House prices to stagnate for 'years'

robots · 11 February 2008

hello,

thankyou for the correction Number,

just like property to stagnate hey Number,

wow a whopping 2.75% over two years,

any chance we can debate the real return on investment with RE or like Xao and others is it going to be washed over?

thankyou

robots

wayneL · 11 February 2008

Aussies like to call Oz "The Lucky Country".

Has anyone given consideration to how continued bubble prices... lets say a continuation of rises substantially above inflation will be sociologically damaging?

Will it be so lucky for our children with the prevailing attitude similar to that of Greedbot?

I'm all for capitalism, but when it becomes predatory it's time to have a good look in the mirror.

numbercruncher · 11 February 2008

I thought the Issue at hand is whats likely to happen going forward, returns of past no longer matter, even if they where fudged.

If you have any doubts as to what the RBA is telling us, this is it in plain english.

Look forward to an economy slowing sharply. The good old days are over. Until the inflation tiger is back in the cage.

http://www.news.com.au/business/money/story/0,25479,23168186-5016110,00.html

This applys to everyone, it doesnt exclude property speculators.

Im still giggling about the " Mortgage Gurus " on aca from a few weeks ago, their top tips included , " Do not Lock in Your Rate " , yes theyve been saying that for a while, maybe two years, when they say the opposite its time to do the opposite

robots · 11 February 2008

hello,

what a cop out NC, 2 years in the past yes, but that is so convenient isnt it

FW

thankyou

robots

professor_frink · 11 February 2008

wayneL said:
Aussies like to call Oz "The Lucky Country".

Has anyone given consideration to how continued bubble prices... lets say a continuation of rises substantially above inflation will be sociologically damaging?

Will it be so lucky for our children with the prevailing attitude similar to that of Greedbot?

I'm all for capitalism, but when it becomes predatory it's time to have a good look in the mirror.

Considering that the trend in housing prices has been pretty well straight up since the end of the great depression, I'd be spending my time telling the kids that they don't have to own a house- there are plenty of other ways to get ahead- and slowly building a share portfolio can be a lot less stressful than buying a crappy house in a crappy suburb that they can't really afford anyway. As long as kids are taught how to manage their money from an early age, then they will be able to get ahead without owning a house. If they are told that owning a house is the only way to get ahead, and that they will more than likely sruggle to be able to get a decent one, then they will do exactly that, struggle.

robots · 11 February 2008

hello,

save, save and save

20-30% of gross wage, this same principle applies to the young today and those who choose to will do well

it is no different to what many people done before us,

look at an 18yr old who doesnt like school, can easily get a job on commercial builder site with EBA rates,

most likely still living at home for next 3 or so years, maybe even longer,

pays some board and still has "ample" left in hand to save/invest

many things in life are very much still achievable,

but hey, the guy on the street with the hand out wanting a $1 wont disappear thats a given

thankyou

robots

wayneL · 11 February 2008

professor_frink said:
Considering that the trend in housing prices has been pretty well straight up since the end of the great depression, I'd be spending my time telling the kids that they don't have to own a house- there are plenty of other ways to get ahead- and slowly building a share portfolio can be a lot less stressful than buying a crappy house in a crappy suburb that they can't really afford anyway. As long as kids are taught how to manage their money from an early age, then they will be able to get ahead without owning a house. If they are told that owning a house is the only way to get ahead, and that they will more than likely sruggle to be able to get a decent one, then they will do exactly that, struggle.

Well this is a salient point. In the Anglo Saxon economies, home ownership is held out as "a dream", an investment, ladder of opportunity, blah blah. Young folks are hypnotized into thinking that they must buy at all costs, "to get a foot on the ladder".

Fine, if house prices are in line with fair value. But people are also led to believe that renters are losers, scroungers, bludgers, welfare cheats... second class citizens.

Strong psychology there.

So what happens if kids can't get a leg on the ladder with all that going into their head?

Depression!

Boy do I see that in this country.

Yet in much of Western Europe, most people rent and rent their entire lives. Well to do people too.

I have some friends in Munich who own a chain of taverns, well into their 50's, quite wealthy... they rent. Benny Hill famously never owned a house (back in the days when Britain was the same). It just isn't such a big issue.

I totally agree with what you say, but the group psychology will have to change first before kids are happy about that.

explod · 11 February 2008

robots said:
hello,

save, save and save

20-30% of gross wage, this same principle applies to the young today and those who choose to will do well

it is no different to what many people done before us,

look at an 18yr old who doesnt like school, can easily get a job on commercial builder site with EBA rates,

most likely still living at home for next 3 or so years, maybe even longer,

pays some board and still has "ample" left in hand to save/invest

many things in life are very much still achievable,

but hey, the guy on the street with the hand out wanting a $1 wont disappear thats a given

thankyou

robots

Pretty wild rationalisation there Robots. Can you give some examples?

Most of the young ones around 18 that do not like school are in that boat because thier parents also have problems and niether are likely to be able to lift themselves, and that is a community social problem. Caused in large part from a drop off in lower end education spending, rationalisation, deregulation and privatisation since the 70s.

The building site projects around here require lads to have some reasonable education and be commencing or heading towards an apprenticeship. The old days of just dropping out and into a job are long gone.

professor_frink · 11 February 2008

wayneL said:
Well this is a salient point. In the Anglo Saxon economies, home ownership is held out as "a dream", an investment, ladder of opportunity, blah blah. Young folks are hypnotized into thinking that they must buy at all costs, "to get a foot on the ladder".

Fine, if house prices are in line with fair value. But people are also led to believe that renters are losers, scroungers, bludgers, welfare cheats... second class citizens.

Strong psychology there.

So what happens if kids can't get a leg on the ladder with all that going into their head?

Depression!

Boy do I see that in this country.

Yet in much of Western Europe, most people rent and rent their entire lives. Well to do people too.

I have some friends in Munich who own a chain of taverns, well into their 50's, quite wealthy... they rent. Benny Hill famously never owned a house (back in the days when Britain was the same). It just isn't such a big issue.

I totally agree with what you say, but the group psychology will have to change first before kids are happy about that.

Yes it most certainly will, and to a certain extent, is already beginning to happen IMO- I know quite a few people my age that have no intention to buy a house anytime soon, and most of them I would consider to be financially responsible. Give it another 10-15 years, and there could be a rather large shift in the thinking of younger people towards the western European attitude you've described above.

Not many of the people that I know that don't want to buy live in my area though- most people I know here wouldn't even consider not buying- when you can get a brick and tile home on a decent sized block for under 300K then it aint much of a contest

numbercruncher · 11 February 2008

wayneL said:
Well this is a salient point. In the Anglo Saxon economies, home ownership is held out as "a dream", an investment, ladder of opportunity, blah blah. Young folks are hypnotized into thinking that they must buy at all costs, "to get a foot on the ladder".

Fine, if house prices are in line with fair value. But people are also led to believe that renters are losers, scroungers, bludgers, welfare cheats... second class citizens.

Strong psychology there.

So what happens if kids can't get a leg on the ladder with all that going into their head?

I think a pretty big shift is happening in this regard, the Young besides the affordability factor couldnt care less, in a huge proportion of cases about home ownership, as can be demonstrated in the home ownership figures for them. I really think Gen-Y are out to have a good time, and good on them I say ! Asset bubbles wont persist if they arnt buying

Its seems GenX are the ones that feel obliged to stack up on debt and societies perceived expectations, they are 27 pc of the population but 47 pc of the Debt! And interestingly this debt is roughly equivalent to what Baby Boomers have in bank deposits, managed investments and superannuation.

Ive read quite a few authors exploring this subject, and the following article I think is a great read, explores your question about this possibly being sociologically damaging and does a good job of crunching the numbers

Pain in the assets: generation Y's lost years

It's an integral part of being a parent: you make sacrifices to give your children the best chance to succeed in life. And there is an expectation that each succeeding generation will take those chances and be happier, better educated and better off.

But what if the behaviour of one generation - however inadvertent - caused a new generation to be worse off?

What if today's young adults, the so-called generation Y, were finding it tougher than their predecessors, generation X, while at the same time baby boomers grew ever richer, using their wealth to lock their children out of the housing market?

That is exactly what appears to be happening. Not only are people under 30 earning less (in relative terms) than generation Xers did when they were the same age, astronomical prices mean they are increasingly locked out of home ownership. They are in danger of becoming the renting generation.

http://www.domain.com.au/Public/Article.aspx?id=1194329261430&index=NationalIndex&headline=Pain%20in%20the%20assets:%20generation%20Y++39;s%20lost%20years

theasxgorilla · 11 February 2008

wayneL said:
Aussies like to call Oz "The Lucky Country".

Has anyone given consideration to how continued bubble prices... lets say a continuation of rises substantially above inflation will be sociologically damaging?

Will it be so lucky for our children with the prevailing attitude similar to that of Greedbot?

I'm all for capitalism, but when it becomes predatory it's time to have a good look in the mirror.

What choice do we have?

The baby boomers have the watch. We've inherited their decision-making. We can only be responsible for what we do in response to that.

ASX.G

wayneL · 12 February 2008

theasxgorilla said:
What choice do we have?

The baby boomers have the watch. We've inherited their decision-making. We can only be responsible for what we do in response to that.

ASX.G

Why couldn't we/don't we take all of that easy capital, and instead of malinvesting in an asset class that doesn't actually produce anything, invest in production. It's what the Chinese are doing - value adding.

Sean K · 12 February 2008

wayneL said:
Why couldn't we/don't we take all of that easy capital, and instead of malinvesting in an asset class that doesn't actually produce anything, invest in production. It's what the Chinese are doing - value adding.

But Wayne, I need to own a home. It's the Australian dream! Plus, I want that extra plazma for the guests room above the 4 car garage...

Kimosabi · 12 February 2008

kennas said:
But Wayne, I need to own a home. It's the Australian dream! Plus, I want that extra plazma for the guests room above the 4 car garage...

I'd love to know where this Great Australian Dream concept came from.

30 years of self imposed enslavement doesn't sound like much of a dream to me, sounds more like a nightmare, especially if the house is bought during a period of bubblenomics.

But if your a Bank, now this sounds like a Dream...

wayneL · 12 February 2008

Owning your own home is a reasonable aspiration. I just object to VI's trying to psych people into buying at any price and at all costs.

It may lock you into 30 years of payments, but it also locks in the cost of housing within reason and subject to interest rate fluctuations etc. If that cost is reasonable, then why the hell not?

But if the cost is unreasonable, as it is in most places... fuggetit. The laws of economics cannot be suspended indefinitely and value will eventually return.

As far as I'm concerned, renting is a bargain at the moment. Sometime in the future, the advantage will swing back to buying. There are plenty of measures of value that will signal that time.

Sean K · 12 February 2008

Kimosabi said:
I'd love to know where this Great Australian Dream concept came from. ...

Psychologically I think it's an important thing based on being a good source of perceived security. That is probably where ownership of a 'space' comes from. The cave men would have put some sort of door on the front of their cave, and you should see little Nimo's protect their anenome - I've been bashed on the mask for getting too close many times...Today, this tranlsates into people wanting a 'home' that is their little 'nest'. Shame we have to put big fences around them and have a dog with a viscious bark...

robots · 12 February 2008

hello,

30yrs of hell, you got to be joking

in most cases after around 7-8 yrs the home owner gets into the same situation as a renter in cost, during the next 22yrs of "hell" the home owner kills it

it is still widely recognised home ownership is a great investment and still "very much affordable"

how is that indicator going still up around 8x earnings? not much is changing, even at that level it is still very much affordable

yields were the same in 05, and hey presto plenty enjoyed growth

keep renting, and put those $100 bills into the cfd account you have a choice

thankyou

robots

robots · 12 February 2008

hello,

and people like kimosabi are classic,

they get on here and spruik how the girlfriend has a 20k credit card debt,

and because people cant afford something it has to drop, it cant be so, its bubblevision etc

many should start looking at themselves first

thankyou

robots

explod · 12 February 2008

robots said:
hello,

30yrs of hell, you got to be joking

in most cases after around 7-8 yrs the home owner gets into the same situation as a renter in cost, during the next 22yrs of "hell" the home owner kills it

it is still widely recognised home ownership is a great investment and still "very much affordable"

how is that indicator going still up around 8x earnings? not much is changing, even at that level it is still very much affordable

yields were the same in 05, and hey presto plenty enjoyed growth

keep renting, and put those $100 bills into the cfd account you have a choice

thankyou

robots

Well I am now renting after being a home owner for 40 years, and its great, the place is spanking brand new, very small garden, no spouts to clean, no rates to pay, water usage only which is low. It would have cost the owner $350,000 and I pay $1,200 a month. My share portfolio earns 70% on the stock market. My bullion holdings are up 30% since last October. I feel that my landlord is probably struggling to make a gain at all. And in this area of Mornington/Mount Martha agents a knocking back stock and For Sale signs are increasing by the day.

And by the way I am still waiting for a reply to my question to you at 09:52PM yesterday

wayneL · 12 February 2008

robots said:
hello,

and people like kimosabi are classic,

they get on here and spruik how the girlfriend has a 20k credit card debt,

and because people cant afford something it has to drop, it cant be so, its bubblevision etc

many should start looking at themselves first

thankyou

robots

Non-sequitur.

You black-white world only exists in your imagination 'bot.

House prices to stagnate for 'years'

hello

VIVA LA LIBERTAD, CARAJO!

Beware of Dropbears

hello

Moderator

hello

VIVA LA LIBERTAD, CARAJO!

explod

Moderator

Beware of Dropbears

Problem solved... next bubble.

VIVA LA LIBERTAD, CARAJO!

Moderator

VIVA LA LIBERTAD, CARAJO!

Moderator

hello

hello

explod

VIVA LA LIBERTAD, CARAJO!

Similar threads

Privacy & Transparency

Privacy & Transparency