House prices to keep rising for years

[Mofra]

Of course we must again reference the time frame involved. Looooong term, prices will keep rising. Meanwhile, the question is: Is now a good time to buy to capitalize on that?

Sshhhhh - you're going to spoil all the fun!

The extremes of "the sky is falling, beachfront property for 2x average wages" vs the "mortgage belt properties in outer suburban areas to rise in the short term" have made this one of the classic threads on ASF.

 

[theasxgorilla]

Of course we must again reference the time frame involved. Looooong term, prices will keep rising. Meanwhile, the question is: Is now a good time to buy to capitalize on that?

I say no.

I agree. Aside from owning a house on this side of the world I'm an observer in this whole thing. But I am ever conscious of my tendency toward being a contrarian and try to find reasons why things won't turn out as bad as so many are suggesting is inevitable.

It's still entirely possible that the neo-serfs of the world are going to have to get used to paying a higher proportion of their disposable income toward the cost of putting a roof over their heads.

 

[nunthewiser]

the R word been mentioned on this thread yet ...... yanno the "recession " word ?. all about cycles . maybe we should all learn to ride a bike and wait for them property bubbles to correct the axis a little , gawd bless capitalism , do feel for the mortgage belt strugglers and those caught in the ozzie dream of paying whatever the price for a roof but hey the world keeps turning and the patient return to pick up the bones , callous ? hell yeah but hey aint we here to make a quid ?, lol sorry guys if my post not applicable to this thread but i thought i would add something instead of the normal "go XYZ"

 

[pepperoni]

Of course we must again reference the time frame involved. Looooong term, prices will keep rising.

Of course they will in the loooooong term, but will they rise in real terms?

Given that we have in a few short years:

- taken up all slack in prices and then some; AND
- overextended a large number of new borrowers; AND
- made it near impossible for people to enter the market,

I say NO WAY.

In fact I think historically prices have not increased faster the inflation rate over the long term.

And I expect we are entering along period of very high inflation whereas property prices simply can not do better than 5% in the VERY long term.

Add to that the fact that the transaction and holding costs are prohibitive and its generally a pain in the ass compared to any other "investment".

YES its tax free, but should we have this distortion in the market which to some degree has caused the affordability crisis ... NO.

To sumarise

- is being a slum lord a good investment NO
- is it a nice way to invest NO
- do people that answer yes to either of the above suck YES
- should people buy houses to live in ABSOLUTELY - but at the odd reasonabel price popping up now and not at the nonsense prices brought about by "property investors".

 

[wayneL]

Oooooommph!!!!

Slide in house prices is the worst since the Great Depression

By Edmund Conway
Last Updated: 1:36am BST 11/07/2008

Britain is now in the midst of the worst housing slide since the Great Depression, economists declared after house price inflation dropped to the lowest level since comparable records began.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/11/cnhousing111.xml

 

[pepperoni]

... and just as property investors have gotten back on top of their finances after selling the car and buying a moped or bicycle.....

http://business.smh.com.au/cba-raises-rates-20080711-3dh4.html

These seem to get less press than the RBA hikes but IMO the trend is more worrying for borrowers.

If only they could raise rents every second week to pass these through

I also see dubai has moved to cap rent increases ... dubai of all places.

I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ... as is rental affordablity.

Why the tax system so strongly encourages greedy housing investment and thereby debt slavery with no PPOR CGT and negative gearing is beyond me.

Even debt bubbles are a social/moral issue ... without even considering usury ...
http://www.henciclopedia.org.uy/autores/Laguiadelmundo/Usury.htm

Anyway its the rudd govts problem now Im sure although property investors will have nowhere to go if rental affordability ever became an issue (although at .5 - 2% for a houses its still the bargain of the century).

 

[robots]

I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ... as is rental affordablity.


Why the tax system so strongly encourages greedy housing investment and thereby debt slavery with no PPOR CGT and negative gearing is beyond me.

Even debt bubbles are a social/moral issue ... without even considering usury ...


.

hello,

rubbish, you want a house you can get one, you want to rent you can get one

nothing more than the usual handout crew commentary,

here have a house for bludging, yes great stuff

thankyou

robots

 

[YELNATS]

...
I also see dubai has moved to cap rent increases ... dubai of all places.

I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ... as is rental affordablity.

Why the tax system so strongly encourages greedy housing investment and thereby debt slavery with no PPOR CGT and negative gearing is beyond me.

Even debt bubbles are a social/moral issue ... without even considering usury ...
http://www.henciclopedia.org.uy/autores/Laguiadelmundo/Usury.htm

Anyway its the rudd govts problem now Im sure although property investors will have nowhere to go if rental affordability ever became an issue (although at .5 - 2% for a houses its still the bargain of the century).

I also see dubai has moved to cap rent increases ... dubai of all places.

I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ... as is rental affordablity.

Utter piffle.

If it's a social issue for renters, it's also a social issue for borrowers/investors.

As an owner of a residential property rented out, my interest rate expenses have gone up by 37% in 12 months (6.39% to 8.77%) and it hurts me a lot.

Interest costs are about 90% of the outgoings for my property.

The lease expires soon and unfortunately I'll be needing to ask for a similar % increase in rent in order to survive financially.

 

[theasxgorilla]

Why the tax system so strongly encourages greedy housing investment and thereby debt slavery with no PPOR CGT and negative gearing is beyond me.

Even debt bubbles are a social/moral issue ... without even considering usury ...
http://www.henciclopedia.org.uy/autores/Laguiadelmundo/Usury.htm

I hear what you're saying, but I do wonder about the mentality of calling it 'debt slavery'. If its a social issue then the way to deal with it is to say you only need your house from when you reach maturity (get married, leave home) until you die or can no longer live in it due to health reasons. Once you're gone, give it back to the society. So whether you're renting the property or renting the money to hold the property, at the end you give it up. Are you a slave? No, you're a member of society. That's the true social(ist) way.

 

[pepperoni]

I said debt bubbles are a social issue ... like rents

In australia property speculators can try to put up rents as much as they want. Go for it. Its just that if lots of people get away with it its highly inflationary ... which leads to more rate hikes. Double ouch.

Which is why dubai is capping rent increases.

So the poor property speculator is most likely to cop it hard, cop it first, and cop it multiple times.

And anyone that invests in 3-5% income on 80% leverage with 6-10% interest is a speculator. And judging from the talk of taking action against oil speculators it seems that speculating on social necessities is not a good look.

Life is hard ... buy some kleenex.

Or live in the poppycock land of denial.

 

[robots]

hello,

"most likely"

do you have anything that has actually occurred yet?

i will have the poppycock land of denial anyday,

the poverty pack can have whatever other option you want to post

thankyou

robots

 

[pepperoni]

I hear what you're saying, but I do wonder about the mentality of calling it 'debt slavery'. If its a social issue then the way to deal with it is to say you only need your house from when you reach maturity (get married, leave home) until you die or can no longer live in it due to health reasons. Once you're gone, give it back to the society. So whether you're renting the property or renting the money to hold the property, at the end you give it up. Are you a slave? No, you're a member of society. That's the true social(ist) way.

Im just saying the govt shouldnt encourage property speculation and should have acted earlier with rate hikes ... lest they end up with dubai like inflation and have to take the unwanted step of capping rents.

They have had the throttle wide open for a decade and now its a case of "**** is there enough space to stop before the end of the road"?

Other countries with more history (eg france) protect renters more in recognition that housing speculation and volatility is not desirable.

Other countries seem to accept concepts of $/sqm for residential property. In aus its $/wow factor and million dollar views.

 

[pepperoni]

i will have the poppycock land of denial anyday,

Yes .... over 100 pages of it now

But as warren buffet said about the debt bubble, in this initial period the fools that make stupid decisions will suffer, but that in later stages people that have made no such errors also suffer as a consequence.

 

[gfresh]

Housing affordability is a social issue for everybody, it doesn't matter which side of the fence you sit on.

I don't know where you get off on handouts Robots, as you're clearly collecting plenty of it from the government in terms of deductions for interest repayments, depreciation of buildings, and everything else you receive, in return for providing rental accommodation to your "poor" tenants. If it's on offer, silly not to take it, but it's still a discount for you to invest in housing.

Anyhow, away from housing somewhat, and looking at external factors on household budgets.. as *petrol* in the next 5 years looks like it will become the next largest weekly cost for any family, next to their mortgage repayments .. oh, and the fact that any car that uses more than 8L/100km will soon be worthless. Best case scenario nearly all are going to have to take out a loan to buy a new efficient vehicle - another couple of hundred into the weekly budget. I know even if petrol goes to $4.00 (half the CSIRO's figure), that's going to cost me nearly $200/wk in fuel with my current car

I don't think house prices are going up anywhere too fast, while the world adapts to this big change. It'll be expensive business. Maybe inflation will be a decade cycle, and the current high interest rate environment will be a long one. It's going to be real battle of attrition for mortgage holders or renters, of who can take the most before cracking. I don't think anybody can really predict the ultimate outcome of whether we'll get through it with or without serious problems.

Housing doesn't exist in it's own private vacuum, many factors out there.

 

[Snakey]

.
property investors will have nowhere to go if rental affordability ever became an issue (although at .5 - 2% for a houses its still the bargain of the century).

Agree with you .
I rent a house on the Gold Coast worth 1.2 million on very wide water front with a boat ramp out the back for my boat and a jetty for fishing, Remote DLUG heaps of room for my two Samoyed dogs and i pay $405 per week. I share with two beautiful and very nice girls that pay me $125 a week each. So I end up paying $155 a week rent.
If I bought it I would be paying $1300 a week receiving $250 then have to come up with $1050 a week.

Greedy pig property speculators who have borrowed money and arrived late boarding the gravy train will be slaughtered IMO. Their credit rating will be destroyed and they will be forced to pay rent. Then they will have to save another more substantial deposit to to buy a house.
Isn't it funny how the creator of the problem then becomes a victim of their own doing.
I guess thats Carma at work.
Good luck Robot and others like him because your gonna need it

 

[Tysonboss1]

Agree with you .
I rent a house on the Gold Coast worth 1.2 million on very wide water front with a boat ramp out the back for my boat and a jetty for fishing, Remote DLUG heaps of room for my two Samoyed dogs and i pay $405 per week.

some how i don't believe you are telling the truth

 

[nioka]

some how i don't believe you are telling the truth

I don't doubt the facts BUT. I've been looking to shift to a canalfront block at the Gold coast and there are some at the price mentioned that are tennanted also at the price mentioned. The tennants are temporary and are really house sitting while a sale is made. I had a unit in a complex there with a 40ft pontoon in the broadwater valued at $650,000 which took a year to sell. While we were waiting for a sale we rented it for $300 week which was a lousy return after paying around $100 week in rates, body corp fees and seabed rental for the pontoon. The tennant was only there on a 30day notice arrangement. Rent would have been higher if permanent.
Then again there are places with a $i.2m tag that will take a lot of selling. Some canals are that far inland and with a 4knot speed limit it takes all day to get to sea. Then there are those along Oxley Drive that have a traffic problem with noise and fumes. A lot of those are tennanted.

I agree there are places to rent that seem a bargain but in years to come a renter ends up with nothing, owners have paid off their place and inflation makes them rich (richer).

 

[Macquack]

Other countries seem to accept concepts of $/sqm for residential property. In aus its $/wow factor and million dollar views.

It appears Sydney's Northern Beaches real estate has not crashed as much as you would have liked.

Being a "token multi-millionaire" does not buy you much on the "insular peninsula".

 

[Tysonboss1]

I agree there are places to rent that seem a bargain but in years to come a renter ends up with nothing, owners have paid off their place and inflation makes them rich (richer).

thats right,... rent starts low and increases forever, the interest charge on the loan starts high and decreases till it is completely gone.

 

[pepperoni]

Agree with you .
I rent a house on the Gold Coast worth 1.2 million on very wide water front with a boat ramp out the back for my boat and a jetty for fishing, Remote DLUG heaps of room for my two Samoyed dogs and i pay $405 per week. I share with two beautiful and very nice girls that pay me $125 a week each. So I end up paying $155 a week rent.
If I bought it I would be paying $1300 a week receiving $250 then have to come up with $1050 a week.

Greedy pig property speculators who have borrowed money and arrived late boarding the gravy train will be slaughtered IMO. Their credit rating will be destroyed and they will be forced to pay rent. Then they will have to save another more substantial deposit to to buy a house.
Isn't it funny how the creator of the problem then becomes a victim of their own doing.
I guess thats Carma at work.
Good luck Robot and others like him because your gonna need it

Nice work .. Im renting a $5m house on one of the best streets on balmoral slopes. 300m to beach, 4 bend, 2 car remote garage, big island kitchen, floor boards, lawnmowing and 3m ceilings for 750 a week.

My missus chucks in 250 a week so she can lay claim to 90% of the house ha ha.

I shake my head ... the property is free falling and the capital could be invested for almost $8k a week interest.

Im no expert but it doesnt add up ... Not my problem though ... Ill happily live in australias most exy real estate for chickenfeed at 37.