House prices to stagnate for 'years'

[BSD]

Thats the whole point. A limited amount of money stops Inflation which is really another form Taxation.

Ever wondered why nobody saves anymore. There's no point because Inflation devalues the money you have saved.

Debt = Slavery, obviously the majority of people are either too stupid or ignorant to do some research to find out they are being f^cked up the Ass...

Nonsense.

And completely off topic.

 

[Happy]

From ABC, 3 Feb. 08


300,000 FACING HOME LOAN DEFAULT: RESEARCH


Economists predict the number of Australians likely to default on their home loans this year will increase because of rising interest rates, massive credit card debt and falling house prices.
Research by JP Morgan and Fujitsu Consulting quoted in Fairfax publications suggests 750,000 home owners will be hit by 'mortgage stress' in the coming months.
It is anticipated up to 300,000 of those will default on the loan and could have their homes repossessed.
JP Morgan spokesman Brian Johnson says one of the factors driving the problem is massive credit card debt.
"The fact is, the average household in Australia [spends] over three months of its disposable income on credit card debt," he said.
"The other thing is that in Australia we only have a system of negative credit reports, which means the credit bureaus only capture people who are defaulting on their credit card.
"There's no data captured about the actual total dollar value of debt."
ANZ chief economist Saul Eslake says a number of factors have contributed to the problem, but he says compared with international standards the number of people in trouble is still quite small.
"There are more than five million mortgages in existence in Australia and although the number of people who are encountering difficulty servicing them is clearly rising, the proportion remains extremely low, especially by comparison with the United States," he said.

Only question is if it is going to happen slowly and surplus homes are going to be absorbed, or this is going to spark sellers stampede and long awaited by some, severe drop in house prices.

 

[Kimosabi]

Nonsense.

And completely off topic.

Do some research

Inflation Tax ==> http://en.wikipedia.org/wiki/Inflation_tax

Debt Bondage ==> http://en.wikipedia.org/wiki/Debt_bondage

This is completely on topic....

 

[Mofra]

The other thing to consider is the use of homes as ATMs. As house prices were rising homeowners took out home equity products to fund other discretionary spending. Many also spent the "capital gains" even though it wasn't relised. (You just have to look at company profits over the last couple of years)

Incorrect. The majority of equity release credit flows into investments, not discretionary spending. The "glee" of equities bulls posting every negative sentiment-filled article on this thread tends to overlook the fact that credit & bull markets are intertwined, and residential property equity is perhaps the easiest bulk crediut available to the average consumer.

... And people wonder why federal & state governments don't crack down on the huge land banks being held by developers

 

[Mofra]

Debt = Slavery, obviously the majority of people are either too stupid or ignorant to do some research to find out they are being f^cked up the Ass...

Surely the debt held decreases proportionally to the equivalent reduction in spending power as a result of inflation on cash-held savings?

Cash = depreciating asset.

 

[numbercruncher]

Stock fall Hits Buyers!

Todays Sunday mail, cant find it online, dodgy dodgy .....


"The Gold Coats most exclusive residential strip is up for sale, atleast 16 properties along Hedges and Albatross ave have gone to market"

Agents say Buyers withdrew offers in the 1.5 to 6m during the week citing "issues with shares "


Bluechip Bluechip

 

[Kimosabi]

Surely the debt held decreases proportionally to the equivalent reduction in spending power as a result of inflation on cash-held savings?

Cash = depreciating asset.

This is correct, the current monetary system is based on debt, at some point like what is happening in the USA, a debt based monetary system is unsustainable and will eventually collapse.

Why do you think the whole system, including the Taxation System rewards people who have debt.

Could it be that the same people who run the RBA, also run the ATO?

 

[numbercruncher]

Rent is the New Buy - wtf these guys musta been reading my work

AS THE hopes and dreams of younger Australians are dashed by poor housing affordability, the time has come to reassess the long-standing national love affair with home ownership.

With a new international survey showing great swaths of Australia in the grip of a world-class affordability crisis, it's clear that the home-ownership dream has fast become a nightmare, and a lifetime of renting awaits those who can't catch the runaway real estate train no matter how hard they chase.

The survey by an American and a New Zealand researcher highlighted that housing on the Sunshine Coast and Gold Coast is less affordable than it is in New York.

But the question is – does it really matter and is it such a disaster to rent rather than buy? The accepted wisdom is that "rent money is dead money" but, in reality, you either rent the home or "rent" the money to buy the home in the form of interest.

In fact, an owner-occupier who borrows $400,000 at 8 per cent a year to buy a $500,000 home ($100,000 deposit) will have paid $656,621 in interest alone at the end of a 30-year loan. A renter would need to fork out $420 a week for 30 years to match that interest bill.

Admittedly, the mortgagor would own a home worth about $1,214,000 at the end of the loan (assuming the property value rose in line with inflation of 3 per cent a year), but what if he or she'd decided instead to rent at $420 a week and invest the $100,000 deposit in a portfolio of growth assets such as share and real estate unit trusts.

If those trusts returned a moderate 8 per cent a year net of fees and taxes reinvested over the 30 years then the renter would need to add only $20 a week to the portfolio to match the home value of $1,214,000. Compare $440 a week with the mortgage repayments which start out about $730 a week. Of course, if the renter chose to invest the full difference between the rent and the mortgage – $310 a week – then he or she'd amass $2,942,000, which puts the renter even further in front.

http://www.news.com.au/couriermail/story/0,23739,23148424-5011140,00.html

 

[BSD]

Could it be that the same people who run the RBA, also run the ATO?

Oh please go on.

Got a wiki link for that?

 

[Flying Fish]

Oh please go on.

Got a wiki link for that?

Aliens run this planet. we are all doomed

 

[Kimosabi]

Aliens run this planet. we are all doomed

No, the world is run by a crime syndicate of inbred families...

 

[numbercruncher]

Rising interest rates will affect both the number of develpers conducting developing activites, especially the small scale stuff suchas investors knocking down and building back duplexes,

as well as reducucing the amount of developments the active developers are conducting,

Why will a devolper care about Higher Interest rates or falling prices in the wider market if his business profits are protected by falling input costs such has which just been passed by the Brisbane council and possibly more from the mayor hopeful ?

Anyway i'd rather sell 100 cans of coke that cost me 50 cents ea for $1 ea than only 10 at $2 ea, wouldnt you ?

My debate in this thread has never been on demand, its been about Average Realestate being at minimum already fully priced to what the average buyer can bare. Demand is there at the right price.

I still maintain the Realestate Industry has been awfully quiet so far this year, dont hear the usual on bubblevision ....

another quote from todays Suday Mail ....

" PRDnationwides Syd Walker said canal homes were worst hit with 40p/c fewer buyers making contact in the last two weeks"

further along ...

They are reporting a slower start than normal for this time of year "

 

[YChromozome]

Incorrect. The majority of equity release credit flows into investments, not discretionary spending.

Do you have some stats on this? Or are you calling Renos investments? I guess it adds value to the house.

The data I have seen (Which I must admit I can't find now) suggests the bulk of it goes into Renovations (Kitchens, Bathrooms, additions etc) and Debt Consolidation. Naturally consolidating the Credit Card debt and other personal loans generally leads to further spending.

Other categories was Holidays, 4WD (O.k. any Vehicle inc Caravans), Education Expenses etc. I do remember other investments and investments in real estate, but they were under the reno & debt consolidation.

Possibly the data I have was a couple of years ago, and I would have no trouble believing after a couple of years of things only going up, the incentive would be there for people to bail into investments that well, you know, only go up.

 

[Tysonboss1]

Why will a devolper care about Higher Interest rates or falling prices in the wider market if his business profits are protected by falling input costs such has which just been passed by the Brisbane council and possibly more from the mayor hopeful ?

QUOTE]

From the moment that they buy the land to the point where they are selling off the property they are paying interest.

So if the interest rate increases then by default the profit margin decreases.

this is also made worse by the fact that as interest rates increase it takes longer to sell the properties with in the development there for increasing the time which the development is subject to the higher interest rates and so profit margin will be lower.

Because it takes longer to sell of the units the developer can not free up the capital to move onto the next development as rapidly so less developments get done.

also alot of would be developers will not take the risk in the smaller projects they were planning due to the risk of serverly reduced margins.

 

[xoa]

Australia average pretax wage = 55k , average House 440k , thats over 10x post tax income = Does not compute.QUOTE]

ha ha ha ha, guess what NC that tells me RE is as high as ever, so much for stagnation

thankyou very much

robots

So, do you think that real estate prices will remain at these high ratios for the long term?

For over a century, the ratio has hovered around 3.5x, except for the occasional boom and bust. Has this fundamental law of real estate suddenly changed?

Maybe the real estate spruikers are right. Maybe there'll always be a limited supply of real estate on our vast and sparsely populated continent.

 

[robots]

hello,

yes I do and I think they are set to worsen slightly,

but still plenty of affordable houses around,

kathmandu went over this again and again,

it is easily fixed by getting a better paying job but the socialists who run all the propaganda dont like you to say that, anyone heard of promotion

for instance a labourer in Vic on EBA rates is on around 60k a year with site allow, travel allow etc, and you also get portable sick leave, redunancy etc

now if you move from one of those low paying IT jobs into the labouring market presto,

thankyou

robots

 

[numbercruncher]

for instance a labourer in Vic on EBA rates is on around 60k a year with site allow, travel allow etc, and you also get portable sick leave, redunancy etc

Hello


Just checked jobsearch.gov.au under " melbourne Labourers, Factory and Machine Workers - Construction and Earthmoving Labourers - Multiple Occupations " 52 positions available .....

These people have 20 of them ...

Location: VIC - MELBOURNE
Emp Ref: Labou- Ashphalt
Salary: $20+ p/h
Positions: 20

--------------------------------------------------------------------------------

Challenge Recruitment Ltd is searching for keen and enthusiastic labourers to be trained in the Asphalting industry. You will be trained in the following skills: Asphalting experience or a HR license please feel free to also apply. Please call 9501 9533 or fax your resume to 9501 9544.


Preferred Licence(s):
Car, Heavy Rigid vehicle.

http://jobsearch.gov.au/SearchResults/Job.aspx?st=11&WHCode=0&rgn=7114vwst%2c7114vnwe%2c7114vnor%2c7114vest%2c7114vswe%2c7114viea%2c7114vsou%2c7114vpen%2c7114vsea&Occ=7111%2c9912%2c9924%2c9913&print=0&NumMJL=0&CommJobs=0&CurPage=1&TotalRec=21&JobPos=17&JobID=166470156&SortDir=0&SortField=0&

You telling little porkpies again Robots ? I noticed you didnt mention how many hours for 6ok Labourer jobs, maybe 10hrs a day 7 days a week ? I have no Doubt some Labourers get 60k in Melbourne but certainly not all or even half.

but still plenty of affordable houses around,

Tell us more , examples, use average wages, average house prices, current and expected Interest rates, allow for cost of living etc, nice little project for you

 

[robots]

hello,

check out cfmeu vic site and you can download rates from them,

10% super, reduncancy, site allowance isnt on the page

the latest table is for 06, so proably been some increases from 06

happy reading NC

thankyou

robots

 

[robots]

hello,

here's one NC,

http://www.realestate.com.au/cgi-bi...r=&cc=&c=83553067&s=vic&snf=rbs&tm=1202023409

185k, 38km to GPO

pretty good deal, wow that was hard work

so a labourer on 60k doing it pretty easy NC

any moaners on this one

thankyou

robots

 

[numbercruncher]

Why will a devolper care about Higher Interest rates or falling prices in the wider market if his business profits are protected by falling input costs such has which just been passed by the Brisbane council and possibly more from the mayor hopeful ?

From the moment that they buy the land to the point where they are selling off the property they are paying interest.

So if the interest rate increases then by default the profit margin decreases.

this is also made worse by the fact that as interest rates increase it takes longer to sell the properties with in the development there for increasing the time which the development is subject to the higher interest rates and so profit margin will be lower.

Because it takes longer to sell of the units the developer can not free up the capital to move onto the next development as rapidly so less developments get done.

also alot of would be developers will not take the risk in the smaller projects they were planning due to the risk of serverly reduced margins.

Oh your talking about the small time Muppets ? The Flippers and wannabe property moguls, sure they are the first to be sqeezed out.

Big developers keep pumping out blocks etc as long as someone is waiting to buy, they dont go on holiday for a decade waiting for low interest rates etc.

Only going to be helped along by Governments/Councils etc, higer Interest rates but cheaper blocks etc because of Infrastructure charges being slashed.

Developers still make money no matter what, they pay less for the land and now less for other development costs, worse comes to worse they lower the profit margin, simple, the people who paid top dollar at the peak lose out.

The economy doesnt stop because of higher rates, in theory itll slow down though.