House prices to stagnate for 'years'

[Sean K]

many should start looking at themselves first

thankyou

robots

Yes, I agree.

 

[chops_a_must]

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

One of the greatest scams in economics is to purport that supply and demand is the only thing that matters. Demand makes no difference, it generally doesn't change; the ability to afford and pay for things however, does.

Demand for Ferraris doesn't change, one's ability to pay for one does. Just another reductio absurdum in the world of economics.

 

[numbercruncher]

Its really pretty simple, Australian owner occupied realestate has got to potentially be one of the worst investments on the planet currently, especially if your paying it off.

Person renting 350k from bank @ 9pc + rates/ins pays 3k a month.

Person renting 350k house from property speculator pays 1200 a month, investing 1800 diff (22k p/a) @ a very min of 7 p/c return.

After 5 years, renter saving difference has a min of 135k.

Person renting the 350k has made a small dent in mortgage principle and has paid out 180k already. approx 160k is interest.

After this 5 years property "owner" has a property that has cost him 510k, he will need to sell it for 645k just to break even with the renter. Make that 660k, to include realestate sharks commission - I havnt included Duty, loan app fees, conveyancing etc!

Big mistake property gamblers make is using percentages to calculate expected return, its no longer applicable because the numbers have got too large.

Your probably going to get rate rise after rate rise going forward, its only a matter of time until youve got people fleeing the property market if it keeps up. Gen-Y arnt buying this silly RE game, it sounds like the musics stopped but not too many have noticed, yet.

 

[xoa]

where are the properites that are renting on yeilds of 1.1%.

I have never seen properites renting on these yeilds

I would like to see an example of an area where properties rent on yeilds this low,... It's just not happening,

Net rental yield = Gross rental yield - Expenses.

 

[Kimosabi]

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

hahahahaha, nice try Bubblebots....

Number 1, the girlfriend has paid off her debt and number 2, it must be time for the Real Estate Rollercoaster....

 

[Kimosabi]

I found a video of Robots on Youtube...

 

[xoa]

hahahahaha, nice try Bubblebots....

Number 1, the girlfriend has paid off her debt and number 2, it must be time for the Real Estate Rollercoaster....

Take a look at the graph I attached a few pages back, and you'll see that the Australian bubble is even worse.

 

[Kimosabi]

Take a look at the graph I attached a few pages back, and you'll see that the Australian bubble is even worse.

Yeah, I know, when you analyse Australia, we are even more exposed than America, if anything happens to our Resources Industry, we are going to make the US crash look like a Walk in the Park...

 

[Temjin]

Here is a recent interesting article to read.

Will China slow down from 2009?
http://cij.inspiriting.com/?p=379

In Shanghai, an apartment that is located conveniently near the city can cost around 1 million yuan. A young Chinese couple with a modest combined salary of say, 120,000 yuan a year and a deposit of say, 300,000 yuan from their parents have to borrow around 700,000 yuan. From the anecdotal hearsay, it looks to us that like Australia, China is vulnerable to debt deflation too. Further hearsay tells us that the Chinese banking and financial system is relatively opaque and there are probably a lot of hushed up bad debts piling up. There are also widespread popular expectations that the Chinese economy will slow down after the Olympics.

Looks like the Chinese are getting into debt as much as we do, in relative term anyway.

I have long given up on trying to "convince" the property investors/owners that there is a potential for a major crisis coming. It's impossible given their majority of the wealth is tied up in property and their own very financial survival is dependant on such asset class anyway. By making themselve to convince that their assets "maybe" in danger is essential getting themselve to admit they've made a mistake.

Human psychology dictates one tend not to admit their own mistake and will find "certain" reasons to justify their position (i.e. like following the herd) and ignore/dismiss all other evidences.

So yep, I've given up.

So it's back to trading for me, save up, build up my commodities portfolio, don't put on any debt and wait till all these are over.

By betting on the residental property market to keep rising at this rate is to bet that Australia is COMPLETELY IMMUNE from any slowdown/hard landing from US and/or China/India growth engine. Not to mention we can continue to build up debt at an every increasing rate than our disposable income. (which is physically impossible anyway, unless someone hands free money to you)

 

[Temjin]

Another interesting quote too...

http://www.dailyreckoning.com.au/bush-sees-no-problem-with-waterboarding/2008/02/11/

Capitalism is a moral system, we pointed out yesterday.

In the long run, it pays to save your money…make your investments carefully…work hard and avoid unnecessary spending. Capitalism will reward you. It is a ’system’ that rewards virtue…and punishes lapses of judgment. But there are times when it seems like lapses of judgment pay off. When prices run up – as they did in the housing bubble of ‘97-’07 – you begin to seem like a bit of a fool if you stay out of it. It is as if a wild party was going on down the block…you feel left out if you don’t go. And the people who are having the best time are the people who have let themselves go. They’re drinking hard…and dancing on the tables. They buy houses they can’t afford…and make money when prices rise. They buy subprime debt…and earn higher yields than more solid credits. They speculate on Chinese stocks…and they seem like geniuses.

“C’mon…get with the program,” they say. “Get in the swing of things…buy a new house; just claim that you earn more than you really do…and don’t worry, the appraiser will go along…and you’ll be able to borrow as much as you want. Then, you can ‘take out equity’ just like everyone else.”
The guy who sticks to his principles feels like a hopeless fuddy duddy…a loser and a chump. He saves…and his savings lose value to inflation. He looks for value in the stock market – and can’t find a thing. He drives his old car…and holds on to his old house, while his neighbors splash out.
But then, comes the correction…and he doesn’t look like such a dope after all.

It sounds so true to some of us who stick to the principles.

Always and everywhere, you can do what seems convenient…or you can do what is right. Sometimes it is hard to tell which is which; often it is not.

This is the best part. Everyone do what seems convenient, follow the herd because if everyone say it is the best thing to do, then it must be right. A contrarian would have look at the whole thing objectively and get away from the crowd. Of course, we suffer from not "partying" while the whole ponzi scheme is in intact.

 

[numbercruncher]

What bubble ? Skys the limit

 

[xoa]

What bubble ? Skys the limit


View attachment 18000

LOL! No way man. Australia is unique. The boom will last forever because of immigrants and stuff. BUY!, BUY!, BUY!, before it's too late.

 

[numbercruncher]

I notice squillions of houses coming to market over at realestate.com.au, take a squizz, stacks of them with the little (new) tag in the corner!

Heres an example ....

Investment Plus - Owners want to rent back at $350/wk
$360K
67A MURPHY RD ZILLMERE
Features: Alarm, Flat Contour; Public Transport: Close by; Grounds: Good
Are you looking for a safe and stress free investment? Are you looking to gain a strong rental return on your investment? Look no further, the current owners want to rent back at $350/wk for at least a 12 month period. This property features 3 Bedrooms, 1 bathroom, Modern kitchen, Lock up garage and Carport. Call Johnny Lin today before somone else buys your new imvestment!!!!

Something smells like fear .....

This guy is onto it though, RE permabull pays 360k, he rents back for half of what he will get in Bank Interest on sale proceeeds

 

[professor_frink]

Its really pretty simple, Australian owner occupied realestate has got to potentially be one of the worst investments on the planet currently, especially if your paying it off.

Person renting 350k from bank @ 9pc + rates/ins pays 3k a month.

Person renting 350k house from property speculator pays 1200 a month, investing 1800 diff (22k p/a) @ a very min of 7 p/c return.

After 5 years, renter saving difference has a min of 135k.

Person renting the 350k has made a small dent in mortgage principle and has paid out 180k already. approx 160k is interest.

After this 5 years property "owner" has a property that has cost him 510k, he will need to sell it for 645k just to break even with the renter. Make that 660k, to include realestate sharks commission - I havnt included Duty, loan app fees, conveyancing etc!

Big mistake property gamblers make is using percentages to calculate expected return, its no longer applicable because the numbers have got too large.

Your probably going to get rate rise after rate rise going forward, its only a matter of time until youve got people fleeing the property market if it keeps up. Gen-Y arnt buying this silly RE game, it sounds like the musics stopped but not too many have noticed, yet.

Fairly obvious that your not an accountant

Where did you get your username from? Not much in the way of number crunching going on there!

 

[numbercruncher]

Fairly obvious that your not an accountant

Where did you get your username from? Not much in the way of number crunching going on there!

Obviously I havent worked it out exact, wheres the major error? The renter will have more because I only compounded annually?

 

[robots]

hello,

number I think you're investing stradegy is very sound (renting & investing difference) and have commented on this before,

and the stradegy of owning you're own home is very sound investing as well,

like you and that great stat about 7x earnings I keep getting that stat from the ABS popping into my mind about how home owners are some 6x wealthier than renters (ha ha ha ha), goodluck

explod, the crew I work with have two guys one 22 and one 23 both on 50k/yr doing basic building work and boss desperating wanting more,

thankyou

robots

 

[theasxgorilla]

This is the best part. Everyone do what seems convenient, follow the herd because if everyone say it is the best thing to do, then it must be right. A contrarian would have look at the whole thing objectively and get away from the crowd. Of course, we suffer from not "partying" while the whole ponzi scheme is in intact.

Thanks for bringing us to the heart of the issue. Those on the bear side of this argument seemingly have a vested interest in being right, and prioritise that above being wealthy. What many don't realise is that the doomsdayers who write this doom and gloom scripture like the bozos over at The Daily Reckoning, are probably already wealthy thanks to doing the wrong thing and getting away with it during a previous boom somewhere, sometime. They can afford to sit back and preach about such things. Can you??

ASX.G

 

[Kimosabi]

Thanks for bringing us to the heart of the issue. Those on the bear side of this argument seemingly have a vested interest in being right, and prioritise that above being wealthy. What many don't realise is that the doomsdayers who write this doom and gloom scripture like the bozos over at The Daily Reckoning, are probably already wealthy thanks to doing the wrong thing and getting away with it during a previous boom somewhere, sometime. They can afford to sit back and preach about such things. Can you??

ASX.G

Maybe some of these people are more interested in contributing to the Greater Good, rather than their own selfish ambitions.

Don't you know that every FIAT monetary system throughout history has failed. Our current system is even worse because a FIAT Monetary System based on Debt.

A funny thing with The Daily Reckoning, is all the stuff they have been warning about for years is actually happening, now, as I type this Post...

 

[robots]

hello,

the socialist crew at it,

how about YOU start sharing your money, go down to the local coles and give some bludger the hard earned you now have since paying of the credit card,

it is not the greater good that bludger's get given things, just like it is a disgrace the church charity organisations plan to build/develop affordable housing,

here, go buy smokes, cans, ice, hammer, maryjane and sit around thats okay I got a nice house for you to live in

thankyou

robots

 

[numbercruncher]

lol Robots ,

You really are setting yourself up with all that bad Kharma


Kimo might do just that, hes creaming it this month, 80pc on MAK I notice He might flick some goldies to that guy you refer to that hangs around outside your place looking for handouts