The future of Australian property prices

[im sparticus]

Thanks for the giggle!

LOOK AT THE CREDIT GROWTH SHRINKING!

Do the math... you don't have to be Eisenstein, or even have to be able to spell. :asdf:

you know that graph is showing credit growth for realestate at 5% and a nice steady decline from its peaks yet to go negative whilst all else is below zero. like i said realestate seems to be fairing far better than most. thanks for the graphs they are really helping cement my beliefs

 

[Starcraftmazter]

Let's say that there was a company on the ASX, who's sp was $500,000. About 70% of the country has at least one share, with many of those having more than one.

Everyone who has bought shares in this company in the last couple of decades had to borrow a lot of money to buy it, but especially in recent years people have borrowed anywhere from 95% to over 100% of their initial deposit to buy it and use their entire income to service the debt. They bought it with the expectation that the share price will rise, and the government has encouraged such speculation with various incentives.

Now share price is dropping and people are getting emotional, lots of people are losing money on their "investment", whereby they pay more in interest than they get in dividends (rent), and everyone is experiencing capital losses.

Would you buy one of these $500,000 shares - taking on massive amounts of debt to do so? Do you think it's better than every single other stock on the ASX?

 

[im sparticus]

Let's say that there was a company on the ASX, who's sp was $500,000. About 70% of the country has at least one share, with many of those having more than one.

Everyone who has bought shares in this company in the last couple of decades had to borrow a lot of money to buy it, but especially in recent years people have borrowed anywhere from 95% to over 100% of their initial deposit to buy it and use their entire income to service the debt. They bought it with the expectation that the share price will rise, and the government has encouraged such speculation with various incentives.

Now share price is dropping and people are getting emotional, lots of people are losing money on their "investment", whereby they pay more in interest than they get in dividends (rent), and everyone is experiencing capital losses.

Would you buy one of these $500,000 shares - taking on massive amounts of debt to do so? Do you think it's better than every single other stock on the ASX?

You forgot (and maybe its that your not aware or just take for granted) that if you dont buy the share you will have to pay the yeild of said share to those that do (well maybe not you scm but your parents that are supporting you)

 

[Starcraftmazter]

You forgot that if you dont buy the share you will have to pay the yeild of said share to those that do (well maybe not you scm but your parents that support you)

Interest + Capital Loss > Dividend

Not to mention you have a lot more money for actual investing, or trading.

 

[im sparticus]

Interest + Capital Loss > Dividend

Not to mention you have a lot more money for actual investing, or trading.

Hasnt been my experiance.

 

[Mr Z]

Which one are you talking about:

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Einstein in aggregate, or take an average if you please!

 

[Mr Z]

you know that graph is showing credit growth for realestate at 5% and a nice steady decline from its peaks yet to go negative whilst all else is below zero. like i said realestate seems to be fairing far better than most. thanks for the graphs they are really helping cement my beliefs

errrr, um. You really need to get a grip on how markets work. :asdf:

 

[im sparticus]

errrr, um. You really need to get a grip on how markets work. :asdf:

Im not the one implying credit growth as the cause of price inflation. let me guess this is another phenomenon that only affects property? All else is imune right?

For those that dont understand here is another simple fact credit growth does not change the value of the underlying currency.

 

[Starcraftmazter]

Im not the one implying credit growth as the cause of price inflation. let me guess this is another phenomenon that only affects property? All else is imune right?

All else? What else is there? Housing is by far the biggest market - much bigger than the stock market. Most people borrow to the hip to buy houses - what else do they do that with?

For those that dont understand here is another simple fact credit growth does not change the value of the underlying currency.

Any other nonsensical and irrelevant comments?

 

[Mr Z]

Im not the one implying credit growth as the cause of price inflation. let me guess this is another phenomenon that only affects property? All else is imune right?

For those that dont understand here is another simple fact credit growth does not change the value of the underlying currency.

What an odd reply! Why would it only effect housing? You have seen what the limitation of credit has done to other markets over the last few years, so the real question is why on earth would it not effect housing? The answer is of course that it does and it is! As credit growth approaches zero it becomes very hard to achieve capital gains. This is not the sole determinant but is is certainly a large key factor. Our housing is all about credit, period, end of story.

To think otherwise is delusional!

 

[Mr Z]

You forgot (and maybe its that your not aware or just take for granted) that if you dont buy the share you will have to pay the yeild of said share to those that do (well maybe not you scm but your parents that are supporting you)

However at the moment the yield is less than the holding cost so you still win.

 

[im sparticus]

What an odd reply! Why would it only effect housing? You have seen what the limitation of credit has done to other markets over the last few years, so the real question is why on earth would it not effect housing? The answer is of course that it does and it is! As credit growth approaches zero it becomes very hard to achieve capital gains. This is not the sole determinant but is is certainly a large key factor. Our housing is all about credit, period, end of story.

To think otherwise is delusional!

Ill write it again everything is deflating the least of all housing your graph illistrates this well. To which your response was that i need to understand how markets work.

Sounds like your reply was far odder than mine.
Care to ellaborate on what you were implying?

 

[im sparticus]

However at the moment the yield is less than the holding cost so you still win.

Whos holding costs? Judging the return on a property by the current yeild is as naive as ranking companies by their pe ratios.

 

[Starcraftmazter]

Ill write it again everything is deflating

Not according to CPI. Healthcare, education, transportation and food are all rising in price. So basically all the fundamental things you need to live.

But I guess you are too busy speculating on housing to pay attention to the actual economy.

 

[herzy]

The scenario you described is an invitation to treat. The offer wasn't made until you were presented with the contract. There are of course plenty of consumer laws around misleading invitation to treat (bait and switch advertising and they may or may not apply to builders, I suspect they don't given the complexity of and individuality of the average building contract) but at the point of comparing prices no contract exists and he can withdraw his invitation or alter it at any time his formal offer was the contract he sent you. It's probably not good for business but it isn't illegal.

This is an invitation to treat, and so the previous discussions are not strictly binding. As McLovin points out, only the final agreement will be binding/enforceable. However, I would add that, reading the documents/communications as a whole (including the email stating 'everything as discussed'), while not actually including many of the specifics which were both discussed and crucial/provisional to you signing the contract would be misleading and deceptive conduct (s18 of the Australian Consumer Law, previously s52 of the TPA). However, given that you didn't sign and presumably suffered no loss, there's not really anything to be done now. Just FYI...

While withdrawing and changing an offer is in no way illegal, representing that it is the same offer as previously discussed would be misleading. The courts have taken a fairly expansive interpretation of what can constitute misleading/deceptive conduct.

 

[im sparticus]

Not according to CPI. Healthcare, education, transportation and food are all rising in price. So basically all the fundamental things you need to live.

But I guess you are too busy speculating on housing to pay attention to the actual economy.

Looks that way. so youve had this insight and the best you could come up with is buy bullion. might be worth taking a look at the value of companies that trade in these underlyings.

 

[Starcraftmazter]

Looks that way. so youve had this insight and the best you could come up with is buy bullion. might be worth taking a look at the value of companies that trade in these underlyings.

No; it's not the best I've come up with - nor is it relevant to the discussion. Stop trying to sidetrack the fact that you are consistently shown to be incorrect with every stupid claim you make.

 

[McLovin]

This is an invitation to treat, and so the previous discussions are not strictly binding. As McLovin points out, only the final agreement will be binding/enforceable. However, I would add that, reading the documents/communications as a whole (including the email stating 'everything as discussed'), while not actually including many of the specifics which were both discussed and crucial/provisional to you signing the contract would be misleading and deceptive conduct (s18 of the Australian Consumer Law, previously s52 of the TPA). However, given that you didn't sign and presumably suffered no loss, there's not really anything to be done now. Just FYI...

While withdrawing and changing an offer is in no way illegal, representing that it is the same offer as previously discussed would be misleading. The courts have taken a fairly expansive interpretation of what can constitute misleading/deceptive conduct.

Interesting Herzy, thanks. Does there need to be financial loss in order to be prosectued under the ACL? Obviously, Julia couldn't sue for damages but a breach of the act has occurred.

My memory of contract law doesn't extend much beyond the Carbolic Smoke Ball Company.

 

[im sparticus]

No; it's not the best I've come up with - nor is it relevant to the discussion. Stop trying to sidetrack the fact that you are consistently shown to be incorrect with every stupid claim you make.

Increasing prices does not always = increasing profit margin.

Do you understand primacy effect yet ¿

 

[Starcraftmazter]

Increasing prices does not always = increasing profit margin.

What the hell does that have to do with ANYTHING?

You claimed there was deflation in everything, that has to you been shown to be incorrect - and you have done nothing but post irrelevant nonsense. Is this some sort of a defence mechanism of denial that you have?