House prices to stagnate for 'years'

[theasxgorilla]

They did and do.

Mortgage insurance picks up the difference between what the property is sold for and what the Mortgage is left owing.

Yes, because you and I both know that property price (on the whole) STILL haven't gone down.

 

[wayneL]

Why would they be "feeling the pinch" then? (genuine question)

 

[theasxgorilla]

Why would they be "feeling the pinch" then? (genuine question)

A 500% increase in claims is what the article said. It's a blip on the radar at least. It all comes down to how they've managed the business..."feeling the pinch" were the words used by the journalist.

 

[wayneL]

Good property is never to expensive.There are many good property deals out there. Idiots dont do the numbers.
If I can positively gear for a great passive income return (And I can often right now ) I'll buy. In time (This varies ) I'll also have capital gain.
In 10 yrs Ill have massive return on initial investment.(Not only from Capital gain but passive income relative to initial investment will be staggering.)

This seems to be self contradictory.

You say good property is never too expensive, yet you will buy if the numbers stack up. This implies that if the numbers don't stack up, then the property is too expensive.

NB Please refrain from generic insults like "Idiots don't do the numbers."... Thanks

 

[Lucky]

let me know if you want an example.

Example from personal experience?

 

[tech/a]

Wayne

Good property will have numbers that stack up.

Good meaning I guess (to me right numbers) right numbers it will never be TOO expensive---not to the buyer (me) the rest of the world may disagree.

Lucky.

Yes.
I develop property,among other things.

 

[slooi1]

Wayne

Good property will have numbers that stack up.

Good meaning I guess (to me right numbers) right numbers it will never be TOO expensive---not to the buyer (me) the rest of the world may disagree.

Lucky.

Yes.
I develop property,among other things.

tech/a,
It'd be appreciated if you could provide an example. From my calcs, in order to generate a decent enough return (or offset possible interest rate risk), I'd have to put quite a large % of equity in a purchase.

I compared this to shares, and the numbers came through better for shares.

slooi1

 

[theasxgorilla]

This wise old man, Michael Hudson, seems to suggest in an interview (which you can listen to at his site) that the idea of borrowing money for buying assets to produce an income is a long forgotten myth and that name of the game for the last century or perhaps even longer is about capital gains. In this case you could be neutrally or negatively geared, so long as your getting the capital gains...which is how a great many people run their property investments.

 

[Kimosabi]

Property is a great investment, if you have equity in your property/s and aren't over leveraged.

In the past, this meant putting down a 20% deposit and being able to service the debt from 1 (one) income. There are very good reasons why this

But now we have no-doc, low-doc, 0% down mortgages that are maxed out to the re-payment capacity of two incomes. This has obviously pushed asset prices out to historically low affordability ratios.

Anyone that has accumulated large amounts of debt in the last 5 years is headed for a very bad time unless they can unload the excessive debt burden that they are carrying ASAP.

We are on the verge of hyper-inflationary/hyper-deflationary period which is going to wipe out anyone who is currently holding large amounts of unservicable debt.

Don't believe me, think about the impacts of the following: America is nearly bankrupt and is well on it's way to recession/depression, the American Dollar is on the verge of collapsing, some countries have already started removing their peg against the US dollar because the US dollar peg has been sending Inflation in these countries through the roof. Has anyone thought what happens when the Chinese realised they have been duped by the Americans and basically given away millions of Plasma TV's and trinkets for free and guess who the biggest customer of Chinese goods are, America.

All hell is about to break out and the worst part of this is that the rich bankers of the world engineer the boom to rip off the poor and middle classes in the bust. Rich people don't have debt, they either play with other peoples money or lend money (which they create out of thin air) to the poor/middle classes.

We are in the blink of an eye going to go from never having it so good to never having it so bad.

The people who are really going to get rich in the next cycle are those that don't have debt now.

 

[Mousie]

The people who are really going to get rich in the next cycle are those that don't have debt now.

Couldn't agree more.

Couldn't wait to attend those fire-sales in a few years' time

 

[tech/a]

sloo1 over here.

https://www.aussiestockforums.com/forums/showthread.php?p=167424#post167424

 

[Kimosabi]

Don't these people know that housing prices always go up

ABN fears world housing crash
Daily Mail
11 June 2007

Soaring borrowing costs could spark a housing slump on a 'global scale', investment bank ABN Amro has warned.

Families have taken on 'unsustainably large' mortgages, leaving them vulnerable to the sharp increases in bond yields and official interest rates seen in recent weeks, wrote economist Dominic White.


Britain is one of the most exposed markets thanks to rampant speculation over the past decade, though it is by no means alone.

Claims that shortfalls in the supply of new homes will lead to an inexorable rise in UK property prices in coming decades have 'as much credibility as Britney Spears' latest comeback,' he wrote.

'The decline in global interest rates has now been largely reversed,' White said. 'Rising real interest rates could result in greater economic volatility. I believe this leaves housing markets vulnerable to a correction on a global scale.'

Central banks have raised interest rates to the highest level since 2001 across the 30 members of the Organisation for Economic Cooperation and Development.

Meanwhile yields on government bonds - a key measure for the cost of borrowing - have increased in recent days, sending shockwaves through financial markets.

Although fears for the health of the US housing market have captured headlines, the degree of over-valuation is more 'severe' in Britain, Australia, Spain and Ireland, ABN Amro calculates.

A note by the bank in April found that UK residential property is 50% overvalued, whereas US houses are 25% too expensive.

The research comes ahead of a slew of key data that will expose the health of the British economy.
Among the most significant reports will be official inflation numbers due on Tuesday. Economists expect consumer price growth to ease to 2.5%, but even a larger drop is unlikely to prevent further hikes by the Bank of England.

http://www.thisismoney.co.uk/mortga....html?in_article_id=421199&in_page_id=57&ct=5

 

[robots]

hello,

http://www.tradingroom.com.au/news_research/index.jsp?page=aap_article.jsp&id=136895

looks like things going along well for established property

i think the LPT's that are in the "good" areas will be loving this in the future

fairly clear the economy is being supported on immigration by the looks of it, 1300 people a week to melb, thats around 300 new dwelling or existing, 1300 mouths to feed and so on

thankyou

robots

 

[WaySolid]

Just had a rental increase from $260 to $290 on a unit.

Expecting a hefty valuation increase in less than one year on a Brisbane house shortly.

Going strongly.

 

[theasxgorilla]

Seriously...you can't tell me that the sharemarket is going to go up for 4 consecutive years at the rate of knots that it has and that the wealth effect that that has created would not eventually filter through into property.

Not like '97-'03, but its always seemed like a fairly reasonable join-the-dots conclusion to me.

 

[Flying Fish]

Seriously...you can't tell me that the sharemarket is going to go up for 4 consecutive years at the rate of knots that it has and that the wealth effect that that has created would not eventually filter through into property.

Not like '97-'03, but its always seemed like a fairly reasonable join-the-dots conclusion to me.

ROFLMAO.

 

[wayneL]

Seriously...you can't tell me that the sharemarket is going to go up for 4 consecutive years at the rate of knots that it has and that the wealth effect that that has created would not eventually filter through into property.

Not like '97-'03, but its always seemed like a fairly reasonable join-the-dots conclusion to me.

It is not so much the wealth effect of the share market, as the availability of credit and loose lending standards.

Tightening of credit will put a serious dent in this market as it has in the US and as is starting to happen in the UK.

 

[theasxgorilla]

It is not so much the wealth effect of the share market, as the availability of credit and loose lending standards.

Tightening of credit will put a serious dent in this market as it has in the US and as is starting to happen in the UK.

I see a Labor government as a bigger catalyst for a serious dent than interest rates...interest rates seems to translate to mere dips.

 

[Flying Fish]

It is not so much the wealth effect of the share market, as the availability of credit and loose lending standards.

Tightening of credit will put a serious dent in this market as it has in the US and as is starting to happen in the UK.

great so borrow up till the hilt while you can

 

[wayneL]

I see a Labor government as a bigger catalyst for a serious dent than interest rates...interest rates seems to translate to mere dips.

Not so much interest rates, lending standards.

Ironically, rises in interest rates have resulted in a decrease of lending standards as cash from lower interest rate regimes flood into economies such as OZ, NZ & UK. The banks must get a return on the influx of cash, so throw it at anyone who can steam up a mirror.

Result, muppets overpay for RE.