House prices to stagnate for 'years'

[money tree]

whats funny is.......

all you guys acting like financial experts, yet the best investment you can come up with is cash yielding 6%? pfft

 

[numbercruncher]

whats funny is.......

all you guys acting like financial experts, yet the best investment you can come up with is cash yielding 6%? pfft

Erm that was a demonstration that cash is better for retirees and infact better than houses in the current climate.


Infact you tell us what is better say for someone 10 years off retirement a property returning 3 to 4pc at the top of a housing boom or 500k in a super fund paying 15pc tax only ? what advice would you give your mother ?

 

[Kimosabi]

haha it seems to be getting so desperate in the US that theyve even found a silver lining .....




Woo Hoo so you lost 100k after fees but dont worry, youll save your self 750 on Tax!! lol clutching at straws anyone ?

I don't know where you got this information, must be false, didn't they teach you in pre-primary, Property prices never go down...

Mind you, I did learn a lot about bubbles in pre-primary, and you know what, they all went POP!!!

 

[wayneL]

hello,

is the bust actually here yet?

let me know the day it starts

goodluck

thankyou

robots

Yes actually, it is. You just don't know it yet. The nuke has gone off, it just takes time for the shock-wave to travel.

Stay tuned

 

[The Red Baron]

Kachiinnnggg....another rate rise on the way.

Glad I applied for another 3 credit cards and bought 40 Ipods just to raise the inflationary pressures

Did someone say housing crash...yep I can feel it in my bones

The first interest rate rise is just a little left jab.. i've got a feeling the second could be a big uppercut.. if we go a third.. knockout.

 

[robots]

hello,

there were 3 last year what an affect that had

.75% increase

where's the bust wayne?

thankyou

robots

 

[wayneL]

hello,

there were 3 last year what an affect that had

.75% increase

where's the bust wayne?

thankyou

robots

That wasn't the bust.

If you can't see it now (one must have a global perspective) you will see it in retrospect. There will be attempts by central banks to avert it, which may draw it out and may even cause some more price rises in certain areas (and make it ultimately worse) but it's on.

Keep some powder dry folks.

 

[robots]

Yes actually, it is. You just don't know it yet. The nuke has gone off, it just takes time for the shock-wave to travel.

Stay tuned

hello,

where? where has the nuke hit

thankyou

robots

 

[wayneL]

hello,

where? where has the nuke hit

thankyou

robots

The US sub-prime apocalypse is the point of impact, as detailed in this thread. Shock-waves spreading....

Overleveraged muppets should take cover.

 

[numbercruncher]

"The Federal Reserve has flooded the market with money, and that money has been chasing returns. Housing has been the “hot” asset class, creating an unsustainable bubble. When that bursts, it will be a lot worse than the tech stock bubble, because it actually hits people right at home.”
-2008 Presidential Candidate, Ron Paul



Wow now even presidental candidates know whats goin on and publicly saying so, whatll happen next!

 

[wayneL]

"The Federal Reserve has flooded the market with money, and that money has been chasing returns. Housing has been the “hot” asset class, creating an unsustainable bubble. When that bursts, it will be a lot worse than the tech stock bubble, because it actually hits people right at home.”
-2008 Presidential Candidate, Ron Paul



Wow now even presidental candidates know whats goin on and publicly saying so, whatll happen next!

This is a shocking development!! An honest politician??? lol

Joking aside, Ron Paul is a very honest man. One of the minority (a very sizable one mind) of "good" Americans. Unfortunately telling the truth doesn't win elections.

 

[Judd]

An interesting article from The Times

http://business.timesonline.co.uk/t.../construction_and_property/article1599721.ece

April 2, 2007
Greed could bring America’s housing sector to grief
Gary Duncan, Economic view

For hundreds of thousands of Americans, it is a personal financial disaster. For the wider US economy, it is a growing economic shock with an increasing potential to inflict severe repercussions on the nation’s prospects and prosperity.

The deepening scandal of the US “sub-prime” mortgage implosion looks more and more like a cautionary tale of financial excess that sits unhappily alongside Enron and the dot-com bubble, both in terms of scale and consequences.

It is story of Dickensian bleakness: of avaricious money-merchants and of the broken dreams of struggling but foolhardy men and women who seized on false promises of an easy leg up the ladder of their own aspirations.

To much of the United States, and most of us in Britain, “sub-prime” lending is another country of which we know little. Yet for millions of America’s poor, it is a financial trend that has turned from seeming salvation to curse in five or six short years.

Viewed in hindsight, the debacle that is now unfolding was, like many such events, an obvious accident waiting to happen.

Around the turn of the decade, as the US housing boom accelerated, a large group of greedy American lending institutions became so rashly intent on maintaining the growth of their loan books at all costs that they began to hand out mortgages to borrowers with varying combinations of poor credit history, no steady source of income and little or no collateral.

As lending criteria grew more and more relaxed, the risks associated with this reckless “sub-prime” lending escalated, with vulnerable borrowers being given access to loans for 100 per cent of property values and high multiples of their incomes. And, just as soaring house prices meant that more people had to resort to such sub-prime loans, so sub-prime lending itself gave more fuel to the property boom.

Two factors turned this trend into a train wreck. First, the vast bulk of sub-prime loans were adjustable rate mortgages, or “Arms”. While these start out at enticing, discounted rates, interest payments jump when such inducements expire.

Now payments on many of these loans are being reset, at a time when official US interest rates are much higher, having been lifted from historic lows of 1 per cent in 2003 and 2004 to more than 5 per cent now.

The result is that borrowers cannot meet repayments, so that mortgage arrears and defaults on sub-prime loans are surging. In turn, more than 30 mortgage lenders have shut up shop since last year. For borrowers and lenders, this was an Arms race on a road to financial destruction.

The second factor makes the picture still worse. For many sub-prime borrowers, these financial horrors have been compounded by seeing their repayments leap just as the US housing market boom hit the buffers. Tens of thousands who were already struggling to service their loans had resorted to refinancing, taking on still more debt at disadvantageous terms. But with falling house prices in some areas now pushing these overstretched people into negative equity, the lenders’ doors are barred. Repossessions and forced sales of homes are rising sharply.

It is plain that the social consequences of all of this are as grim as they are scandalous. Yet many US analysts appear excessively relaxed about the wider fallout for a slowing American economy, arguing that the scale of the sub-prime market means that any spillover effects will be slight.

This looks about as complacent as the thoughtless lenders who are now going to the wall. Not only is it clear that the sub-prime crisis is going to get a whole lot worse before it runs its course, but the potential for a domino effect hitting large parts of the United States’s housing market, and the wider economy, looks rather greater.

The sub-prime market mushroomed over the past five years, so that by last year it accounted for almost a quarter of new mortgages, worth about $665 billion. That’s up from 10 per cent of loans, worth some $200 billion, in 2001.

Analysis by Paul Dales, of Capital Economics, notes that the percentage of sub-prime mortgages now in persistent arrears has climbed to more than 13 per cent, from 10.3 per cent at the end of 2004, while default rates have risen to 4.5 per cent of sub-prime loans. As Mr Dales suggests, arrears and defaults are likely to climb more steeply, as many sub-prime mortgages have yet to reset to higher interest-rate levels. And the problems will almost certainly be compounded by weakening economic conditions, as well as falling house prices in some regions that will push more borrowers into the trap of negative equity.

The threat of wider, knock-on consequences will then escalate if forced auctions of repossessed homes drive up the supply of houses for sale just as housing demand is curtailed both by a faltering economy and (inevitably) the greatly reduced availability of sub-prime loans.

An excess of property and a drop in demand will put more downward pressure on US house prices, deepening the slump in the property market. In turn, the impact could then be felt on consumer demand, since American homeowners have for years relied on cashing in on the previously rising value of their homes to finance their high-spending habits.

Sanguine observers believe that the sub-prime market is too small to have such a big impact. But Capital’s analysis highlights a detailed study by the US Centre for Responsible Lending which estimates that 20 per cent of sub-prime mortgages made in the past two years could end in defaults ”” meaning an extra 600,000 US homes could be put up for sale: a rise of 15 per cent compared with the total size of the market in January.

Factoring in lower demand, in the event of sub-prime loans completely drying up, Mr Dales calculates that ”” in a possible worst-case scenario ”” the sub-prime meltdown could end up with ten months’ supply of homes on the US property market, up from about six months’ supply now: enough to trigger significant price drops.

Even if things do not get quite this bad, what is increasingly clear is that the parable of the sub-prime lender is not one that will have a happy ending.

End

And also recognize that a number of these "sub-prime" loans were bundled up in CDO's and sold as AA+ products. Now that's what I call financial engineering!

 

[numbercruncher]

Moody investor report says Mortgage delinquencies Hit record high in Australia for December!

Mortgage delinquencies - late payments - reached a historic high in December, the agency's review of residential mortgage-backed securities shows. "With the deflation of the housing bubble and higher interest rates, [an] increasing number of borrowers are running into financial difficulties as reflected by the delinquency numbers," the report says.


http://www.smh.com.au/news/national...pain-in-suburbs/2007/03/08/1173166897908.html

Two more Interest rate rises should be just enough to nail it hey? If the US implodes maybe we wont even need that!

Also Interesting in the same article is CBA saying this .....

Commonwealth Bank, the nation's biggest home lender, said late last year it would lose a relatively insignificant $299.4 million from a lending book of $154 billion if property prices collapsed by 30 per cent and there was a sixfold increase in the probability of default.

 

[robots]

hello,

sorry which part of AUS has crashed?

what have they dropped by 10% 20% 30%?

oh it hasnt happened yet, oh okay will sit tight, oh what got to wait 5yrs

buy quality

quality shares quality property

get it

goodluck

thankyou

robots

thankyou

 

[wayneL]

hello,

sorry which part of AUS has crashed?

what have they dropped by 10% 20% 30%?

oh it hasnt happened yet, oh okay will sit tight, oh what got to wait 5yrs

buy quality

quality shares quality property

get it

goodluck

thankyou

robots

thankyou

Agree, buy quality, but with a qualifier, i.e. "at value".

A very basic investing premise. I have some property bought at value. I will not be buying more until value returns.

Get it? Good!

Forgive me for my observation that your posts are based on previous performance. This can be a grievous mistake. However if you bought at value previously you will be fine, as stated before.

It is overleveraged muppets in any market, whether quality or crap, who will crash and burn.

It is already happening. Defaults are skyrocketing even in Oz. Fact.

 

[robots]

hello,

dont ignore the first few statements

sorry which suburb has crashed?

thankyou

robots

 

[wayneL]

hello,

dont ignore the first few statements

sorry which suburb has crashed?

thankyou

robots

:sleeping: We've been through this before. Please review this thread.

 

[robots]

hello,

all I have been claiming is that quality property is solid at the moment, hasnt stagnated but in fact increased

I havent "forecast" any direction for property unlike others (check my posts)

time in the market, yeah I am a strong believer for that

whats cheap today is dear tommorrow, who knows

got to be in it to win it

goodluck

thankyou
robots

 

[Freeballinginawetsuit]

Its all relative really............business's or property. One has to admit, credit aside thier is quite a lot of 'real' liquidity around ATM.

I have to agree with Wayne though, speculation always overshoots the mark within the cycles, thats why the mean is always so relative over time...........a two finger job with maybe the pinky thrown in . Timing is everything and making the most of it, the stockmarket being so liquid enables this...........with real estate its a bit more painful.

ATM I still think 'stones throw' coastal RE in Perth is cheap, relative to its demand base and liquidity . As for investment properties, the returns are ****e and the forward view of capital growth is even worse.
Its a no brainer really as an investment or new entry for the first timer.

 

[numbercruncher]

But whats your definition of Quality Realestate ?

Million dollar homes within 10km of cbd i guess? That isnt helping Joe Blow much whose mortgaged 400k home in the back blocks is going to get nailed!


Realestate price growth relys on overall economic growth, nothing seems to point towards the growth weve seen in the last decade, Global Warming for example is becoming a huge Issue and stopping that isnt consistant with economic growth ..... Only thing keeping us humming is Chinas insatible resource demand, if that slows or worse, what then ?

This whole stack of cards is wavering on the Economies of the US and China, IMHO.

Good Luck