House prices to keep falling for years

[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?

Personally, I'd buy both!

Beej

 

[Passive]

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.

 

[Passive]

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.

 

[numbercruncher]

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.

 

[Passive]

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.

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.

 

[ROE]

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.

 

[numbercruncher]

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 !

 

[lusk]

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.

 

[Passive]

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!

 

[Beej]

[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

 

[Glen48]

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]

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 gearing.

 

[Beej]

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 gearing.

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

 

[ROE]

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

 

[ROE]

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

 

[chops_a_must]

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.

 

[ROE]

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]

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.

 

[Glen48]

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?

 

[robots]

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