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House prices to keep rising for years

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wayneL said:
That's the predominant feature of folks who are in the schtook over here, massive MEW on frivolities... or very recent (last 1 - 3 years) buyers with humungous LVR/wage-mortgage ratios.
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I'd say it will be a common attribute with most people that get into trouble with debt(boom or no boom). It's not their fault though, it's high interest rates:rolleyes:

IT'S NEVER MY FAULT!:D
 
professor_frink said:
I'd say it will be a common attribute with most people that get into trouble with debt(boom or no boom). It's not their fault though, it's high interest rates:rolleyes:

IT'S NEVER MY FAULT!:D
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It's those evil banks wot made me do it. :D
 
Another sign of carnage in waiting :eek: our version of ARM :cautious:


FOR the past three years, they have breezed through each interest rate rise, their beatific serenity at odds with other mortgage holders who have been bludgeoned without ceremony closer to Struggle Street with each hike.

They are the estimated 30 per cent of Australia's mortgage holders who chose to fix their rates after the Reserve Bank lifted its cash rate to 5.5 per cent in March, 2005.
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They will find that their interest repayments will rise by a whopping 50 per cent.
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http://www.news.com.au/business/money/story/0,25479,23573946-5016199,00.html
 
From Nine MSN, 22 Apr. 08

ONE IN FIVE WILL LOSE HOMES: REPORT

Up to one in five households under mortgage stress will lose their homes, according to new figures.
The findings in the monthly Anatomy of Australian Mortgage Stress to be released on Thursday show that about 20 per cent of people who go "into the slippery slide" of borrowing never get out.

But "once you're in severe stress there's only about a 50-50 chance of getting out," Martin North from Fujitsu Consulting, the firm that compiled the report, told Fairfax on Tuesday.
The firm's previous monthly mortgage stress report indicated an alarming 750,000 Australian households would be under mortgage stress by mid-2008 - with about 300,000 under severe stress.

Fairfax reported that 72 per cent of households blamed interest rates hikes for the mortgage stress this year, up from 14 per cent in 2005.
Mortgage stress has hit young families the hardest with 35 per cent experiencing the pressure.
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One day we will know if this is true or fabricated scare mongering attempt to make people sell at lower price.

By then prices will probably start to rise again, after every bust there is almost always reversal.
 
Maybe there should be warnings on all home loan applications "WARNING: Interest rates may vary up to 5% higher than when you originally take out this loan". Seems this slips many people's minds when taking out large loans.

With the CBA right now, non home-credit is becoming pretty out there. Their variable personal loan is now from about 14.75-16%, and their "visa classic" card is now up over 20%. This is enough to get many in trouble, into much greater trouble quite soon.

There is so many conflicting stories out there, one of which is "house prices will keep going up and up, if you don't buy now you never will". So people jump in right at the fringes of what they can afford, almost in fear of "missing out". Fear is definitely not the best reason to go into the largest financial purchase that most families will do. People only have themselves to blame by following the rheotoric and paying exorbidant prices paid in certain areas.

I don't think there is anything like a bust yet where I am. Lots of forsale signs on the goldcoast, but checking the purchase price data (where available), none of these vendors will be taking a large loss, quite the opposite.
 
Happy said:
One day we will know if this is true or fabricated scare mongering attempt to make people sell at lower price.

By then prices will probably start to rise again, after every bust there is almost always reversal.
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Sorry, the boom in property will not happen again for a very very long term. The recent global property boom was all fueled by cheap credit and relaxed lending criterias, both of which were unprecendent and an unique event in modern history.

When everything do go bust, and you can almost guarantee that it will sooner or later, it will take a VERY LONG TIME for people to have confident in borrowing money again to speculate. The bear market in credit will be quite prolonged, because the bull market in credit is a secular event, not a cyclic. Remember the word SECULAR, a once off event.

But humans never really learn from history, so be prepared for the next boom
 
The bear market in credit will be quite prolonged,
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Yeh well thats exactly what was being touted in the 80s.
Then Keating had "The recession we had to have"

Short memories.12 or so years in fact.

Humans do learn from history.
In the 80s I was one of those who crashed and burned to tumultuous applause from the knockers.
This time like many others we have capitalised the majority of our gains.

both of which were unprecendent and an unique event in modern history.
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You jest---you also must have been in diapers.
Low interest rates (6.8%)
Low purchase prices which could be positively geared from day 1
Established housing far cheaper than building.
All seen before---and those that have seen it now should take advantage of it in years to come when they see it again!!
I'll be well into my 60s but having a ball!
 
Wanna cheap flat?

I was just watching an auction (via live link) and saw this one go through.\/

Just need to brush up on the German. :D

Another large semi in a semi rural area just went for £9,000 too.

LOL
 

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robots said:
hello,

great news,

http://au.news.yahoo.com/080422/2/16kjj.html

it just goes on and on globalisation,

thankyou

robots
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I certainly don't mind the food in Sydney. :D Must go back for more in the future.

tech/A said:
Yeh well thats exactly what was being touted in the 80s.
Then Keating had "The recession we had to have"

Short memories.12 or so years in fact.

Humans do learn from history.
In the 80s I was one of those who crashed and burned to tumultuous applause from the knockers.
This time like many others we have capitalised the majority of our gains.
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Of course, some individuals do learn from history and able to benefit from it.

I am saying that CROWD BEHAVIOUR never change. HUMANS (with emphasis on the "s") will always be humans, collective greed and fear will always exist. Greed and fear exist, and will always do. That is why technical analysis do work despite of what the fundamentalists or "in-love-with-their-efficient-theory" economists say.

And good on you for being able to capitalise on the recent boom. I wish I had the capacity and financial foundation to capitalise on it just a little over few years ago. I will definitely be ready for the next one.

tech/a said:
You jest---you also must have been in diapers.
Low interest rates (6.8%)
Low purchase prices which could be positively geared from day 1
Established housing far cheaper than building.
All seen before---and those that have seen it now should take advantage of it in years to come when they see it again!!
I'll be well into my 60s but having a ball!
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Have you seen 105% loan being available to low income earners back in the "old days"? I was not born back then but my limited knowledge of history tell me no such thing exist back then. Tell me otherwise if I am wrong.

The mentality for "credit / free money" for us younger generations are so much different from what you may have in back 20-30 years ago.

Yes, I may not be old or "wise" enough to back up what I am claiming. However, at the very least, I can learn from history that good times do not last forever. Unlike my fellow Generation Ys who believe the boom in property will last forever, especially one who commit half a million dollar on an old queenslander house and expect that it will increase in value by 7-10% every year for eternity. Not to mention he is a recent graduate, first job, and with a wife who works as a real estate agent for the last 2-3 years. (so I guess it's rather hard to convince him otherwise...)
 
Have you seen 105% loan being available to low income earners back in the "old days"? I was not born back then but my limited knowledge of history tell me no such thing exist back then. Tell me otherwise if I am wrong.
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I remember loans at 5% down. I had a few. Dont know about 100% down plus costs,cant remember that far back---urr what was the topic?---.

I do remember vividly banks virtually throwing money at me.
I also remember that after the first approval there was very little regard to servicability,thats what got them unstuck back then. (The Banks and their clients).
Very similar to today in that very little attention was directed in how the debt was to be serviced particularly with a string of interest rate rises.

Proper use of leverage is fine,you usually learn this after a period of Improper use!
Which in my case back in the 80s very nearly cost me the lot!
 
Let there be no doubt, cheap easy credit fueled this boom, borrowing has never been so easy, except for perhaps before the great depression ?

Anyone with an ABN and prepared to lie could borrow hundreds of thousands - thats changing rapidly im sure :eek:


I remember as a debt free working teenager in the early 90s getting rejected for a 5k car loan! Seems we went from one extremity to another, from far to tight to far to loose.

:)
 
I think the biggest change is non-mortgage credit. Surely this has changed?

Accessible credit and creating new types for consumers is how the banks have swelled their profits so much in recent years.. And because they're all competing against each other, it's not like any one of them will stand up and go "hang on, we're going to be selective here". That philosophy just hasn't been good for business, or shareholders who won't stand for an underperformer.

It's interesting to think our very first credit card was only offered in 1974 here in Australia.. That's only one generation that has grown up with the concept of "unlimited" cash in a card, or credit on demand. Now it seems that even people on minimum income are able to obtain multiple cards with several thousand dollar limits. Even a $3k limit seemed large when I first got a card in the early 90's, but I think that is almost the minimum they will accept these days(?)

Even retailers such as the likes of Harvey Norman have fed fat on offering their "xxxx months" interest free systems, store branded credit cards, etc. By the time you add them all up, lots of temptations for people.

Contracts are also becoming more common as well which leads many into a trap that never used to exist. $50/m doesn't seem like much for a mobile say, but by the time you add up internet contracts, foxtel, etc it's easy to rack up a couple of hundred dollars a month minimum costs in your budget. And they're all now 24 month contracts, 12 months used to be common.. If you want to get out because times get tough, bad luck, you signed a contract - debt collectors for you.
 
gfresh said:
I think the biggest change is non-mortgage credit. Surely this has changed?

Accessible credit and creating new types for consumers is how the banks have swelled their profits so much in recent years.. And because they're all competing against each other, it's not like any one of them will stand up and go "hang on, we're going to be selective here". That philosophy just hasn't been good for business, or shareholders who won't stand for an underperformer.

It's interesting to think our very first credit card was only offered in 1974 here in Australia.. That's only one generation that has grown up with the concept of "unlimited" cash in a card, or credit on demand. Now it seems that even people on minimum income are able to obtain multiple cards with several thousand dollar limits. Even a $3k limit seemed large when I first got a card in the early 90's, but I think that is almost the minimum they will accept these days(?)

Even retailers such as the likes of Harvey Norman have fed fat on offering their "xxxx months" interest free systems, store branded credit cards, etc. By the time you add them all up, lots of temptations for people.

Contracts are also becoming more common as well which leads many into a trap that never used to exist. $50/m doesn't seem like much for a mobile say, but by the time you add up internet contracts, foxtel, it's easy to rack up a couple of hundred dollars a month. And they're all now 24 month contracts, 12 months used to be common.. If you want to get out because times get tough, bad luck, debt collectors for you.
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Na, my only CC has a whopping $1000 limit on it.
 
hello,

and you can still easily get 105% loans, no docs, low docs etc

sure the rate is high maybe 10%>, it will also get easier than it was yesterday to get credit,

gotta love the social commentary this thread generates, i hope people can stick to the discussion

thankyou

robots
 
robots; said:
hello, and you can still easily get 105% loans, no docs, low docs etc
sure the rate is high maybe 10%>, it will also get easier than it was yesterday to get credit, gotta love the social commentary this thread generates, i hope people can stick to the discussion
thankyou
robots
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Not for long my friend. Look at the number of mortgages available at this level compared to 6 months ago. Have a look at what is going on in the USA & UK, as leading indicators of how the credit crunch is impacting loan availability. In the UK some of the largest lenders have withdrawn most mortgages unless there is a good deposit and the best rates are now based on a 25% deposit.

The people who lend you 105% at +10% have a problem - they can't sell the mortgage on, as there is no secondary market for this security. So they have to raise money from unorthodox channels e.g. interesting 3rd tier lenders. And when you cant make one or two payments they will have no problem about sending you bankrupt in no time.

The restriction in lending and the move back to deposits WILL impact the housing market. Much of the Sydney market has gone nowhere over the past 4/5 years. Is that a problem - no, not for the majority of people. long may it continue.
 
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