The future of Australian property prices

[Tysonboss1]

But wil be a problem for all those FHB of the last few years thanks to this disfunctional govnuts approach to property/debt and the FHBG who will be faced with negative equity and being a slave to the banks for many many many years to come.

And then the negative sentiment that will run through society due to falling property prices and yes they are in decline and stocks levels are rising month on month.

I for one don't want to see peoples hopes and dreams dashed, but on the other hand I cannot support such high prices and the cost they impose on greater society. Now how was retail going.

Prices on the way down down prices are down.

Cheers

But a falling price will not increase the monthly cost for existing owners, they just keep making the same payments as the always have, it could also be a net plus, if it facilitates lower interest rates,

 

[satanoperca]

But a falling price will not increase the monthly cost for existing owners, they just keep making the same payments as the always have, it could also be a net plus, if it facilitates lower interest rates,

Are you serious or live a life as a hermit, don't mean to be rude but this nation is obsessed with property and it going up up and away.

Do you really believe that people who bought in the last few years with high LVR's are not expecting that their investment will not appreciate in value?

And when they realise that their investment is decreasing in value will cut back on spending, become worried about how they will move forward, pay for the next holiday for the kids etc

I for one are seeing the effects in many areas in our society, retail being one and another being the number of kids that are in before school and after school care because both parents are working, the equity genie has left and they are left with the old fashion way of creating wealth, working for it.

I'm still lost as to why credit should become cheaper if the economy starts sliding, the risk increases in loaning money. But then again, most people wish us to go down the same path of ridiculous low interest rates like most other countries and look how that is panning out.

We are in a sticky situation and the best we can hope for is a slow decline, the next 6 months will determine how fast a descent we are on but two years ago now in Melbourne would have believed that we could fall over 6% in a year, but it happened and will continue until an equalibrium is reached.

Cheers

 

[Glen48]

I know of one home victim who CBA foreclosed on who is no longer with us and he will be one of many as IR increase and house prices decrease and PM's increase each year.

 

[Tysonboss1]

My point stands, property price decreasing does not effect the monthly mortgage payment.

People will just keep plugging away,

Yes there will be foreclusures, but not because property prices went down.

We have had property crashes before, it is not a new thing, we have also had long periods of stagnation before,

People may be bummed if they find there property price has gone down, but if they enjoy living in there home what does it matter.

 

[Tysonboss1]

I know of one home victim who CBA foreclosed on who is no longer with us and he will be one of many as IR increase and house prices decrease and PM's increase each year.

How is he a "home" victim.

Surely there was other factors, ie, job loss, poor budgeting, consumer debt.

 

[McLovin]

We have had property crashes before, it is not a new thing, we have also had long periods of stagnation before,

People may be bummed if they find there property price has gone down, but if they enjoy living in there home what does it matter.

Until the bank starts asking for extra security when the mortgage is worth more than the house...

With a fat deposit not so much a problem but if you're up to your eyeballs in the Australian dream, then a 5-10% fall in the value of your property could mean the bank asking for $50k.

The etymology of the word "mortgage" is rather ironic.

 

[Glen48]

Think the word will Morgue iges for a lot who got conned by the FHOB and the myth house prices never fail next one to go will be " as safe as a bank"
The world has a depression ever 70 -80 years this one is delayed while big Ben and crew prop up the economy's.

At present the total amount owing on CDS's is 11.4 times the total world economy which is about $550 B.
Once that starts to bite it should speed the depression along.

 

[explod]

I'm still lost as to why credit should become cheaper if the economy starts sliding, the risk increases in loaning money. But then again, most people wish us to go down the same path of ridiculous low interest rates like most other countries and look how that is panning out.

Cheers

It is a perception painted and reinforced by money created by the US Federal Reserve at zero to .5 basis points and lent out to Banks having difficulties.

For a year or so now smaller businesses and builders I know have been finding it increasingly difficult or unable to obtain funding for spec homes.

A mantra by the bulls on this forum over the years has been "its different here in Australia" but when some of us have indicated by our research that the economic situation may well be different this time, we have been howled down.

We live in interesting times perhaps, but there is nothing for anyone to gloat about either.

And do not fret for our ole Pal Robots, his presence on the forum over the years puts him in the catigory of a thinker who will have provided options for himself. It is the families with children to raise and put through school who in a year or two will be hit by the preverbial.

 

[Dowdy]

My point stands, property price decreasing does not effect the monthly mortgage payment.

People will just keep plugging away,

Yes there will be foreclusures, but not because property prices went down.

We have had property crashes before, it is not a new thing, we have also had long periods of stagnation before,

People may be bummed if they find there property price has gone down, but if they enjoy living in there home what does it matter.

You forgot one thing that people have in their minds/ego - CONFIDENCE!

When people see what they owe is more then the house is worth they will lose confidence in spending, which leads to a vicious cycle ie.recession


...PS
Not that recessions are bad thing. It exposes the 'McMillionaire' phonies from the fiscally responsible....
If left to the free market, things will return to equilibrium fairly quickly but we all know that won't happen. It's not popular with the pollies....

 

[medicowallet]

For a year or so now smaller businesses and builders I know have been finding it increasingly difficult or unable to obtain funding for spec homes.

.

Highlighted by the incompetent Wayne Swann who "pressures" the banks into lowering interest rates for home owners, and therefore stifles the bank's ability to provide cheaper cost of lending to business...

Would Australians prefer banks to provide loans to their employers to keep their business ( and exports ) growing or to home owners (and risk unemployment / lower economic growth) to keep bidding up house prices / building mcmansions (and increasing imports)

Couple this with stupid wasteful spending and increased taxes, and the picture painted is that of incompetence.. but, it gets em elected.

MW

PS Where is Robots?

 

[Mrmagoo]

But a falling price will not increase the monthly cost for existing owners, they just keep making the same payments as the always have, it could also be a net plus, if it facilitates lower interest rates,

If prices become lower then the asset of buying a house becomes less attractive to new investors.

Who cares if they don't sell ? Lol @ them for having an "asset" which loses money..

 

[Mrmagoo]

Highlighted by the incompetent Wayne Swann who "pressures" the banks into lowering interest rates for home owners, and therefore stifles the bank's ability to provide cheaper cost of lending to business...

Wayne Swann is a good treasurer.

 

[Mrmagoo]

Housing is very expensive. I don't think it is sustainable or fair at the current prices.

Some people pay less on mortgage than others do on rent simply because they bought a few years earlier. That is not a just way to run a country because housing is a necessity.

 

[Mrmagoo]

It is the families with children to raise and put through school who in a year or two will be hit by the preverbial.

Personally I hope they lose the lot and the kids go hungry. I don't think the government should help these people, infact I think they should actively take action that would result in rate raises.

Why ? These people stopped being families the minute the paid 350k for a 3 bedder on the urban fringe because of "capital gains" and became investors, who should suffer for their poor investments if the market dictates this is the case.

What these selfish evil people do not realise is that each dollar in capital gains means that some other family will be $1 worse off.

So tough to them - I hope they lose the lot.

 

[young-gun]

But wil be a problem for all those FHB of the last few years thanks to this disfunctional govnuts approach to property/debt and the FHBG who will be faced with negative equity and being a slave to the banks for many many many years to come.

And then the negative sentiment that will run through society due to falling property prices and yes they are in decline and stocks levels are rising month on month.

I for one don't want to see peoples hopes and dreams dashed, but on the other hand I cannot support such high prices and the cost they impose on greater society. Now how was retail going.

Prices on the way down down prices are down.

Cheers

i would have been one of them had i not sold 10 months ago. and i do feel for them, it's not the fhob's fault, they(myself included) weren't to know, i just got lucky that i was made aware of exactly what is happening.

it is purely the governments fault, had they of not had the fhog many wouldnt have gotten into the market that shouldnt have been there, and those affected would have been more contained to greedy investors.

 

[satanoperca]

Personally I hope they lose the lot and the kids go hungry. I don't think the government should help these people, infact I think they should actively take action that would result in rate raises.

Why ? These people stopped being families the minute the paid 350k for a 3 bedder on the urban fringe because of "capital gains" and became investors, who should suffer for their poor investments if the market dictates this is the case.

What these selfish evil people do not realise is that each dollar in capital gains means that some other family will be $1 worse off.

So tough to them - I hope they lose the lot.

Easy to say from behind a screen and just a little to harsh. Hope kids starve is well behind me.

I do believe that people should research a lot more before placing themselves in debt but they also expect that the govnuts will provide the right advice and actions which they have not.

Lets just see if Mr Krudd gets a second chance tomorrow.

Cheers

 

[young-gun]

My point stands, property price decreasing does not effect the monthly mortgage payment.

People will just keep plugging away,

Yes there will be foreclusures, but not because property prices went down.

We have had property crashes before, it is not a new thing, we have also had long periods of stagnation before,

People may be bummed if they find there property price has gone down, but if they enjoy living in there home what does it matter.

tyson, mortgage repayments may not change, but are you forgetting one of the driving forces(although not the trigger) behind prices continuing to fall is high unemployment? which also leads to employers being able to pay less and become more picky, which leaves people short.

you have used this argument before, on the chinese guy that bought a unit and 1 week later they were 30% off or something. the fact is people have not only bought a house as a home, they buy as an investment - or t least they believed it was. an investment that will later allow them to enhance their living standards, and path the way for their children to succeed, through use of equity.

i cant help but notice your bullish tone is starting to turn ever so slightly towards property tyson

Personally I hope they lose the lot and the kids go hungry. I don't think the government should help these people, infact I think they should actively take action that would result in rate raises.

Why ? These people stopped being families the minute the paid 350k for a 3 bedder on the urban fringe because of "capital gains" and became investors, who should suffer for their poor investments if the market dictates this is the case.

What these selfish evil people do not realise is that each dollar in capital gains means that some other family will be $1 worse off.

So tough to them - I hope they lose the lot.

always a pleasure to read your posts magoo.... if a family needs a single house to live in they dont have much choice but to pay the price at the time. people need to realise that very few people research and understand economics. they catch a few glimpses of things on the news, which obviously doesn't deliver an economic forecast for them. the broader population simply has no idea. if anything comes out of this crash ahead we can only hope its that people pick up on the cycle of demographics, and people and businesses can prepare themselves for the expected downturns instead of pretending everything is going to be ok.

 

[So_Cynical]

Attention property gurus...i have a question

I'm wondering...can i negative gear an overseas property? with an overseas loan? and get like the Aussie tax breaks?

Thanks in advance.

 

[Tysonboss1]

tyson, mortgage repayments may not change, but are you forgetting one of the driving forces(although not the trigger) behind prices continuing to fall is high unemployment? which also leads to employers being able to pay less and become more picky, which leaves people short.

Yes that may be true for owners who are near 100% LVR's but the average home loan has 50% equity at the the moment.

Also, Australia has close to 95% employment, So I can't see unemployment being a factor.

you have used this argument before, on the chinese guy that bought a unit and 1 week later they were 30% off or something. the fact is people have not only bought a house as a home, they buy as an investment - or t least they believed it was. an investment that will later allow them to enhance their living standards, and path the way for their children to succeed, through use of equity.

Even if property did suffer a 30% fall, it wouls still function as an investment, Property is a longterm asset class.

Offcourse if buy "investment", you mean "speculative gamble" then yes it could end badly for you, as does most gambling.

i

cant help but notice your bullish tone is starting to turn ever so slightly towards property tyson

I have thought a correction in property was due for a long time, As I have said many times I thought it would come through a small decline followed by a period of stagnation.

I am bullish on it as an asset class, However I haven't bought any for a long time because everyone else has been excited about it so it's been impossible to get it at a price that would excite me.

My comments on lower prices being a good thing always hold true, Property along with great companies are fantastic assets to own, Offcourse I want to get them as cheap as possible, So I welcome Share market crashes, Property crashes etc.

 

[Tysonboss1]

Some people pay less on mortgage than others do on rent simply because they bought a few years earlier

.

Thats just the way things are, It is always going to be cheaper to own than to rent over time, the owners cost of ownership decreases every year as the loan gets smaller and the renters rent goes up with inflation.

That is not a just way to run a country because housing is a necessity

It seems fair to me, If you buy your own home over time it should be cheaper for you than some one who rents a home from someone else, just like it is cheaper to make your own sandwiches.

Offcourse making your own sandwiches seems more expensive becuase you have to spend $500 to buy a whole loaf of bread, a whole tub of butter, a whole block of cheese, a pack of ham a lettuce, perhaps even a cutting board a knife and a fridge etc.etc wheres as the guy who buys the sandwich just pays $4.5 for a sandwich.

But after 5 years the guying buying his sandwich each day would have outlayed $1000's.