Well this stupid money is doing just fine.
Where is the smart money these days?
When I bought my properties many friends labelled me as "Stupid".
I've sold a few since and building now---I'm evidently still "Stupid"
Stupid is comfortable so happy to remain and continue on my stupid way.
OK, maybe stupid was a bad word to use, I was referring to the irresponsible lending environment we have been in.
I wasn't calling anyone stupid, except maybe the irresponsible lending institutions and reserve banks who have fueled the Real Estate Bubbles Worldwide by making too much easy money available.
If you've made money through this cycle, good on you, just don't get caught naked when the music stops playing.
Oh Puuullleeeeeeze!!!Id rather be in my position than paralised by FEAR.
Yes, we can certainly relate to this tech/aWhen I bought my properties many friends labelled me as "Stupid".
Sounds like something straight out of a Jamie McIntyre course.Yes, we can certainly relate to this tech/a
Fortunately we managed to help a few of our friends overcome the fear of buying their first investment property.
They have become even better friends now....strange that.
It's considered a great contrarian compliment by me.When I bought my properties many friends labelled me as "Stupid".
I've sold a few since and building now---I'm evidently still "Stupid"
Stupid is comfortable so happy to remain and continue on my stupid way.
Oh Puuullleeeeeeze!!!
An economic decision to not buy RE is not necessarily fear FFS!
That's a lot of assumptions based on zero information. Therefore the blinkers appear to someplace other than you imagined.True its not.
But I'm sure there are many who are not making an economic decision even though they could well be in the position to make one that wouldnt involve the paralising fear of risk which obviously the majority on this thread appear to have.
An economic decision not to buy R/E as a blanket decision IE---period--- or until prices fall---- I would say IS fear based.
Those with blinkers on are in my view not capable of making a balanced economic decision.
A personal decision based upon whatever--- entirely different.
That's a lot of assumptions based on zero information. Therefore the blinkers appear to someplace other than you imagined.
Is the great Australian dream out of reach?
Alison and Bryce Morgan had to give up on their dream rather than borrow hundreds of thousands of dollars to buy a house up to 40 kilometres from their work and friends.
The couple has decided to live in inner-city Windsor as it is convenient and close to where they work and study. Here, they rent a "1 ½"-bedroom home for $320 a week.
In the weeks leading up to Christmas they began looking around the beachside neighbourhoods of St Kilda and Elwood, searching for a place to buy and maybe start a family.
But with a budget on the trimmer side of $300,000 and a dog in need of a yard, the Morgans quickly realised the dream would have to wait a little longer.
"We bit the bullet and decided to move inner-city for the experience, knowing we'd have to pay big rent,"
Mrs Morgan says. "We realised pretty quickly we weren't really in the market for much, and what we could afford we were advised that it was probably not a great investment option anyway, because one-bedrooms are hard to move."
Their experience is part of a worsening social crisis, which is also bad news for business ”” very bad news.
People on typical incomes are struggling more than ever to buy their first home. For others on lower incomes, the situation is even grimmer as they are locked into a vicious cycle of rising rents and the reduced ability to save.
For business, the residential arms of Australia's largest listed developers have reported flat or falling earnings in the recent profit season while the home-building industry continues to face sluggish conditions.
Yet talk of a crisis in something as basic as housing seems crazy in a time of such plenty.
Many Australians have never had it so good with the sharemarket boom, falling unemployment and solid wages growth helping private-sector wealth reach record highs last year.
But it appears not everyone is able to share in the opportunities that abound.
In Victoria, data compiled by BusinessDay shows that the first-home buyer share of Victoria's home loan market has changed dramatically in the past decade.
From 1997 to 2001, first-time buyers made up on average 24.7 per cent of the market. Since 2002 this average has shrunk to 18 per cent as prices boomed. The trend confirms that more people are rethinking their plans.
The Morgans try to look at their situation positively, but the experience has so affected
Mrs Morgan that the idea of home ownership has been shelved indefinitely.
They now say that they are happy with their decision to rent because it gives them greater flexibility.
The decision by many people to rent rather than buy is reflected in rental vacancy rates, which are at 25-year lows, as more people rent for longer because of soaring house prices.
Despite the dip in the March quarter, the median price in Melbourne has risen more than 65 per cent since the end of 1999.
And a closer look at the top suburbs where first-home buyers move ”” Craigieburn, Cranbourne, Pakenham, Berwick and Caroline Springs ”” reveals all bar one recorded price growth over the past year.
Prices in Pakenham grew 10.4 per cent.
The rising prices and downward spiral in the share of first-home buyers is forcing developers across Australia to come up with innovative solutions as they try to maintain a market.
These innovations vary from the obvious ”” smaller homes on smaller blocks of land ”” to the more creative. Late last year, in response to rising interest rates, Stockland offered Melbourne buyers a monthly rebate paid into their bank accounts.
The fall in first-home buyers is exercising the mind of Delfin Lend Lease chief operating officer David Keir. "The thing we find now is that first-home owners are such a small part of our overall mix, they are probably circa 10 to 15 per cent," he says.
So Delfin is increasingly aiming at other parts of the market, such as baby boomers, and offering a wider range of housing types to attract as many buyers as possible.
While Victoria is relatively unaffordable, he says, sales and inquiries in recent months have been good and the situation is better than in Sydney and Perth.
Nationwide, affordability is in the doldrums, with an HIA/Commonwealth Bank survey finding it worse now than when interest rates were 17 per cent.
Keir believes there are two parts to the affordability issue. There are those on middle incomes who are finding it harder to buy in the private market, while people on low incomes need assistance.
His latter point is supported by research from RMIT University's Australian Housing and Urban Research Institute, which has found that housing affordability has plummeted.
The research, based on housing transactions across Melbourne between 1990 and 2003, found that of 57,160 housing transactions in 2003, only 1130, or 2 per cent, would be affordable for someone on a low to average income.
This compares with 13.5 per cent in 1996. The figures are slightly better for units and apartments.
Professor Gavin Wood, who works for the centre and who did the research, says it has created a more segregated society of haves and have-nots.
In a federal election year, the causes of the housing crisis ”” and the suggested solutions ”” have become hotly contested.
Last election the Government's pitch was about economic management and low interest rates.
This time speculation abounds that the Government may do something in next month's budget.
Economists warn against measures such as increasing the $7000 first-home owners grant, saying it would simply push up house prices rather than improve affordability.
ANZ chief economist Saul Eslake thinks it highly likely the Federal Government will release "bad policies" to try to win votes.
Prime Minister John Howard had previously said he would consider increasing rent assistance, but changed his mind. He says that increasing Commonwealth rent assistance would just deal with the symptoms.
The solution is for the states to release more land, which will eventually decrease values and make housing more affordable, he says.
Although Labor has not committed to any proposals yet, its policy platform for last weekend's national conference contains a key part focusing on strategies to improve housing affordability.
These strategies include such possible moves as restructuring the first-home buyers grant to benefit low and middle-income households, shared equity schemes, and increasing rent assistance.
But it is not just the politicians offering solutions. A slew of schemes and proposals from interest groups and lobbyists has emerged in recent times.
One proposal has attracted support from the competing interests of industry, unions and welfare groups.
Under the plan ”” which a coalition of the HIA, ACTU and Australian Council of Social Service is backing ”” state and federal governments would provide incentives to boost the supply of rental homes by up to 15,000 a year.
The point of the plan is to encourage superannuation funds to invest in residential property, with the subsidy flowing directly to the investor rather than the tenant.
In return, rents would be kept well below market rates. The plan aims to boost the supply of homes and to allow more people to reduce their housing costs.
But it is the question of the causes of the housing crisis where much of the debate gets bogged.
Eslake argues the affordability problem has come about because of relatively lower interest rates in recent years, more competition in mortgage markets and rising real incomes that have fuelled borrowing and pushed up prices.
Although buyers' borrowing capacity has more than trebled in the past 15 years, and immigration has risen, there has not been a corresponding increase in housing supply.
Eslake says the Federal Government also needs to have an input through measures such as increased tax incentives and aiming the first-home buyer grants at lower-income earners.
Institute of Public Affairs deregulation unit director Alan Moran thinks it is fundamentally a state issue.
Moran says there is a major misallocation in savings in Australia. "We have created this overpriced asset and we are spending a lot more on it than we should be, and less on other things that are more productive," he says.
The median house price has gone from three times the average income to more than six times the average income in the past 20 years, he says, but not because of lack of land.
"We have got a lot of land in Australia … but it's (state) government decisions on residential urban growth boundaries that has restricted the amount of urban land to growth boundaries," he says.
He says there are three main aspects, and costs, to building a home.
"Firstly there's the cost of virgin land itself," he says. "A block of land is usually less than $1000. Then there's the cost in making sure it's habitable; the power lines, sewerage, the guttering. This usually is about $40,000.
"But over $100,000 is created by scarcity of the land, which governments control. And Melbourne is not the worst by any means."
"In my opinion, it's gobsmackingly obvious that a huge increase in 'home-buying power' was the dominant force behind the big upswing in the average price of Australia's 8 million homes over the past decade or so," he says in a report.
For those struggling to buy, the debate may seem academic, but they can expect to hear much more about the causes and solutions to rising housing costs this election year.
Link
Remarkably, 100sqM in Paris would cost less than 100sqM in Sydney.hello,
remember the title:
house prices to stagnate for "years"
you can pull up what ever crap you like about affordability issues, unethical lending practices, government should do this or that
i would love to live in a 100sqM apartment in Paris too, think someone should help me out?
i think its very evident that prices are not stagnant, around 18mths, their must be another article from the FSU (financial sense university) for the weekend
thankyou
robots
When I bought my properties many friends labelled me as "Stupid".
I've sold a few since and building now---I'm evidently still "Stupid"
Stupid is comfortable so happy to remain and continue on my stupid way.
Remarkably, 100sqM in Paris would cost less than 100sqM in Sydney.
4 beds with a few acres cheaper in Bordeaux than Gerladton.
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