not just moderation to keep prices in line with their historical increases of just over inflation?


----------



## TOBAB (15 October 2009)

Soft Dough said:


> So do you think that if wages growth falls into line with inflation that there will be a corresponding fall in house prices and not just moderation to keep prices in line with their historical increases of just over inflation?




Inflation and measuring it - don't get me started. 

If real wages growth falls, and I mean not just measured against the CPI, I mean REAL falls then housing prices will inevitably fall. And my term REAL refers to the necssities of life. When your wages can not afford a mortage and buy a square meal then that is when property prices WILL tumble.

We are a long way from that position my friend.


----------



## Soft Dough (15 October 2009)

TOBAB said:


> Inflation and measuring it - don't get me started.
> 
> If real wages growth falls, and I mean not just measured against the CPI, I mean REAL falls then housing prices will inevitably fall. And my term REAL refers to the necssities of life. When your wages can not afford a mortage and buy a square meal then that is when property prices WILL tumble.
> 
> We are a long way from that position my friend.




No I said not fall, I said rise in line with inflation, and not in excess of inflation ( and imo we are there already )

Ie if gearing ratches up then return to trend should ratchet down too.


----------



## explod (15 October 2009)

robots said:


> hello,
> 
> looks like Knocker has departed, gee i have got 4 A4 sheets sticky taped together with all the names, just amazing
> 
> ...





Good idea Professor, we dont' want people getting onto the truth, keep the jawboning going, party, who cares if they cant' pay anymore, no one it seems.

Take out a couple of credit cards, pay rent for two years in advance, furnish with no more to pay for two years, get the benefits and handouts, no worries. the Professor will back you.

Yeeeeeeeeeee Haaaaaaaaaaaaaa.

The bigger the party the greater the bust.  Professor, what was your thesis old Son.


----------



## robots (15 October 2009)

hello,

i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)

i am working on a paper at the moment which will expose the unnecessary  "hype" surrounding inflation, 

great fun collecting the data

thankyou
professor robots


----------



## explod (15 October 2009)

> i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)




Well I consider it an ignorant degredation of those who achieve true scholarship. Professor is in fact senior to Associate, think you should only put up what you're entitled to. 

As my old Mount Martha connection thought you were better than that.

More signs going up down here with less sale stickers.  In a few years when the freeway connects it should be good pickings for those who still have a bit left.

JMHO


----------



## Soft Dough (15 October 2009)

robots said:


> hello,
> 
> i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)
> 
> ...




So you don't have a phd then?


----------



## Glen48 (15 October 2009)

Yes he does if you want a Post Hole Dug contact the Poff.
Just don't ask any one to post facts of were migrants are buying, there is a shortage of houses, houses double every 10 yrs, China is being honest with growth because there aren't any


----------



## robots (16 October 2009)

hello,

yeah, will dig hole and will charge same rate as brain surgeon for my time, fantastic

thankyou
associate professor robots


----------



## Aussiejeff (16 October 2009)

robots said:


> hello,
> 
> i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)
> 
> ...




*TO*i*LET* paper, Mr  Ass. Poff?


----------



## satanoperca (16 October 2009)

http://www.theage.com.au/national/seven-rate-rises-in-a-row-tipped-20091015-gz64.html



> Financial markets responded by pricing in the most rapid series of interest rate rises Australia has seen for 15 years. Markets now predict that the Reserve board will raise rates at seven consecutive meetings, lifting its cash rate from 3 per cent 10 days ago to 4.75 per cent by May and 5 per cent by July




Can feel those breaks being applied as we speak.

Reduction in FHBG 
Increase in IR's

The bottom end of the market will see little demand at current prices as IR's are lifted and FHBG reduced. 

Lets hope those upgraders continue buying.

Robots, you need to upgrade your title to Dr as it is Dr Steven Keen, just a few more wheaties packets.

Cheers


----------



## MACCA350 (16 October 2009)

robots said:


> hello,
> 
> yeah, will dig hole and will charge same rate as brain surgeon for my time, fantastic



So you're saying that tradies are earning more than their worth.............no doubt builders can cut some fat

cheers


----------



## Soft Dough (16 October 2009)

MACCA350 said:


> So you're saying that tradies are earning more than their worth.............no doubt builders can cut some fat
> 
> cheers




I guess that there is no competition required out there considering the federal government is subsidising housing prices by the geared equivalent of the FHBG, so if that was totally removed, no doubt prices would drop 50k-100k overnight.


----------



## MACCA350 (16 October 2009)

Soft Dough said:


> I guess that there is no competition required out there considering the federal government is subsidising housing prices by the geared equivalent of the FHBG, so if that was totally removed, no doubt prices would drop 50k-100k overnight.



I've been watching prices to build fall over the last few months already, in excess of the FHBG boost drop. So it's already happening and I'm thinking about jumping back on the fence and sitting on our land as I get the feeling they'll continue to fall.

cheers


----------



## Beej (16 October 2009)

cutz said:


> Don't think so dude,
> 
> The ratio of average house price to average income has increased to ridiculous levels, especially around the inner city.
> 
> It can't be sustained, prices have to crash.




What makes you think inner city property prices have (or are likely to have) anything at all to do with average incomes?? Thinking like that is a big mistake if you are trying to get ahead in the real estate game....

Cheers,

Beej


----------



## Soft Dough (16 October 2009)

Beej said:


> What makes you think inner city property prices have (or are likely to have) anything at all to do with average incomes?? Thinking like that is a big mistake if you are trying to get ahead in the real estate game....
> 
> Cheers,
> 
> Beej




YEAH

That's right CUTZ, don't let any logic or fundamental analysis get in the way of getting ahead in the real-estate game at the moment as the herd forgot fundamentals a long time ago


----------



## MrBurns (16 October 2009)

Soft Dough said:


> YEAH
> 
> That's right CUTZ, don't let any logic or fundamental analysis get in the way of getting ahead in the real-estate game at the moment as the herd forgot fundamentals a long time ago




The more thngs change the more they remain the same, it will correct, in a big way thanks to Rudd, wait for it.


----------



## Soft Dough (16 October 2009)

MrBurns said:


> The more thngs change the more they remain the same, it will correct, in a big way thanks to Rudd, wait for it.




Exactly, the pseudo-ponzi scheme now REQUIRES people to abandon fundamentals to keep afloat ( as well as relying on government handouts and therefore disrespecting of market forces )


----------



## Beej (16 October 2009)

Soft Dough said:


> YEAH
> 
> That's right CUTZ, don't let any logic or fundamental analysis get in the way of getting ahead in the real-estate game at the moment as the herd forgot fundamentals a long time ago






MrBurns said:


> The more thngs change the more they remain the same, it will correct, in a big way thanks to Rudd, wait for it.






Soft Dough said:


> Exactly, the pseudo-ponzi scheme now REQUIRES people to abandon fundamentals to keep afloat ( as well as relying on government handouts and therefore disrespecting of market forces )




Complete load of rubbish. If you are talking city-wide or national average/median property prices then your argument about what you call "fundamentals" might carry some weight, although you are still misguided expecting a big crash as ultimately the issue will be solved with increased supply through building and decentralisation of the population (like in the US), but anyhoooo.....

Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.

In fact the "correction" in inner city property prices in Sydney at least has already happened! Late last year/early this year in the depths of the GFC,  property in the inner city was changing hands for up to 20% lower prices than a year earlier. Prices are now back to where they were in late 2007, and still rising. If you didn't see what was going on then, you missed the opportunity - the "correction" in the inner city has been and gone.

Cheers,

Beej


----------



## MrBurns (16 October 2009)

Beej said:


> Complete load of rubbish. If you are talking city-wide or national average/median property prices then your argument about what you call "fundamentals" might carry some weight, although you are still misguided expecting a big crash as ultimately the issue will be solved with increased supply through building and decentralisation of the population (like in the US), but anyhoooo.....
> 
> Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.
> 
> ...




You are single handedly obsessed with propping up the housing market. You dont see the reality of whats going on, I dont know how old you are but it sounds like you didnt see it happen in the past, this market is so distorted and bloated by meddling from Canberra it's now in a very precarious situation or rather all the FHB who were sucked in recently are in particular in a very bad situation.

How many of your wealthier people will continue to support these prices once the market gets the shakes ? Very few.


----------



## Beej (16 October 2009)

MrBurns said:


> You are single handedly obsessed with propping up the housing market. You dont see the reality of whats going on, I dont know how old you are but it sounds like you didnt see it happen in the past, this market is so distorted and bloated by meddling from Canberra it's now in a very precarious situation or rather all the FHB who were sucked in recently are in particular in a very bad situation.
> 
> How many of your wealthier people will continue to support these prices once the market gets the shakes ? Very few.




As usual simply a BS post full of one-eyed political ranting and devoid of any actual facts or rational argument to back up your point. Are my arguments simply too compelling for you to actually refute in any rational way? Why do you think inner city and beach side property costs so much more than elsewhere exactly? Did you miss the correction last year that has already been and gone?

Beej


----------



## trainspotter (16 October 2009)

Bang a gong .... bring it on ! "If we were prepared to cut rates rapidly, to a very low level, in response to a threat but then were too timid to lessen that stimulus in a timely way when the threat had passed, we would have a bias in our monetary policy framework," RBA Governor Mr Stevens said in prepared remarks. Oooooooooooopsss ......... here comes the pain.

*But wait there is more !* ONE quarter of 1 per cent may not sound like much, but for Sonja and Arjen van den Bosch it represents $167 a month extra that they will have to find to pay their $800,000 mortgage.

The couple live in Coogee, in Sydney's east, with their two-year-old twins, and are willing to manage the burden of very large interest payments in return for a beautiful home and a beachside lifestyle, The Australian reports. 

But the prospect of further interest rate rises concerns the family, who have already significantly reined in their spending habits.The family took out a substantial mortgage in 2005 when they bought two unrenovated duplexes for $1.6 million.

But financial stresses soon followed when their budget for renovating the two properties blew out. At one point the family's mortgage was as high as $2 million. They sold one of the duplexes in 2007 at a $100,000 net loss.

Thank you goes to "The Australian" for this tidbit of info. Gosh ... reality is setting in?


----------



## Mc Gusto (16 October 2009)

Beej said:


> Complete load of rubbish. If you are talking city-wide or national average/median property prices then your argument about what you call "fundamentals" might carry some weight, although you are still misguided expecting a big crash as ultimately the issue will be solved with increased supply through building and decentralisation of the population (like in the US), but anyhoooo.....
> 
> Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.
> 
> ...





Can't agree with the correction comment. If it did correct then why is it back? In truth it began to correct but the gvt interfered. anyone can see that. the question of whether it holds at the same levels is the contentious one. 
I personally think it will go back to where it was in the 'correction' period. Not a crash by any means. Interest rates will have an impact, further unemployment and a slow down of stimulus will have an effect and a dent to confidence in the macro community will have an impact. Australia and the world has a while to go yet. We are far from out of the woods.

Thanks

Gusto


----------



## explod (16 October 2009)

> Beej
> 
> Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.




And the big money earners are losing jobs at an increasing rate, particularly finance, leasure industry, manufacture and yes building and construction.  The other is that many semi and retired have had super portfolio values reduce by 30% overall (and the financials say that more losses will come soon).   The real shift that commenced with the October crash of 08 has not worked its way through the whole system yet, held back to some degree by the stimulous and some empty jawboing.

If you only focus your fundamantal analysis on the property side of the ledger you may just find things not so good for you in the longer term. 

We are only trying to help,  the idea of hype and cheeriness for success is fine, but one needs to keep an eye on and understand possible downsides.   The US are learning that hard and fast, and in spite of Chindia and immigration we may not be immune.  The great depression taught us that and history like human nature will repeat the mistakes.


----------



## Beej (16 October 2009)

explod said:


> And the big money earners are losing jobs at an increasing rate, particularly finance, leasure industry, manufacture and yes building and construction.




Are they really? Are you so sure about that? I'm pretty broadly plugged in for various reasons and that's not what I see. Last year there were a few hiccups in the financial services industry, but everyone I know who lost a job last year in those area's found one again and in all cases are earning more now than they were before..... People are making quite a bit out of the stock market at the moment as well, the banks are all doing well and hiring in many area's (not just not firing) and so on. 

I don't think there are many unemployed tradies around Sydney at least right now either. As for tourism/leisure industry, that's actually not that high a paying sector down here really, and manufacturing doesn't tend to be a big driver of inner city property either. It's financial services, business owners, executives, medical professionals, lawyers, IT and other professionals that are the main buyers in Sydney inner city.



> The other is that many semi and retired have had super portfolio values reduce by 30% overall (and the financials say that more losses will come soon).   The real shift that commenced with the October crash of 08 has not worked its way through the whole system yet, held back to some degree by the stimulus and some empty jawboing.




But how do you see that impacting Sydney/Melbourne inner city property prices? If anything it could cause a "flight to safety" as those very same super portfolio holders swear off a heavy equity bias in their super and instead shift more of it towards "bricks and mortar" for security of capital value and income stream? Also many of them have done extremely will since the March stock market lows as well.



> If you only focus your fundamantal analysis on the property side of the ledger you may just find things not so good for you in the longer term.
> 
> We are only trying to help,  the idea of hype and cheeriness for success is fine, but one needs to keep an eye on and understand possible downsides.   The US are learning that hard and fast, and in spite of Chindia and immigration we may not be immune.  The great depression taught us that and history like human nature will repeat the mistakes.




Of course, but the level of mis-placed pessimism that has been shown in this thread over the past 18 months, plus the fact that it proved to be pretty much completely wrong, suggests that the same statement could be made the other way around as well! 

Cheers,

Beej


----------



## satanoperca (16 October 2009)

Beej said:


> Also many of them have done extremely will since the March stock market lows as well.




This statement is only true if they sold at or around the peak and picked the bottom in March. Many are just getting back to break even on the share market, some have made some $$$ and some are still negative. 

It fanatastic that many took flight into property in the last year with low interest rates and freebees, thus holding up the demand for the time being. I do wonder how many will then flee when they see prices stagnate or decline.

With all those FHB and those investors coming into the market, who will be the buyers in the next year as interest rates return to normal in a market saturated with debt.

With a rising $AU, property in Australia becomes less attractive to overseas investors. This was hearld as another reason why property would boom, not if the dollar keeps going up.

Stuff the fundamentals, just go with the flow, it will work out.


----------



## explod (16 October 2009)

Ya know Beej, this thread is really the wrong one for you, and you obviously know little of the real financial fundamentals.   There is a good U tube post put up by Kennas on the Gold Thread overnight.  Objectively have a soak of all that, and if you think the same thing is not gradually happening in Australia, then you are beyond help.

cheers explod

I am am prepared, but have done well out of property in the past.


----------



## Beej (16 October 2009)

explod said:


> Ya know Beej, this thread is really the wrong one for you, and you obviously know little of the real financial fundamentals.   There is a good U tube post put up by Kennas on the Gold Thread overnight.  Objectively have a soak of all that, and if you think the same thing is not gradually happening in Australia, then you are beyond help.
> 
> cheers explod
> 
> I am am prepared, but have done well out of property in the past.




Look I'll be honest and tell you that I think people that think they truly know anything about financial fundamentals based on YouTube video's off the internet are probably the ones actually lacking in true knowledge/understanding 

Beej


----------



## explod (16 October 2009)

Beej said:


> Look I'll be honest and tell you that I think people that think they truly know anything about financial fundamentals based on YouTube video's off the internet are probably the ones actually lacking in true knowledge/understanding
> 
> Beej




I have had a number of financial advisors in the past, have read very many books by authors worldwide on financial fundamentals and have been an investor speculator for more than 40 years.   If you are wiser (and learning does not make real wisdom, experience and i.q are the only things that can do that) then I take my hat off to you and dont' look at the u tube (it is actually a business documentary being circulated that way)  think it was CNBC.  So play your make believe and I'll get back to my trading, up 125% this month, does not happen all the time, but a good one this month indeed.


----------



## MrBurns (16 October 2009)

Beej said:


> As usual simply a BS post full of one-eyed political ranting and devoid of any actual facts or rational argument to back up your point. Are my arguments simply too compelling for you to actually refute in any rational way? Why do you think inner city and beach side property costs so much more than elsewhere exactly? Did you miss the correction last year that has already been and gone?
> Beej




No actually all your posts are full of BS facts contrived by you in your obsessive quest to single handedly hold up the property market, you are breathtakingly transparent in your one sided lies and distortions.

Your arguments are too compelling ?????????? I have to be careful not to spontaneously spew, you are an arrogant balloon full of ****.


----------



## explod (16 October 2009)

MrBurns said:


> No actually all your posts are full of BS facts contrived by you in your obsessive quest to single handedly hold up the property market, you are breathtakingly transparent in your one sided lies and distortions.
> 
> Your arguments are too compelling ?????????? I have to be careful not to spontaneously spew, you are an arrogant balloon full of ****.




Mr Burns, an unbelievable waste as my post is too.  He is on the wrong thead and does not seem know it.

But well said

Back on topic, investing in property can be a very good thing, but now is suicide if you like money,  qualification, my own opinion: do your own research


----------



## MrBurns (16 October 2009)

explod said:


> Mr Burns, an unbelievable waste as my post is too.  He is on the wrong thead and does not seem know it.
> 
> But well said
> 
> Back on topic, investing in property can be a very good thing, but now is suicide if you like money,  qualification, my own opinion: do your own research




As I've always said, property is great, my preferred way to go but to say it always goes up and has no dangers is fools advice and to not admit we are in a serious bubble is just the opinion of the witless.


----------



## freebird54 (16 October 2009)

ANYONE seen this yet?

The Housing Collapse of 2010 Will Be Worse Than 2008

http://www.youtube.com/watch?v=kunB4SnAh4g&NR=1


----------



## Soft Dough (16 October 2009)

Beej said:


> Complete load of rubbish. If you are talking city-wide or national average/median property prices then your argument about what you call "fundamentals" might carry some weight, although you are still misguided expecting a big crash as ultimately the issue will be solved with increased supply through building and decentralisation of the population (like in the US), but anyhoooo.....
> 
> Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.
> 
> ...




Isolated single property cases may support your argument.

But if you cared to read other posts on these forums, you would understand, through simple mathematics that if inner city housing continued to outpace outer suburb prices by percentage growth each year that

1. It would result in exponential price discrepancy difference.
2. That it would eventually result in outer suburb pricing making up the difference.

Also your post fails to highlight that not only has outer suburb pricing lost touch with proven, reliable, historical fundamentals, but so has inner city pricing.

I cannot wait to see what Kevin Rudd pulls out of his electoral purse to save the housing market this time, as no doubt, if he does not get an early election, house prices will start to fall before the next election.

I finish with this.  

If there is unnatural intervention by the government into the housing market, it is going to increase prices or decrease falls... that said, if K Rudd introduces any more stimulus to housing ( and has just used $4 billion to prop up lending ) you can tell that his advice is that housing is going to fall and hence hurt his chances of re-election.


----------



## robots (16 October 2009)

hello,

hahahahaha, I WILL FINISH WITH THIS, yes sir, okay sir, no worries sir, 

great commentary as usual Beej, keep it up man you are a true people's poet and we bathing in it

still 8x income, OH YEAH, 9x income next year? i hope so

for the people with $ its great having a place to live, the commoners can keep getting the use of a property, no big deal, wow Mr Burns please dont call me a name, you should of stood up to the Ex, 

thankyou
Professor Robots

hello,

here it is again, reality

thankyou
professor robots


----------



## Soft Dough (16 October 2009)

robots said:


> hello,
> 
> hahahahaha, I WILL FINISH WITH THIS, yes sir, okay sir, no worries sir,
> 
> ...




Another zero content quote from the master of senseless posts.

Perhaps Mr Robots would like to contribute to the discussion instead of resorting to posting nonsense designed to inflame?

I see that you have finally manned up and given us a prediction of 9x average income next year.

I would have preferred you to have given a percentage price increase instead of a multiple, due to the each way bet you have taken on what could cause the multiple to rise.

Please try to post something constructive, as my fingers are getting sore from responding to no content posts of yours with content.

I guess from now on for each content free post you reply to one of my posts with, I will reply with a copy and paste response, which in one way is very similar to what you do.


----------



## MrBurns (16 October 2009)

robots said:


> Mr Burns please dont call me a name, you should of stood up to the Ex,
> Professor Robots




I dont recall calling you a nme , but if you insist i can ?


----------



## robots (16 October 2009)

hello, 

great, more people will get to see the truth

thankyou
Professor Robots


----------



## satanoperca (17 October 2009)

robots said:


> hello,
> 
> great, more people will get to see *the truth*
> thankyou
> Professor Robots




1. You are not and more than likely will never be able to obtain the title of Professor through the diligence of study at a University.
2. House prices were falling in 2008
3. House prices gained temporary support through the FHBG and stimulatory IR rates - lowest in 50 years
4. House prices are overvalued as a multiple of household income
5. Australian households are some of the most indebted in the world
6. IR rates are and will return to normal
7. The FHBG is to be reduced again
8. Oz has high immigration
9. The majority still believe house prices cannot fall
10. There is an under supply of affordable housing
11. There is no under supply of housing
12. FHB demand has been released and bought forward in the last year
13. The lower end of the property market is going to see selling pressure in the next few years with limited buyers, buyers unwilling and unable to pay yesterday prices and more mortgagee defaults.
14. We are going to have to listen to tradies wine like little children that they are unable to maintain wages equal to surgeons - (AKA Robots early response)
15. The government needs to get its act together and allow development of more land with less red tape.
16. The bulls seem to be losing touch with reality rapidly.
17. Property moves in large cycles
18. Lending practices are still to weak
19. Government should not intervene, help and/or support the banking sector with money from taxpayers.
20. NG on existing properties does not add to the supply of homes and should be abolished.
21. NG should only be on new properties adding to the supply of housing and jobs.
22. Property does not create real wealth for society.
23. The GFC taught governments nothing and will be repeated again and again until there is major change
24. A nation focussed on innovation and efficiency instead of property is a better nation to live in.

Please add to the list or dispute what you like.

Within 6-9months the other thread will be irrelevant.


----------



## nunthewiser (17 October 2009)

Soft Dough said:


> Another zero content quote from the master of senseless posts.
> 
> Perhaps Mr Robots would like to contribute to the discussion instead of resorting to posting nonsense designed to inflame?
> 
> ...





um seeing as this is one big zero content post 

dont you find that rather hypocritical?

i do


----------



## Macquack (17 October 2009)

I like you list santanoperca, except for number 14.
Can you change it to read:

14. We are going to have to listen to tradies wine like little children that they are unable to maintain wages equal to *bank clerks *who also *wine like little children when the air conditioning doesn't work.*


----------



## Soft Dough (17 October 2009)

nunthewiser said:


> um seeing as this is one big zero content post
> 
> dont you find that rather hypocritical?
> 
> i do




Of course not, there is obviously the fact that Robots is a chronic non-contributor who continually ridicules people for manning up and making predictions backed by some logic, which for example through government intervention are unmet.  He will not offer a prediction of house price increases over the next twelve months, yet professes to be a competent and successful "investor"

I have just stated how I will reply to his continually non-content posts which are also immature and designed to be inflammatory.

I like to acknowledge I have actually read most posts which refer to my contributions, and believe this is the best way to respond to someone with such childish behaviour.


----------



## satanoperca (17 October 2009)

Soft Dough said:


> believe this is the best way to respond to someone with such childish behaviour.




No the best way is not to respond, just ignore.

Even better respond with facts and logical arguments to represent your views. 

25. Rising $AU reduces overseas demand for Australian RE.


----------



## Soft Dough (17 October 2009)

satanoperca said:


> No the best way is not to respond, just ignore.
> 
> Even better respond with facts and logical arguments to represent your views.
> 
> 25. Rising $AU reduces overseas demand for Australian RE.




26. Rent rises unlikely to sustain growth due to wages growth decline

27. Bank guarantee expiry may force lenders to adopt more strict lending practices and force bank margins to rise to cover increased risk.

( bit of support for 11. and 26. below )

http://www.smh.com.au/national/rent-fall-a-threeyear-first-but-rises-loom-20091016-h14p.html


----------



## satanoperca (17 October 2009)

Soft Dough, Excellent.

Lets the bulls strike back.


----------



## moXJO (17 October 2009)

Is our dollar making highs against all other currencies or just the US?


----------



## robots (17 October 2009)

hello,

28. another week of 80% clearance rate taking it to about 5mths of Superb results

please keep up the no-content posts, enjoy them 

thankyou
Dr Robots


----------



## explod (17 October 2009)

robots said:


> hello,
> 
> 28. another week of 80% clearance rate taking it to about 5mths of Superb results
> 
> ...




Yep high clearance rate, many anxious sellers pleased to be getting out and dah poor sheeple brainwashed by the Fed Reserve and Krudd heading to the knackery.

Good work Robots, *the hangman* and professor extrordinair


----------



## WinnieBlues (17 October 2009)

does anyone who is a bull property investor worry about 'black swan' events that could drag down the value of their investment??

I have done research on mortgage resets on alt a and option arm mortgage loans resetting in the states in the next 2-3 years, with a high percentage of owners holding neg equity, in the opinion of deutche bank...

i have liquidated my one ip a while back, for a tidy gain, currently hold my ppor

i just feel that the central banks have fired all their ammo off.....and have no more remaining for any future shocks, so best to cash out while i can

i would be interested in the thoughts of other investors..cheers


----------



## robots (17 October 2009)

hello,

29. People are the happiest they have ever been:

http://www.heraldsun.com.au/news/ha...ellbeing-to-date/story-e6frf7jo-1225787300469

looks as though 8x income (oh yeah) sure is good for people by the looks of it, yeah EVERYONE HAPPY

and please stop those no-content posts

thankyou
Dr Robots


----------



## UBIQUITOUS (17 October 2009)

hello,

STOP PRESS! Australian real estate market hits new heights! : 100% clearance rate for the only auction in my street.

thank you


----------



## satanoperca (20 October 2009)

http://www.news.com.au/business/money/story/0,28323,26228564-5013951,00.html



> Record-high purchase levels by first-home buyers have already started to taper down and this trend is forecast to continue, REIA president David Airey says.
> 
> "We had about 170,000 firsthome buyers in the past year - that's about 50 per cent above the usual number in the market, so I expect them to drop back to normal levels," Airey says.




So FHBG bought forward demand and historically low interest rates released pent up demand. I wouldn't expect them to drop back to normal levels but overshoot that mark.

Where is demand going to come from for the sub $500K market especially with IR's returning to normal.



> Properties in this range could see sales decline but it will be a limited affect and probably not noticeable until the first quarter of next year




Limited by what exactly. Is the governuts going to come to the rescue with FHBG v2, v3, v4. 

Cheers


----------



## Beej (20 October 2009)

satanoperca said:


> http://www.news.com.au/business/money/story/0,28323,26228564-5013951,00.html
> 
> 
> 
> So FHBG bought forward demand and historically low interest rates released pent up demand. I wouldn't expect them to drop back to normal levels but overshoot that mark.




It may well over-shoot the mark - but remember we had FHB participation as low as 15% of the market during during 06/07 and the first part of 08, + highish/rising interest rates, and the market did just fine. Also remember that whatever buyer demand the grant boost/low interest rates may have brought forward (or released in terms of pent up demand), the same can be said for seller demand. Ie as buyer numbers in the sub $500K price range reduce, there may well also be less sellers, keeping supply/demand roughly in balance.

PS: I thought that was a pretty balanced article, especially considering it's from an REI.



> Where is demand going to come from for the sub $500K market especially with IR's returning to normal.




Well for a start even if FHB number overshoot the average 20% mark, that will still leaves 15% say of purchasers playing in that space, so there will absolutely still be demand, just less than now - now see points above re seller demand again. The key as to whether prices rise or fall based on buyer/seller numbers in any market segment is the balance between the two.

And then if you look at the latest ABS housing finance stats here: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0, you might note that *in August 09 finance for property investment loans increased by 7.6%*. If that trend continues then you have the answer to your question right there (I don't know if it will or not, no-one really does!).



> Limited by what exactly. Is the governuts going to come to the rescue with FHBG v2, v3, v4.




Perhaps they thinks effects will be limited by a drop off in the number of sellers plus an increase in the number of investors buying?

At the end of the day there is no question that some "heat" is going to come off the FHB market/price ranges in the next 12 months, but I'm just pointing out the factors that may well limit the effect on prices as this occurs based on available data + my past experience with the market in the early/mid 90s and also early 00s when very similar bearish arguments to now were being made.

Cheers,

Beej


----------



## Mc Gusto (20 October 2009)

In my opinion there is no way investors are going to pick up where first home buyers have left off. The reason for this is that they are investors and won't be buying at current market prices because they are not stupid!

Wait and see...numbers are coming off weekly


----------



## Beej (20 October 2009)

Mc Gusto said:


> In my opinion there is no way investors are going to pick up where first home buyers have left off. The reason for this is that they are investors and won't be buying at current market prices because they are not stupid!
> 
> Wait and see...numbers are coming off weekly




Well you may be right but the Aug figures (only one month though) are suggesting otherwise so far. We shall see!  As most on this thread have found out over the past 18 months, the property market often does completely different things than what some expect. 

I still think the investor wild card are the SMSFs where the holders are near or at retirement and are looking for nice steady cash flow in the years to come without the risk/volatility of shares etc. There are still some half decent investment opportunities around; I saw a 1 bed flat on the lower north shore last week that sold for $265k with a gross rental yield of 6.5% and a net yield after body corporate, rates etc of 5.5% - that's not too bad at all? Location was excellent and such that you would never have a problem finding/keeping tenants at market rent rates. I'm personally not increasing property holdings right now because I have been increasing my equity weighting since late last year after selling an IP and my old PPOR and upgrading, however a property like the one I saw last week could be very attractive for a SMSF?

Cheers,

Beej


----------



## MrBurns (20 October 2009)

From Crikey - 



> The real estate spinners who are artificially inflating prices
> Adam Schwab writes:
> 
> 
> ...


----------



## Knobby22 (20 October 2009)

Speaking of spin, an agent has put a big add on a giant billboard near where I live proclaiming Real Estate has got hot, with the word "hot" spelled with chillies.

Says it all really.


----------



## satanoperca (20 October 2009)

I couldn't agree more with the above actually.

Last week I noticed the REIV missed reporting on one property I attend the auction and was passed in with a vendor bid only and another property in the same suburb was sold privately and never up for auction was listed in the auction results.

REIV reported approx 600 auctions last week, the domain RE liftout showed approx 250 auctions for the same week. A little sus.

I then looked into REIV report and found properties that had been sold the previous weekend been included in last weekend results.

This week I have selected six suburbs and noted down number of auctions in each suburb and will check them against REIV figures on Sunday. Somehow I feel I will see a lot lower clearance rate than what is being reported.

Cheers


----------



## satanoperca (20 October 2009)

Knobby,

where is it, a little bit of word changing might be required at night.

Cheers


----------



## Knobby22 (20 October 2009)

Good idea.

Corner of Mt Alexander and I think Princes Street, Flemington, in Melbourne.


----------



## robots (20 October 2009)

hello, 

i will meet you down there if you need a hand

thankyou
Doctor Robots


----------



## satanoperca (20 October 2009)

robots said:


> hello,
> 
> i will meet you down there if you need a hand
> 
> ...




Robots you really make me laugh, diversity is the spice of life and you certaintly added some spice.

Not to be out done by Dr Steven Keen, I see you have been studying hard, day and night and in a very short space of time have received the honour of using the title of Doctor. Congratulations.

On the above, can always use the hands of a trusty tradie. Will have the site scoped and a plan of action within a couple of days. Will be intouch.


----------



## trainspotter (20 October 2009)

I am thinking an "S" at the front of the word HOT and the "O" changed to an "I" perhaps? This would work.


----------



## satanoperca (20 October 2009)

Trainspotter,

A plan is starting to come together and thank-you for this creative and spirited idea. 

Are the characters to be in the form of poo as well? Maybe to far.

Will keep those interested posted on progress.

Cheers


----------



## robots (20 October 2009)

hello,

anyway we could tweak it to read *SPECIAL*

thankyou
Doctor Robots


----------



## trainspotter (20 October 2009)

satanoperca said:


> Trainspotter,
> 
> A plan is starting to come together and thank-you for this creative and spirited idea.
> 
> ...




Ummmmmmmm .... had not really thought about having the lettering to be symbiotic with excreta by nature? But now that you mention it ... not a bad idea !! Keep ASFers informed of the headway. Pictures even would be good.


----------



## satanoperca (20 October 2009)

Yes, some mock ups will be required before action can proceed.

Cheers


----------



## trainspotter (20 October 2009)

robots said:


> hello,
> 
> anyway we could tweak it to read *SPECIAL*
> 
> ...




And have the lettering in the form of cereberally challenged troglodytes? This way you caould really get the full effect of what you are trying to achieve ! HAHA AH ah ha h he eh he eh eh heh ......... *plop*


----------



## CamKawa (28 October 2009)

This thread has gone a bit quiet. Am I the only bear left?


----------



## MrBurns (28 October 2009)

CamKawa said:


> This thread has gone a bit quiet. Am I the only bear left?




As so as you think it's all go, it just isn't.

Correction not far away.


----------



## explod (28 October 2009)

CamKawa said:


> This thread has gone a bit quiet. Am I the only bear left?





No you are not, suporters in the wind.   And they will increase in the next month or two, FHBG fading and the Real Estate Industry ramping so hard there is little left now.

cheers explod


----------



## CamKawa (28 October 2009)

Thanks for the responses. I was feeling like I was the lone bear in the woods...


----------



## Gordon Gekko (28 October 2009)

CamKawa said:


> Thanks for the responses. I was feeling like I was the lone bear in the woods...




It's not easy being a bear. But we will have our day in the sun. reality is starting to set in finally!

G


----------



## robots (28 October 2009)

hello,

the thread went quiet because people realised its all over

the previous predictions have gone nowhere so now many are reloading with a new set, great reading 

keep ramping it, and title holders will keep collecting EquityMate

thankyou
Doctor Robots


----------



## robots (28 October 2009)

hello,

good evening, bit more action over here at doom & gloom headquarters

check this:

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

fantastic reading, armchairs critics will no doubt know everything 

thankyou
Doctor Robots


----------



## explod (28 October 2009)

robots said:


> hello,
> 
> good evening, bit more action over here at doom & gloom headquarters
> 
> ...




Yep *dOCTOR THINGAMY* 
the rhetoric from those ramping to take the fees for ziltch are pretty desperate as all else is failing, we must be close to the blow off top by the reading of it *dOCTOR* 

My stocks up an average of 10% today *on a down day too*.   Be able to buy some prime real estate with it after the fall, great investment opportunities all the time.


----------



## robots (28 October 2009)

hello,

any chance of flipping the Doctor a dollar or two, help out a battler from the street

thankyou
Doctor Robots


----------



## Macquack (28 October 2009)

robots said:


> hello,
> 
> good evening, bit more action over here at doom & gloom headquarters
> 
> ...




That house at 2a Como Avenue, South Yarra sold for $3,990,000, they have to be kidding.
http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008022665

 I would hate to see what something with a view is worth!


----------



## nunthewiser (28 October 2009)

If one was to buy a development block that was under a "distressed" sale scenario and was paying what the seller paid in 2003/04 would that be classed as buying at the wrong time also ? 


Heheheheh gotta love capitalism and over extended people . 


And the debt pain has not even kicked in fully yet overall.

Sunshine and Lollipoops Brothers


----------



## TOBAB (28 October 2009)

Macquack said:


> That house at 2a Como Avenue, South Yarra sold for $3,990,000, they have to be kidding.
> http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008022665
> 
> I would hate to see what something with a view is worth!




I know that place and the 3.9 is for land only. The house wouldn't be worth $50K. HUGE PRICE.


----------



## Aussiejeff (29 October 2009)

robots said:


> hello,
> 
> any chance of flipping the Doctor a dollar or two, help out a battler from the street
> 
> ...




Dear Doctor,

I have researched all your thousand's of posts and notice that 99.9% in essence refer wholly to yourself about yourself.

Is your REAL name Doctor Dorothy Dix?


Chiz,

Curious


----------



## explod (29 October 2009)

Aussiejeff said:


> Dear Doctor,
> 
> I have researched all your thousand's of posts and notice that 99.9% in essence refer wholly to yourself about yourself.
> 
> ...




Too true Aussie J, but Dorothy s message had some content.  The banter of course has us way off topic so we are falling for the same.

If all else fails the diversion reigns for the pillars supporting house prices.  *Is pRolly why he has dOCTORATE*


----------



## Beej (29 October 2009)

explod said:


> If all else fails the diversion reigns for the pillars supporting house prices.




A request for clarification:

Are you suggesting that people like Robots, myself and others are actually responsible for house prices rising? Ie our actions have "supported" prices in the way say low interest rates or the FHB grant boost have? 

Or do you mean that Robot's et al "support" house prices, as in they/we have always argued here over the past 2 years that nominal prices would not fall significantly despite all the endless bearish arguments, predictions, statements of absolutely certain outcomes and so forth that turned out to be completely wrong, and that we have turned out to be correct so far?

If the former then I am truly humbled that you see such market power being held by little old us!

If the latter then I can certainly see how house price "supporters" are worthy of derision and ridicule! 

Cheers,

Beej


----------



## satanoperca (29 October 2009)

Patience is the key for the bears and action for the bulls.

We are nearing a junction :

Rising IR's from an incredibly low base
Decreased government revenue (not good given size of deficit)
Reduced FHBG
Government still predicting unemployment to rise
Share market about to take a correction
House prices surging in a classic blow off
USA about to rain down debt across the world with defaults on the rise and the next set of Alt-A /R loans about to mature
China has plenty of stock piles of resources/commodities
China exports down 20% this year
Our banking sector might be better than other countries but that does not mean it is bullet proof, actually a water pistol could bring them down
High $AU.


Conclusion property must go up because a Doctor told me so.

Cheers & enjoy Melbournes sunny day.

Oh, forgot, we have our own subprime, thanks RUDD, going to bail them out to with tax payers dollars.


----------



## robots (29 October 2009)

hello,

good afternoon, another great day across australia

oops, wrong thread

thankyou
doctor robots


----------



## WinnieBlues (29 October 2009)

australian housing is the last great bubble not to burst

here in brisbane, i bought my ex ppor for 180k in 99 in bardon, sold for 685k last year....

am now renting, sitting on a big wad of cash...

This is not the time or the place to be in debt

Robots....i don't know how many IP's you own....it might be too late to get out....i wouldn't want to be the last to the exits mate, you and other DIY property investors who are used to seeing endless growth might be crushed..

I got out at the right time...will you????

This is from a bloke called Gerald celente, who predicted much of the financial crisis with surprising accuracy...google it if you like...

this won't be pretty, as he is calling it as worse than the great depression......if he is right we are in big trouble..

i wouldn't dismiss what he says......as he has been right so many times....watch out below

http://www.youtube.com/watch?v=9nJ7LM3iyNg


----------



## WinnieBlues (29 October 2009)

ouch...and all the mortgage resets coming.......

subprime is over...now the next stage, and they have run out of bullets!!!!!!!!!

now for round two.......but i'm not the one risking my financial future......but i am sure uncle ben at the fed is right, the recession is over....just like they said saddam hussein had wmd!!!!

for your enjoyment, mortgage resets in the USA....man, that is one steep curve up!!!!!!

http://www.bearishnews.com/wp-content/uploads/2009/05/mortgage-reset-chart.jpg


----------



## robots (29 October 2009)

hello,

this is from a bloke called Doctor Robots, you dont need to google, he right here in the house man with over 2000 posts right here

this guy (along with 4 others) predicted the boom with 100% accuracy, yes man 100% accuracy

Got It Right Crew, i will ride the bumps along the way

thankyou
Doctor Robots


----------



## WinnieBlues (29 October 2009)

robots....u do know what you are talking about.....i have read your posts, and u made a great investment in saint kilda...

the game has changed though......

i have made good money in property....now is the time to get out...

the world is in a bad, bad way...i just got back from europe a few weeks ago...the US is worse

australia is not some isolated place...this will hit here, and hard.....we have no more to throw at this

I am not risking my financial future any more...i am 100% AUD....

this from the US.....but sure, the recession is over there, according to BB

http://www.youtube.com/watch?v=46r4yxttThw


----------



## robots (29 October 2009)

hello,

no worries Winnnieblues

it is some isolated place, like  a hobby farm, self sufficient, paradise man

all the best for your investments, i hope people are still killing it with RE in years to come

thankyou
doctor robots


----------



## WinnieBlues (29 October 2009)

good luck robots.....i hope you make a motza......i am out of the game now....sitting on a big lot of cash.......you gotta know when to hold em and all that.....now time to get out....i have taken profit off the table....

there is no harm in getting out while you are still ahead.....quitting while you are ahead is not the same as quitting

just my 2c

I can read the signs...the writing is on the wall IMO for almost every asset bar cash and gold....deflation is going to kill off most asset classes..

the last few years....we aint seen nothing yet

do your research.......i did, and i was worried....forewarned is forearmed


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## robots (29 October 2009)

hello,

okay

thankyou
Professor Robots


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## joeyr46 (29 October 2009)

WinnieBlues said:


> good luck robots.....i hope you make a motza......i am out of the game now....sitting on a big lot of cash.......you gotta know when to hold em and all that.....now time to get out....i have taken profit off the table....
> 
> there is no harm in getting out while you are still ahead.....quitting while you are ahead is not the same as quitting
> 
> ...



You forgot to mention that we don't actually produce anything anymore we are no better than a banana republic until we start to produce something again, but then again the housing bulls don't seem to worry about no production and high debt. It has always ended badly can't see why this time will be any different I'm just amazed it has held up so long. But it is not going to happen overnight could take best part of 10 years or so. when you read financial history and step outside of housing prices to look at how stupid they have become compared to our wages (and how low rent has become compared to price of house) either rents double (the old formula was for every $16000 a house or unit cost you should get $40 a week) or prices half roughly to get back to some sort of real value because we certainly don't have inflation at the moment


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## nunthewiser (29 October 2009)

joeyr46 said:


> You forgot to mention that we don't actually produce anything anymore we are no better than a banana republic until we start to produce something again,




Um resources just to name one major driver of this country.


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## robots (29 October 2009)

hello,

and taxi's

thankyou
professor robots


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## nunthewiser (29 October 2009)

robots said:


> hello,
> 
> and taxi's
> 
> ...





Yes Drivers drive them 

thanks for clarifying that one 

Grandmaster nun and the furious five


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## Beej (29 October 2009)

joeyr46 said:


> You forgot to mention that we don't actually produce anything anymore we are no better than a banana republic until we start to produce something again, but then again the housing bulls don't seem to worry about no production and high debt. It has always ended badly can't see why this time will be any different I'm just amazed it has held up so long. But it is not going to happen overnight could take best part of 10 years or so. when you read financial history and step outside of housing prices to look at how stupid they have become compared to our wages (and how low rent has become compared to price of house) either rents double (the old formula was for every $16000 a house or unit cost you should get $40 a week) or prices half roughly to get back to some sort of real value because we certainly don't have inflation at the moment




Utter rubbish! For a start, $40/week for every $16k of purchase price (don't where you got that from!) = 13% gross rental return! Holy crap if I could get that steady cash return from ANY investment I, and every other person with access to ANY capital, would be there in a flash? Especially with access to borrowed capital @ under 6%..... Free money yeah!

As for Australia producing nothing, hmmmmm - I look at my career of 20+ years where I have pretty much earned all my income from activities that generated export income, I suppose myself, all the people I worked with, the businesses I worked for etc don't actually do anything after all?? Who would of thunk it? Not mention (as Nun did) the resources sector? Or the farming sector? Or the manufacturing sector? Or the tourism sector? Of the financial services sector? I could go on.......and on.......

Cheers,

Beej


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## explod (29 October 2009)

Beej said:


> A request for clarification:
> 
> Are you suggesting that people like Robots, myself and others are actually responsible for house prices rising? Ie our actions have "supported" prices in the way say low interest rates or the FHB grant boost have?
> 
> ...




First of all apologies as have just noticed your post from yesterday.

Yes a great run for property over the last two years and those skilled will always do well.

However there are many not so skilled who take notice of the rhetoric and are getting into property like it is a teller machine and way over their heads.  The best evidence comes from talking to people and being involved with the family.   And part of my employ years ago was as OIC to directly analyse demographics for government planning on resource allocation.

Stick in the muds like myself try to provide some ballance so that the unfortunates that cannot realy afford it in the long term do not get caught.  It is because some of us are Grandparents heading towards Great Grandparents that not only try to advise our own of the right path but also to provide some wisdom by whatever means to the average Joe Blow (no offence intended to our esteemed ASF leader).

I am not that one sided Beej, have done very well out of property and will no doubt do it again .  But your very narrow and one sided view needs to be tempered with some wisdom (IMHO only) for the vulnerable.


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## Soft Dough (29 October 2009)

Beej said:


> Utter rubbish! For a start, $40/week for every $16k of purchase price (don't where you got that from!) = 13% gross rental return! Holy crap if I could get that steady cash return from ANY investment I, and every other person with access to ANY capital, would be there in a flash? Especially with access to borrowed capital @ under 6%..... Free money yeah!
> 
> Beej




Guess you weren't around in the good old days when housing wasn't in a bubble.

I have purchased properties for $100k and rented them out for $200 per week. Interest rates were only around 8% as well ( not that I borrowed for any of them, too old for that )  The same box of rubbish is apparently worth around $400k now and rents for $350 per week.

Not too far off those figures, and that was only 10 years ago.  It just goes to show that properties are not only overvalued, but returns are too reliant on capital growth, from a historical perspective.


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## Fleeta (30 October 2009)

Soft Dough said:


> It just goes to show that properties are not only overvalued, but returns are too reliant on capital growth, from a historical perspective.




Bang! You just hit the nail on the head - and exactly why I, like many others are on the sidelines - it's all about being in the best asset class - and for now, my $ are not sitting idle in the housing market at these prices.

I could be wrong - property may still go up, but will it go up as much as other investments...I don't think so.

As a 30 year old, I am seeing many of my friends be that 'greater fool' that is referred to - they are 90% leveraged and assume the capital gain will outstrip the interest payments...big call, I say - but good luck to them.


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## Gone Fishin (30 October 2009)

Fleeta said:


> Bang! You just hit the nail on the head - and exactly why I, like many others are on the sidelines - it's all about being in the best asset class - and for now, my $ are not sitting idle in the housing market at these prices.
> 
> I could be wrong - property may still go up, but will it go up as much as other investments...I don't think so.
> 
> As a 30 year old, I am seeing many of my friends be that 'greater fool' that is referred to - they are 90% leveraged and assume the capital gain will outstrip the interest payments...big call, I say - but good luck to them.




You forget one thing. If rates go up so too will property. Also many other things a foot. perhaps your mates might cut back on luxuries to afford their 90% leverage.

Good luck.


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## Soft Dough (30 October 2009)

Gone Fishin said:


> You forget one thing. If rates go up so too will property. Also many other things a foot. perhaps your mates might cut back on luxuries to afford their 90% leverage.
> 
> Good luck.




Not necessarily.  House prices increases as rates rise assumes inflation rises and houses keeping pace with inflation.  This is a good assumption when gearing is low to start with and banks have low risks of default and are prepared to lend even as rates increase.

Now it is different, with record gearing in a record bubble.

And even if they do, they need to increase at a rate faster than the loss incurred by the increase.  A bit of a gamble at the moment.

I bet the mates have already cut back on many luxuries, something I did not have to do in my time. I feel sorry for them actually.


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## Beej (30 October 2009)

explod said:


> First of all apologies as have just noticed your post from yesterday.
> 
> Yes a great run for property over the last two years and those skilled will always do well.
> 
> ...




All fair comments - all should be very wary of borrowing too much money in this environment and be expecting/planning for significant interest rate rises in the years ahead, and only *limited* capital growth in property IMO (we won't see a repeat of the last 10 years in Brisbane or Melbourne or Perth for example).



Soft Dough said:


> Guess you weren't around in the good old days when housing wasn't in a bubble.




You mean before WWII??? 



> I have purchased properties for $100k and rented them out for $200 per week. Interest rates were only around 8% as well ( not that I borrowed for any of them, too old for that )  The same box of rubbish is apparently worth around $400k now and rents for $350 per week.
> 
> Not too far off those figures, and that was only 10 years ago.  It just goes to show that properties are not only overvalued, but returns are too reliant on capital growth, from a historical perspective.




For a start, in your example you were getting a 10% gross return, not 13% - quite a difference. If the values/rent for today are as you say, then the return now is 4.5% gross which sounds about right in the current market. 

I would suggest that you bought well, not because houses are necessarily massively over-valued now, (although they are certainly not cheap), but because they were by historical terms very under-valued in the area you bought in at the time you bought - no wonder they went up so much as that sort of return if capital is available at < 8% is very very good - I doubt many even on this thread would argue NOT to buy if that sort of property opportunity arose. What I am saying is that sort of return, matched with low interest rates and low inflation, would be the exception, not the norm, whereas many here would seem to believe it's the other way around. Do you think that it is "normal" to be easy or hard to make money with low risk? A rental return greater than the cost of money over a period of time is essentially "free" money; that sort of market condition cannot exist for long IMO.

PS: Where was this? Major city or regional centre? In 20 years or property ownership/investing in Sydney I have never seen a 10%+ gross rental return residential property (at it's current market value) other than studios etc where the capital gain potential is very low.

Cheers,

Beej


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## Soft Dough (30 October 2009)

Beej said:


> You mean before WWII???
> 
> For a start, in your example you were getting a 10% gross return, not 13% - quite a difference. If the values/rent for today are as you say, then the return now is 4.5% gross which sounds about right in the current market.
> 
> ...




1. As I said, just 10 years ago.  Note that there is a world outside of Sydney 
2. I stated that the return was not 13%, but as you have acknowledged, it was still very good, and quite frankly readily achievable in the 90s.
3. I flew up to Townsville after some friends told me of some good deals. A Major Australian city ( 13th)  and all were in central locations.

Now they are overpriced, but stupid Gen-X and Gen-Y are prepared to pay too much as they have never known housing market slumps, recessions and have too easy access to money, I still say that the next 12 months is going to be very interesting indeed.


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## joeyr46 (31 October 2009)

Beej said:


> Utter rubbish! For a start, $40/week for every $16k of purchase price (don't where you got that from!) = 13% gross rental return! Holy crap if I could get that steady cash return from ANY investment I, and every other person with access to ANY capital, would be there in a flash? Especially with access to borrowed capital @ under 6%..... Free money yeah!
> 
> As for Australia producing nothing, hmmmmm - I look at my career of 20+ years where I have pretty much earned all my income from activities that generated export income, I suppose myself, all the people I worked with, the businesses I worked for etc don't actually do anything after all?? Who would of thunk it? Not mention (as Nun did) the resources sector? Or the farming sector? Or the manufacturing sector? Or the tourism sector? Of the financial services sector? I could go on.......and on.......
> 
> ...




$40 for every 16000k invested was common in the 60's and prior. As for not producing anything I didn't realise everyone would take it so literally.
Of course there are the resources we sell but we dont produce them we just mine them. Agriculture is more long term if we look after the soil. but as for producing things we rely on other nations to do that and then import them not sensible especially when we import oranges to Qld and apples to Tassie destroying our own farmers in the process, and I know the arguments about cheaper etc but we really are paying ourselves too much and relying too heavily on the finance industry. Manufacturing sector is continually moving offshore, Tourism is definitely one I had forgotten about but it is in danger of a strong dollar at the moment although I expect that to change rapidly in the next few months but doubt tourism on it's own can support the rest of the economy especially with resource prices now on the downward slope  but it still does not change the fact that houses by any reasonable measure in history are way overvalued and potentially about to correct (but not necessarily tomorrow) 
I have actually done quite well out of property in the past but feel it is totally out of wack with any reality at the moment


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## cornnfedd (31 October 2009)

I decided to go to some auctions today to see what the market is doing in Adelaide.

First house was passed in, 2 vendor bids at 850k then 870k - I valued the house at around 750k, thought the vendor bids were way to high, needless to say nobody bid at all except the vendor. Probably around 30-40 people at the auction. Brighton.

Second house was on a big block close to the city - developers dream really at over 900 sqm, nice and flat, ****ty house so good to knock down. Loads of people there, probably over 100, i valued the house at 540k - it sold for around 556k, probably around 4 serious bidders going at it. Plympton

Third house at Marion, nice neat house on 800 sqm, flat well looked after, maybe 30-40 people at the auction, first bid at 250k, then sold for about $415k, I must have been dreaming as I valued at $535k (woops) but i think the bidder did well, not much competition.

Fourth house around Brighton area, 670 sqm, ****ty old had to knock this one down, not a heap of interest, maybe 30 people at the auction, 2 bidders going at it for a bit, sold for approx $430k, I valued at $425k.

So there did seem to be a fair bit of interest at the auctions, so taking a 1 day look at the market, 75% clearance rate - not too bad, and a fair amount of people at each auction.

I still havent decided if I will invest in another property, best to wait until early next year to see what the market will do, it could go either way still i think.


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## Macquack (1 November 2009)

robots said:


> this is from a bloke called Doctor Robots, you dont need to google, he right here in the house man with *over 2000 posts right here*




Quote from "House prices to keep rising for years" thread


robots said:


> hello,
> 
> thankyou
> Doctor Robots




Great stuff robots.

Maybe you should work on your quality rather than quantity.


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## condog (7 November 2009)

If you want to know quickly and easily what the property markets doing there are three websites you should go to: 

The first is for the weekend auction clearance rates http://www.homepriceguide.com.au/auction_results/index.cfm 


The second does detailed market analysis of supply and demand fundamentals for that market. I personally dont like the properties they ares selling, but I have used there advice on currently reccomended markets for many years and made great profits from their advice.
www.quartile.com.au   and see which markets are currently reccomended and which are not.   At present they have been reccomendening Sydney and Brisbane for a while. 

The third is Steve McKnights     www.propertyinvesting.com.au
Steve has his finger on the pulse, but hes a bit Victoria centric, and melbourne at present still has oversupply issues , particularly in units.

Terry Ryder is another guru.

These guys make a living from detailed market analysis and its information is far more detailed and accurate then that above.


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## MrBurns (7 November 2009)

Good links condog, thanks.


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