Thx good info. That's a significant reduction in reliance on European credit markets. However, the amount remaining as reliant on international credit growth is still very very high as a proportion of the total.
The future of Australian property prices
- Thread starter Joe Blow
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Thx good info. That's a significant reduction in reliance on European credit markets. However, the amount remaining as reliant on international credit growth is still very very high as a proportion of the total.
Bill M
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The point of the original post was to highlight that cash deposit rates have indeed gone down more than the RBA rates. On Feb2012 the RBA rates were 4.25%, on Feb 2013 the rates are 3%. For that 12 Months it went down 1.25%.
On the other hand I just looked at my UBANK statement. On 1/3/2012 the rate with bonus was 6.01% and now that same rate is 4.66% with bonus. That is a drop of 1.35%. If you do not have an automatic saving plan then that drops even further to 3.96%.
So my original comment was along the lines of why would you keep it in the bank getting 4% when you can do far better with other investments? Where is all this "cash on the sidelines" going to go? Shares have been good, maybe some of will flow into real estate too? Cheers.
Julia
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Is real estate (representing 'other investments' as above), really doing so much better?
I can't now recall the yield you've quoted for your investment property, but think it wasn't much over 4%?
Apologies if I'm quite wrong.
A house in my street sold a few months ago and is now being rented out. I did the calculation as to yield on the purchase price and, after expenses, it's well under 4%. And that's without all the potential hassle of tenants, repairs and maintenance, rate rises outstripping rent increases etc.
Bank shares with grossed up yield would seem to be a better proposition, as would locked in term deposits of a few years ago, still bringing in 8% with no anxieties attached.
Does it make a difference that the yield on cost (after outgoings) a property has the potential to at least track inflation over time?
Julia
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I suppose it depends on what period of time you're suggesting represents "over time".
This seems variable area to area.
Where I am the fact that prices have fallen up to 30% since the GFC and show no signs of picking up would be enough to put me off.
Bill M
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Mine is returning about 4% after tax and expenses, so 4% net is not too shabby. With the interest returns of 4% I would still have to pay tax on that and there is no chance of capital gains. Property seems to be firming up around my area on the Central Coast and on the Northern Beaches in Sydney it just gets more expensive all the time. I reckon prices will be higher in 5 years time, in the mean time I just collect the rent.
The IP is just one part of my investment portfolio, I also hold shares and listed interest securities. I have allocated capital to each of those roughly in one thirds. As you probably already know I am a long term investor, I don't buy and sell all that often. Real estate is definitely not a quick way to make a buck but by gosh it is a very steady source of income for me. I have rented out this property for over 3 years now and that Monthly deposit of rent into my account has always been there and that is very comforting, cheers.
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he g
The big gains that were made in property pre GFC (at the expense of the average home owner) were because of imprudent lending, leverage and credit...things are different now....
you will not see the growth in property you have seen previously because the criminal activities associated with it's growth have been exposed....
anyone trying to make money out of property is a "johnny come lately"
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There was a good article by Philip Soos in the SMH yesterday
It's interesting to see that for a long time house prices were pretty static. they've only really taken off since financial regulation was eased in the late 80s.
I will note that all the metrics for housing turn really nasty from 2000, when Howard and Costello gifted us with the halving of CGT.
While you can get more people to take on more debt the ponzi scheme will run its course, but considering we now have the one of the most indebted household sectors in the world I don't think the debt fuel has much longer to go.
It's interesting to see that for a long time house prices were pretty static. they've only really taken off since financial regulation was eased in the late 80s.
I will note that all the metrics for housing turn really nasty from 2000, when Howard and Costello gifted us with the halving of CGT.
While you can get more people to take on more debt the ponzi scheme will run its course, but considering we now have the one of the most indebted household sectors in the world I don't think the debt fuel has much longer to go.
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Since the GFC the banks have been paying depositors at rates higher than 90 day BBSW. There's certainly been some compression over the last few months on how much extra the banks are paying, but it's still quite high by pre GFC standards.
I get the feeling the flood of money has started to hit the ASX. Anything offering 6% yield seems to be taking off. NAB is up 25% since November. I'll take the ability to positively gear a share portfolio over negatively gearing a house any day.
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you do realise how banks create money out of thin air don't you?
If I deposit $10 into ANZ they can then lend out $90 and charge the borrower the going interest rate plus fees for the privilege.....
wake up we are being shafted!!!!
If you are serious about trading the market you have to understand how money is created....
google...how money is created out of thin air
good luck
white_goodman
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you literally have said nothing of value
+1. Not to mention the very bad (wrong?) description of fractional reserve banking.
I agree Julia, I don' even get 4% return and endless hassles with my IP. And it is frustrating watching fairly safe blue chip stocks soar while my house price does nothing. Also, tenants depreciate the value of the property because they don't bother to look after it. The only advantage for me is that I can't make fast stupid mistakes like i can in the stock market. So for myself, with limited skills and high risk aversion, property feels safer. I could sell the house and put the money into term deposits, but we may end up with near 0% rates like the US. I am hopeful the government will continue to make poor policy decisions which continue to inflate the housing sector (sorry FHB)
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Just to throw the cat amongst the pigeons (it is Friday)...
http://www.businessinsider.com/matt-kings-most-depressing-slide-ever-2012-12
NB: I don't necessarily agree.
http://www.businessinsider.com/matt-kings-most-depressing-slide-ever-2012-12
NB: I don't necessarily agree.
Great Slide. Just a note that they are using the inverse dependency ratio which wasn't obvious to me until I went to the article.
Curious as to why you don't necessarily agree with "one of the most powerful forces in all of economics: demographics", McLovin?
I will add though, this is a more solvable problem for Oz than most other countries as we are population wise a small country with robust immigration and immigration prospects.
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I agree with what you say about IPs and would add that they don't actually depreciate because tennants don't look after them, they will depreciate anyway due to the general wear and tear of having people living in them, the effects of weather etc. Even if you have the best tennants in the world things wear out and get old over time and need replacing. It's true that some tennants don't look after the place but others (like me) treat it as they would their own home and look after it very well. Nevertheless, over time paint gets tired looking, hot water services wear out etc. etc. Bad tennants will make your property depreciate faster but it will depreciate anyway. This is part of the reason I just can't see the attraction of IPs, you don't have to do running repairs to your shares. Of course if the returns were very high it would be worth the extra costs, but at the moment the return om most IPs is low.
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Looks like you answered the question yourself.
I'd add America to that list, even Ireland and Spain.
Looks like you answered the question yourself.
I'd add America to that list, even Ireland and Spain.
Yes I did. A bit slow today. I was thinking more globally but than the thread title does say future of Australian property prices.
Yes Ireland and Spain are small enough and the US will get population support from Latin American which along with India, Africa and some Asian countries are the only ones with decreasing dep ratios. It will also depend on the policies of the country. e.g Japan.
However China also had it's peak in the inverse dependency ratio somewhere between 2009 and now. I am still uncertain as to how things will reach equilibrium.
BTW I think this were the "printing" is going. To stop the demographic changes from causing deflation. Something to add to the printing thread when I get time.
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Generaly, yes, however if you overpay for the property, not for a long time.
The problem at the moment is three fold.
1. Debt fuelled price increases over the last 10 years. Well documented.
2. Relaxing of foreign ownership rules.
3. Excessive wages due to mining boom
It can't last,IMO, if we continue on we will end up the working poor in our own country.
http://au.news.yahoo.com/thewest/business/a/-/national/16155306/investment-boom-to-peak-lower-rba/
Supply and demand will push down wages, 457's will push down wages. That gets rid of number 3
Relaxing foreign ownership rules will keep prices of houses up.
Australians personal debt is maxed out, so if real wages go down and foreign buyers stay in the market, OMG
That is worste case scenario, but I'm a doom and gloom guy.
I just want to see a return to social equity where a man can own what he bought with his own hard work. The housing market is a classic example of socialism for us, capitalism for you. The whole thing is out of whack and once again it is liberal government socialism which caused it.
