House prices to stagnate for 'years'

[wayneL]

hello,

actually you only have to go to local jewish area, chinese area, vietnamese area in most countries to see the benefit of shared living,

thankyou

robots

Agree, but we Anglo Saxons don't seem to thrive doing that. It's a fault in our culture for sure, but a fact nevertheless.

 

[numbercruncher]

Agree, but we Anglo Saxons don't seem to thrive doing that. It's a fault in our culture for sure, but a fact nevertheless.

I was just going to say that, coop us up and we'll invade every continent on the planet, oh hang on

 

[theasxgorilla]

any property bulls got a comment?

It's an extremist arguement, and therefore the weakest kind. I don't see the point. If people stepped out of the market in anticipation of some kind of crash, which is yet to manifest, it stands to reason that we can expect to see this kind of huffing and puffing from their corner. They'll either get what they want or blow themselves out.

ASX.G

 

[explod]

It's an extremist arguement, and therefore the weakest kind. I don't see the point. If people stepped out of the market in anticipation of some kind of crash, which is yet to manifest, it stands to reason that we can expect to see this kind of huffing and puffing from their corner. They'll either get what they want or blow themselves out.

ASX.G

Other way round:; with cost of living getting out of hand for many, the market becomes out of reach (steps away from the people) which may induce a crash, and there is evidence that it is happening in some areas already.

A fair argument of supply and demand, not extremist, just a possible scenerio.

 

[Mofra]

Strange that the argument always seems to lead back to what the market as a whole is doing, yet even splitting the market into three tiers (inner city, median & outer suburban) often shows the "boom" in property prices was led by only one of those sectors.

 

[Tysonboss1]

Property Bulls,

So retail variable mortgage rates will now get to 9pc, Your average 400k property renting for $400 a week, must surely by now be looking a little dicey, what happens at 10,11,12 p/c , just keep passing it onto the tenants until they become squatters ? What happens when we get to 12pc and your property sits vacant with 1000 pw interest bill ?

Interest rates will affect all asset classes,.... Interest rates really only affect you if you are leveraged investor, so a share investor who is leveraged to 80% will be affected to a similar extent as a property investor at 80%.

What to you think will happen to the share market with interest rates at 12%?

 

[Tysonboss1]

I hope people know there are laws that protect existing tenant.
IE you can increase a maximum of 15% on rental price on existing tenant
but most people wont get the full 15% more like between 5%-10% if they lucky.

you don't increase the rent just because interest rates go up anyway, you increase the rents partly due to inflation and partly due to supply and demand.

 

[wayneL]

Interest rates will affect all asset classes,.... Interest rates really only affect you if you are leveraged investor, so a share investor who is leveraged to 80% will be affected to a similar extent as a property investor at 80%.

What to you think will happen to the share market with interest rates at 12%?

Exactly what needs to happen.

 

[Tysonboss1]

Interesting story on ACA tonight called " Interest Rate Gurus "

Usual suspects, at end of article they summarise with 5 major points, one of which is " Dont Lock into a Fixed Rate "

Same advice they where giving 10 interest rate rises ago, maybe theyll be right this time

The media and the men that pay their wages are not your friend

http://aca.ninemsn.com.au/

I try not to listen to anyone that ACA or today tonight call a guru, often with all the editing and emotional angle the story is trying to pull you never here the full story or the real explanation behind peoples theories.

I think if you are an investor exposed to alot of debt you should have fixed atleast a portion of your debt long ago,...Some of my loans are fixed at 7.69% for 3 more years.

Even if the rate does drop in the future I think it is wise to hedge your rate by fixing.

 

[numbercruncher]

Is it just me or ? I cant stand that Aussie Home Loans guy, they make him out like some legendry friend of the people ?

"Some of my loans are fixed at 7.69% for 3 more years"

Good work Tyson, you have obviously been paying attention to your own research and not the media comptrollers

Would take something big for you to lose out from that position im sure, retail variable rate now will be 9pc and rampant inflation, good work

 

[robots]

hello,

i am with you on John Symonds from Aussie Home Loans, have the same view on steven keen as well,

come and talk to you're lender so we can "push" sorry re-finance you this way and get some hefty fees for some simple paperwork,

thankyou

robots

 

[KIWIKARLOS]

Theres a story in the news today that once the price of Iron Ore and coal is increased Australias exports should increase from 42 Billion PA to around 70 Bill PA

Tell me how can we have a crash in house prices when australias resource sector is about to start making a lot more money which will inevitabily lead to higher wages and more jobs.

On top of that El nina is bringing drenching rains to farmers so food prices are going to go down and our agriculture exports going up.

Interest rates aren't enough to help cool our economy I believe Oz will continue to have a strong economy well into the future. House prices will keep rising. Even with rates goingg up and morgage stress increasing we have yet to see any real broad based decrease in prices in any state.
As the oz dollar goes up the cost of imports comes down, when the US hits the wall oil could be $80 a barrel. I can only see inflationary pressures decreasing in the medium term while our profitability as a country goes up.

 

[Tysonboss1]

Interestingly enough, working that calculation to give Sydney's current average house price (~ $540K) comes in at 5.1% per annum coumpounded.
This means a doubling every 14 years over a 119 year sample.

Wonder wait the average inflation is over this same period?

Even if we take your very conservative figure of a 5.1% growth rate, we still get overall return of greater than 10%.

add a 5% rental return on to that 5.1% growth rate and you have a 10.1%p/a return,....

 

[numbercruncher]

Even if we take your very conservative figure of a 5.1% growth rate, we still get overall return of greater than 10%.

add a 5% rental return on to that 5.1% growth rate and you have a 10.1%p/a return,....

But we would'nt dare subtract the holding costs, bank Interest etc , now would we

 

[explod]

Theres a story in the news today that once the price of Iron Ore and coal is increased Australias exports should increase from 42 Billion PA to around 70 Bill PA

Tell me how can we have a crash in house prices when australias resource sector is about to start making a lot more money which will inevitabily lead to higher wages and more jobs.

On top of that El nina is bringing drenching rains to farmers so food prices are going to go down and our agriculture exports going up.

Interest rates aren't enough to help cool our economy I believe Oz will continue to have a strong economy well into the future. House prices will keep rising. Even with rates goingg up and morgage stress increasing we have yet to see any real broad based decrease in prices in any state.
As the oz dollar goes up the cost of imports comes down, when the US hits the wall oil could be $80 a barrel. I can only see inflationary pressures decreasing in the medium term while our profitability as a country goes up.

If life were so simple, but things never work out as they seem.

Sure a few more jobs, but the trucks etc are getting bigger. And where do the profits go, some royalties and taxes, the rest to shareholders, a lot of them overseas.

What we really should be looking at is refining the ores ourselves, even extruding rail tracks etc. Our resources are large but finite and secondary industries should be growing from them. Now that would be jobs.

 

[numbercruncher]

If life were so simple, but things never work out as they seem.

Sure a few more jobs, but the trucks etc are getting bigger. And where do the profits go, some royalties and taxes, the rest to shareholders, a lot of them overseas.

What we really should be looking at is refining the ores ourselves, even extruding rail tracks etc. Our resources are large but finite and secondary industries should be growing from them. Now that would be jobs.

Spot on Explod, I fear we are blowing a golden opportunity, bigger profits for fewer people.

 

[KIWIKARLOS]

how is it profits for fewer people, anyone can buy shares in these companies its just that alot of people dont know about investing in shares let alone anything else. Also I guarentee most peoples super funds have some holdings in these mining companies.

I agree we could make more refining the product here or making steel but those industries cost heaps to set up and may not be built in time to make the best of the comoditiy bull market.

 

[numbercruncher]

Its certainly hows it working in the US , and seen as Howard/Costello worked dilligently to model us on them Im assuming we are not far off the following article.

Income inequality grew significantly in 2005, with the top 1 percent of Americans ”” those with incomes that year of more than $348,000 ”” receiving their largest share of national income since 1928, analysis of newly released tax data shows.

While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.

The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

http://www.nytimes.com/2007/03/29/business/29tax.html?ex=1332820800&en=fb472e72466c34c8&ei=5088&partner=rssnyt&emc=rss

Im not saying Australia is exactly the same as this, but Im certain there is more than a passing resemblance.

 

[Santob]

Its certainly hows it working in the US , and seen as Howard/Costello worked dilligently to model us on them Im assuming we are not far off the following article.



http://www.nytimes.com/2007/03/29/business/29tax.html?ex=1332820800&en=fb472e72466c34c8&ei=5088&partner=rssnyt&emc=rss

Im not saying Australia is exactly the same as this, but Im certain there is more than a passing resemblance.

Howard and the Liberals were excellent at making the rich richer, and the poor more frightened of the immigrants who were terrorising their mortgages (or something like that)

 

[Tysonboss1]

But we would'nt dare subtract the holding costs, bank Interest etc , now would we

No you wouldn't subtract the holding costs in the intial calculation because these holding costs will be differtrent for every single investor,... ie. some have 90%LVR others 20% LVR.

You would look at return on investment the same way as people work out the 5year share price return figure,.... being the capital growth + dividends translated to a p/a % return.

just like when it is published that woolworths has had a 5 year share price return of 22.5%,... this is simply capital growth + dividends, property should be treated the same.

as I pointed out in my earlier thread the properites that were worth $1000 in 1890 would be worth far more than sydneys median house price today, so the actual capital growth would be far more than 5.1%,.... but even at 5.1% its a decent 10.1% when rents are included.