House prices to keep falling for years

[Indie]

Demographics is increasingly becoming the predominate factor determining any investment decision I make for the long term. But it is debateable and could change.

The first wave of boomers are retiring now and are changing from net borrowers and spenders to net savers. Their peak earning and borrowing years are behind them. Tax revenues will also need to increase to accommodate this group.

 

[It's Snake Pliskin]

The first wave of boomers are retiring now and are changing from net borrowers and spenders to net savers. Their peak earning and borrowing years are behind them. Tax revenues will also need to increase to accommodate this group.

Exactly. Robert Kiyosaki wrote a book on the topic years ago.

Sadly some boomers will have to keep working though as they have lost a lot of their retirement funds.

 

[Julia]

Exactly. Robert Kiyosaki wrote a book on the topic years ago.

Sadly some boomers will have to keep working though as they have lost a lot of their retirement funds.

It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.

There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.

 

[Indie]

It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.

There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.

I'm sure they didn't all blow their doe. But it doesn't change that they are moving into a lifestyle of frugality rather than one where they borrow and spend. Particularly borrow. Very few retirees have a retirement income that matches their working income. Fewer still are prepared to take on new debt.
This is very negative for the economy since we are consumer driven.

It's no coincidence that the stock and property bubbles are bursting just as this key demographic are starting to exit their peak earning and borrowing years.

 

[It's Snake Pliskin]

It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.

There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.

Yes it did occur to me Julia as I used the word SOME. Congratulations on your achievement.

 

[numbercruncher]

60 percent of Quensland retirees rely on the Govs old age pension.

 

[Naked shorts]

They also rely on poker machine revenue, that will go as well when things go real bad. I guess they'll just trim the fat ?

Well for now with everyone getting handouts from Rudd, they will have plenty of revenues from this source.

It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.

Yeah so what? isnt that the old "10% of people in the market actually know what they are doing" rule?

The fact of the matter is, most baby boomers have/had jobs and dont have time to watch the stock market. All they know what to do is buy more when prices go down because that's what Warren Buffet does and he is one of richest men in the world

 

[lioness]

It doesn't seem to occur to any of you that a good proportion of baby boomers will have been quite sensible enough to move their shares to cash a year or so ago, thus preserving their capital, then lock in term deposit rates for a reasonable period, after which the market may well represent good opportunity once again.

There may well be more strain on the welfare budget from people on the dole, given the almost certain increase in unemployment as companies pare back staff numbers.

What a crock Julia. I work in finance and I personally know many financial planners and less than 2% moved to cash. They are all crying over their statements every night. I know as I speak to many of them.

 

[Glen48]

I see consumer confidence is up 7.5% the every one must think the $10.4B will go to them????
I wonder if the true housing figures will be posted or will the Feds etc worry about creating a panic???

 

[prawn_86]

I see consumer confidence is up 7.5% the every one must think the $10.4B will go to them????
I wonder if the true housing figures will be posted or will the Feds etc worry about creating a panic???

Up 7.5% for the month but down 18% for the yr.

Take that however you want....

 

[sinner]

Took the scenic route from Sydney to Singleton yesterday.

Not an exaggeration: every second rural block we saw on Putty Rd was for sale!

 

[numbercruncher]

Took the scenic route from Sydney to Singleton yesterday.

Not an exaggeration: every second rural block we saw on Putty Rd was for sale!

But they told us there was a monumental shortage and RE would boom forever providing us with a lifestyle of the rich and famous !!

What happened??

 

[Glen48]

Buy acreage now would be a good investment once the depression starts in earnest the acreage can be turned in to trailer park and store all the White Trailer trash there. Would require a trip to USA to study up on how to do it and what type of tenants go for that sort of thing.
Then look to buying Caravans to put in peoples back yard to help with their mortgage payment until their "investment" turns around and they can recoup 10 yrs of minus nothing growth plus rates, repairs, tenant damage and bank fee.

 

[MrBurns]

You won't see any bargains yet as everyone is trying to get out at yesterdays prices, they arent prepared to take the really low prices or new values yet, that will take a year to really kick in.

 

[Julia]

What a crock Julia. I work in finance and I personally know many financial planners and less than 2% moved to cash. They are all crying over their statements every night. I know as I speak to many of them.

The baby boomers I'm talking about are sufficiently financially literate in their own right not to need any so called financial planners.

These "professionals" have been responsible for much of the misery being experienced by the people silly enough to imagine they actually had advice worth giving.

Lioness, you have perfectly enhanced my point. Thank you.

 

[Julia]

I'm sure they didn't all blow their doe. But it doesn't change that they are moving into a lifestyle of frugality rather than one where they borrow and spend. Particularly borrow. Very few retirees have a retirement income that matches their working income. Fewer still are prepared to take on new debt.
This is very negative for the economy since we are consumer driven.

Do you think most retirees actually need a retirement income that matches their working income? I don't know any people retired or about to retire who would even consider borrowing in retirement.
I guess your suggestion that this is negative for the economy is a whole other subject. Imo individuals have far too much debt now. How are they going to service this when they lose their jobs?
Every day we're seeing companies unable to refinance their debt. It may well happen that individuals will face the same situation as the current debacle progresses.

Yes it did occur to me Julia as I used the word SOME. Congratulations on your achievement.

Yes, you did indeed say SOME, Snake. Sorry. I should have worded my response more carefully.
I wasn't necessarily just describing my own situation. I know plenty of people who took some responsibility for their own outcomes instead of blindly trusting the sort of people described by "Lioness" as Financial Planners. What price their advice now as people mourn their losses?

And before the few competent FP's who actually grace this forum become offended, I'm not slating all planners. Several years ago I took advice from a FP myself which really changed my life and I will be for ever grateful.
Maybe just avoid the ones such as those "Lioness" works with.

 

[agathos]

Hi everyone,

I am from Western Australia, Perth.
I am a migrant from Singapore and I have been here for 22 months and I am here for good, contributing actively, paying tax and am on the look out for a great property buy!!!!

I was tempted to buy when I first came in February 2007.

In fact, back in 2006, when I first made a maiden trip to perth to survey the land (my wife and I had surveyed Queensland + Melbourne), everyone urge us to buy a landed property as "you save yourselves the rental money, which is dead money anyway".

Those noises were so loud. Bear in mind these opinions are from very good friends of mine. It was very hard to resist.

But I know that what goes up so fast, must come down too.
So, I waited and stayed on the periphery.
At times, it was hard. The dumb ones are the blinded ones - they can't give you good advice, and the friends also pressure you.

But the longer I wait, the more I see signs of property crumbling.
At first it was , full steam ahead. Then after a while, in 2007, people start to say , "Property heading south". "Boom Over". "68 days on average to sell a home", "Property poised for 5% drop in 2008". and more.

Then came Subprime and a new cereal called Credit CRUNCH!
Then Lehman Brothers, AIG, Fannie mae, Freddie Mac.

Still OZ economist talk about decoupling. China will save us.
Then after Olympic Glitter, China also puncture!
Ran out of steam. Economic growth below 8% for 2009
Rio cut back. BHP refuse to buy BHP.
15,000 global job cuts.

Now, in my opinion, 3 ke factors will shape the real estate price. I will disclose my 3rd opinion in the next post, but I personally believe that:

1) The UMEMPLOYMENT rate , if it rises will affect a lot of people. Young and old who use to carry lolly pop sign in the mine and get AUD$150,000 will suddenly be left with a mortgage they can't afford and a sheila that might dissapear (not uncommon - read articles on Toxic Wife Syndrome).

As it is, today (11 Dec 2008) unemployment figures - quite a few thousand jobs lost are actually from WesterN australia AND Tasmania.

I have a friend who is a consultant to mining companies. It seems he has to go China & help look for buyers for iron ore, etc.

I have another friend who use to be in the Shipping industry. 20% of the world's cargo ships and tankers are dry docked somewhere, because the cost of running them are exhorbitant. so might as well dry dock them.

Proof of economy back sliding - if some of you remember the baltic Ship Charter or someting to that effect- the freight rates drop by 87% in the last few months. Shipping demand is just drying up!!!!


2) FUNDING factor or Credit Availability.
Banks will still find it hard to get funds.
In fact, it has become such a fear factor now that if you put $$$ in the US bond, it seems the interest rate is ZERO. No, I am not kidding. U check it out.

So, with this 2 factors, and if UMEMPLOYMENT goes up rapidly, 10 Billion Economy stimulus is like spending 30 million to fire a few rounds of bullets in Iraq. hardly does anything to tame the enemy. (all these are my opinion).

Some may say I am an opportunist - but then again. Those who have bought their homes long ago. A lot of them who are keen to sell have woken up and are willing to accpt realistic price just to keep their ball rolling.

real life example - I have afriend in Swan valley, his home is worth 1.2 million.
he quicly sell it for 1 million, keep it in the bank for a few months, then bought another property that was advertised for 1 million for 800,000 AUD$.

See, they ARE realistic sellers out there.
These are REAL sellers.
The ones who ask for yesterday's prices - wait long long , mate!

I hope to post the 3rd mysterious factor, which in my opinion will shape the unemployment rate. The economist already know it. U probably know it too.

But let's give it some time for the plot to develop so that I won't spoil the fun of robbing the media of their front page news cover!

Have a great day.

 

[wayneL]

Hi everyone,

I am from Western Australia, Perth.
I am a migrant from Singapore...

Welcome aboard agothos. It's always nice to have another realist on the forum; looking forward to your input.

Cheers

 

[It's Snake Pliskin]

Hello Mr agathos,

I am from Western Australia, Perth.
I am a migrant from Singapore and I have been here for 22 months and I am here for good, contributing actively, paying tax and am on the look out for a great property buy!!!!

Nice to see a paying migrant and not a sucking parasite welfare sponge. Good stuff man.

"you save yourselves the rental money, which is dead money anyway".

Not really it could be considered a fee for living which limits opportunity costs for quicker wealth building options.(not options as in trading options)

But I know that what goes up so fast, must come down too.
So, I waited and stayed on the periphery.
At times, it was hard. The dumb ones are the blinded ones - they can't give you good advice, and the friends also pressure you.

Yep, "buy now you'll miss out" heard it all before.

But the longer I wait, the more I see signs of property crumbling.
At first it was , full steam ahead. Then after a while, in 2007, people start to say , "Property heading south". "Boom Over". "68 days on average to sell a home", "Property poised for 5% drop in 2008". and more.

All things end.

Then came Subprime and a new cereal called Credit CRUNCH!
Then Lehman Brothers, AIG, Fannie mae, Freddie Mac.

Nice humour!
And have a great day yourself.

 

[georgey]

Hi all, this may have been raised before but what are yr thoughts about the future
of interest rates and whether one on a 8.3% fixed mortgage for 3 more years should pay the 5k cost
to refix at a rate 2% lower for 6 months. It would be a no brainer to do so IF one could be
sure that rates would stay down or lower further over the next 3-5 years.
But there is talk about how all the financial stimulus can eventually create inflation which
usually indicates higher interest rates also.
Would not be nice to pay the cost to change and be caught high and dry if rates decided to
soar - I remember +20% in the eighties. I am in NZ by the way.
Thanks
Georgey