People are still spending

[kitehigh]

3 weeks ago my mate flew to Sydney, just to buy a car. The particular make and model of the car costs anywhere from $41-45K in Melbourne. He found a dealer in Sydney that was selling it cheaper (with 3yrs warranty), so he flew up to have a look. The dealer picked him up from the airport (30min drive from dealer) and opened the dealership on a Sunday (when they are normally closed). The dealer was advertising for $34K, and my mate ended up buying it for $32K and driving it back to Melbourne. Then the very next day he gets it insured by RACV for the value of $42K. He could ride it off today and make a $10K profit (minus airfares to Sydney and fuel on drive home ) not that he'd do that, he loves the car.

I guess times are tougher in Sydney than they are down here.

Would be interested to know what car that was Gav as I will be in the market to buy a new car soon in that price range.

 

[juw177]

Soon enough people will realise that there is no point spending now when you can buy more with your money later.

People taking advantage of the low interest rates will get a nasty surprise when it shoots upwards and home values plunge. Historically, low interest rates correlates with high prices and high interest rates correlating with low prices.

There is a lot of effort by governments to keep prices inflated. But low prices are good, because only from there will the economy begin to recover.

 

[Smurf1976]

3 weeks ago my mate flew to Sydney, just to buy a car. The particular make and model of the car costs anywhere from $41-45K in Melbourne. He found a dealer in Sydney that was selling it cheaper (with 3yrs warranty), so he flew up to have a look. The dealer picked him up from the airport (30min drive from dealer) and opened the dealership on a Sunday (when they are normally closed). The dealer was advertising for $34K, and my mate ended up buying it for $32K and driving it back to Melbourne. Then the very next day he gets it insured by RACV for the value of $42K. He could ride it off today and make a $10K profit (minus airfares to Sydney and fuel on drive home ) not that he'd do that, he loves the car.

I guess times are tougher in Sydney than they are down here.

It's pretty common in Tas for people to fly to Melbourne or sometime further away to buy used cars too. The saving is only modest once you include the cost of flying there and driving / boat back home but you do get an effectively free interstate holiday out of it.

 

[Smurf1976]

MOXJO and Nomore4s: don't be intimidated into changing what feels right for you by friends with a shorter term approach.

Totally agreed there. For me at least, it's security that brings happiness rather than having the latest gadgets.

I've never seen the point of following the crowd. I don't have a plasma TV either!

Well I do have a plasma, but only because I needed to buy a new TV anyway and they were considerably cheaper than LCD.

But I'm doing much the same with other things. Once Winter arrives, I'll be messing about with a wood fire whilst my neighbours run their air-conditioners (after which they complain about power bills).

I'm looking at a second hand CRT monitor right now that was being thrown out - it cost me literally nothing and works fine.

Only thing I would like but don't have is a more reliable lawn mower. The one I have does work and it's not that old. But bits fall off at random and it needs a ridiculous amount of servicing to keep the engine running properly because whoever designed it put the air filter where it cops every possible bit of dust and blocks up all the time. I should have stuck with the good old Aussie two stroke - low tech maybe but at least they work.

 

[Garpal Gumnut]

As they say in the English Pantomines at Christmas.


OH NO THEY'RE NOT


I was in Harvey Normans yesterday arvo on a sale day, they had 4 people on the registers, and it took 4 minutes for a punter to go through.

There were customers, but it was difficult to get them to spend. Everyone is after a bargain.

This retail downturn is ugly.

gg

 

[Julia]

People taking advantage of the low interest rates will get a nasty surprise when it shoots upwards and home values plunge. Historically, low interest rates correlates with high prices and high interest rates correlating with low prices.

That hasn't been my experience, juw. Thinking back to the 80's when (at least in NZ and I think it wasn't isolated to that country) inflation was rampant, I was paying 22% on IP mortgage but the capital gain was astonishing. Also rents rose exponentially. Given negative gearing and high personal tax rate, it was actually a very rewarding time.

 

[juw177]

Hmm good point, perhaps the correlation isn't as strong as I had imagined.

 

[tech/a]

Hmm good point, perhaps the correlation isn't as strong as I had imagined.

If you look back to the 2003 to 2008 period where interest rates touched 9% you'll also notice a spike in House prices.

The 80s scenerio while it looks impossible now wont in my view look so impossible in 4 or so years.

This I believe is a once in a life time opportunity to.

(1) Low gearing to managable levels.
(2) Soon lock in for as long as you can any debt you have at the lowest rate you can find.
(3) If your cashed and can keep gearing low.Get more property in the medium price belt (In Adelaide the sub $350k range) close to the beach or some other sought after --- even if its not now--- area.


My view I'm sure others will disagree--Im used to that.

 

[Stan 101]

3 weeks ago my mate flew to Sydney, just to buy a car. The particular make and model of the car costs anywhere from $41-45K in Melbourne. He found a dealer in Sydney that was selling it cheaper (with 3yrs warranty), so he flew up to have a look. The dealer picked him up from the airport (30min drive from dealer) and opened the dealership on a Sunday (when they are normally closed). The dealer was advertising for $34K, and my mate ended up buying it for $32K and driving it back to Melbourne. Then the very next day he gets it insured by RACV for the value of $42K. He could ride it off today and make a $10K profit (minus airfares to Sydney and fuel on drive home ) not that he'd do that, he loves the car.




I guess times are tougher in Sydney than they are down here.

How did your mate get around the registration issue? I imagine the dealer would have registered the car in NSW.

 

[IFocus]

If you look back to the 2003 to 2008 period where interest rates touched 9% you'll also notice a spike in House prices.

The 80s scenerio while it looks impossible now wont in my view look so impossible in 4 or so years.

This I believe is a once in a life time opportunity to.

(1) Low gearing to managable levels.
(2) Soon lock in for as long as you can any debt you have at the lowest rate you can find.
(3) If your cashed and can keep gearing low.Get more property in the medium price belt (In Adelaide the sub $350k range) close to the beach or some other sought after --- even if its not now--- area.


My view I'm sure others will disagree--Im used to that.

Tech I am negative medium term real estate but your view I think is good advice particularly the low gearing

 

[Julia]

Will banks allow borrowers to lock in the present low interest rates for a long time? Wouldn't this be against their interests in the same way as they won't offer any longer period term deposits at the currently highest rates?

I'm not looking to borrow, but am interested in this.

 

[billv]

Will banks allow borrowers to lock in the present low interest rates for a long time? Wouldn't this be against their interests in the same way as they won't offer any longer period term deposits at the currently highest rates?.

The fixed interest rates are not that low.

For example, currently with CBA any fixed term loan longer than 7 years has an interest rate of 6.99%.

http://www.commbank.com.au/personal/apply-online/download-printed-forms/home-loan-update-002842.pdf

 

[gav]

How did your mate get around the registration issue? I imagine the dealer would have registered the car in NSW.

I have no idea. I'll ask next time I see him. Even if he had to re-register, he saved nearly $10k

 

[gav]

Would be interested to know what car that was Gav as I will be in the market to buy a new car soon in that price range.

Far from "new". It was a 2003 Audi TT convertible. I've been looking online in Sydney to see if the car I want is cheaper (2006-2007 Nissan 350Z), however I haven't found any much cheaper - which is probably a good thing, that money goes towards something more important (mortgage)

 

[Beej]

I have no idea. I'll ask next time I see him. Even if he had to re-register, he saved nearly $10k

In NSW the dealers usually register their cars under a special short term dealer rego. Then when you buy the car they register it on your behalf in which ever state you ask them to.

Cheers,

Beej

 

[gfresh]

Dealers can also usually ship cars nationwide for a few hundred bucks also, which is often worthwhile if you can make enough saving. Works well on new cars, as you already know what you are getting.

I haven't really stopped spending on smaller to medium items. When I was buying a new fridge on the weekend, barely had to ask and the salesperson knocked off $100 just like that. Was very quiet for a Saturday morning though compared to a few months ago.

 

[Aussiejeff]

People should keep splashing cash like crazy. Weyhey!

The RuddBank will keep the luvverly moolah flowing to the hoi poloi through Cash Bonanza's III (my tip $30 Billion) & IV (my tip $50 Billion) later this year, in order to boost Sep & Dec '09 quarterly results and make the gummint look good.

It's a motzah!

So let's spend in a frenzy of self-gratification while it lasts.

Dunno wot appens when the RuddBank runs dry next year tho.

 

[Beej]

People should keep splashing cash like crazy. Weyhey!

The RuddBank will keep the luvverly moolah flowing to the hoi poloi through Cash Bonanza's III (my tip $30 Billion) & IV (my tip $50 Billion) later this year, in order to boost Sep & Dec '09 quarterly results and make the gummint look good.

It's a motzah!

So let's spend in a frenzy of self-gratification while it lasts.

Dunno wot appens when the RuddBank runs dry next year tho.

Political commentary aside, I think you will find "Stimulus III" will focus on longer term infrastructure - Linsday Tanner pretty much said as much on Insiders a couple of weeks ago. I hope this turns out to be the case!

Cheers,

Beej