Housing plan to tackle affordability

[DTM]

Kris,

you've run a good argument and made some valid points. Your leaving this forum because you disagree with Tech A or anyone else who has large property portfolios would be a shame because you contribute a point of view that many can identify with. I myself am from a poor background and understand where you're coming from. I also have worked hard for what I have and am working hard to "get ahead" whether it be in the sharemarket, a business or in property. Opportunities abound in this land of ours and I'm sure Tech does put back into the community as anyone else would. His contribution (as well as yours) to this forum has been excellent because he shares his trading knowledge and experience with everyone else on this forum. Its helped me personally and for that I am grateful.

What ever you do, make sure you don't minimise your opportunities just because you disagree with someone. Tech has a lot of things people could learn from because you have to remember, he started with nothing too after going bust. To his credit, he didn't stop trying.

 

[Happy]

People make choices, this was one of them, and I am happy to move on.

Probably similar thing happens in ‘real Australia’, where people cannot accept other people’s way of life…

 

[Rafa]

I do feel sorry for Kris's past based on his childhood life...
Tho there is no way I can sympathise with his current actions...

The reason young people can't buy a house is because they choose to spend their money of consumer goods... flash cars, phones, ipods, etc, etc, travel around the world, etc, etc... it is the choice they make and then they expect others to come and bail them out... RUBBISH!

This is one sorry society if we start blaming our predicament on others. People from most of Asia, India, Africa, Latin America have nett assets of close to ZERO! AND yet in those countries, there are some very very very wealthy people!

But the poor there will always have a smile on their face... and will always invite a visitor in for cup of tea and yarn. And they get on with life and try the best they can to make a living.

In Australia, we can all own a property if we choose to live within our means. But we want to have it all, and even then are not satisfied! That is a sad state of affairs.

Its all about the choices we make... and we are solely responsible for our own decisions. And it is UP TO US to make the best out of our lives!

And for those talking about How Moral is Tech/A... I have a question...

How moral are you who wish interest rates to rise so that ordinary familles struggling to get by are kicked out of their homes... and then you can come in and buy the house off them at the fire sale.... ??? The hypocrisy is amazing!!!

Anyway, thats my rant for the day... sorry about that.

 

[Knobby22]

It is very rare that homeowners default. Even when interest rates were at 17% very few defaulted. The ones that were forced to sell were investors who overreached.

This is good otherwise every house would be owned by an investor and the young would have even more trouble buying a home. the next generation need houses prices to stabilise and fall somewhat so they can enter the market.

I don't want interest rates to rise in the short term but I do think a rise, if warranted by economic conditions, would be helpful to the next generation.
Sorry if I sounded like a bastard, but market forces, like nature will catch the unwary.

 

[Rafa]

I agree completely, market forces will catch those out who have invested un-wisely. And so it should.

I just thought that the moral arguement put forward by some was just simply uncalled for.

 

[Smurf1976]

I can't help but notice that nobody seems to have a convincing reason as to why house prices would rise, apart from a few specific areas, over the next few years.

We have come to point where people will not pay, CAN NOT pay, any more that present prices and indeed many have bought knowing that the only way they can meet repayments over the longer term is with a fall in interest rates. The comment about depending on lower interest rates came from a local real estate agent who added words to the effect of "It's crazy, people borrowing almost 100% of the house price plus the buying costs and borrowing for furniture and they have car loans, credit cards etc too. A lot of these people are going to be in trouble sooner or later. It just can't go on. They're in way over their head with so much debt. I can see a lot of them having to sell in a few years." This agent was based in Hobart's Eastern shore suburbs, a reasonably wealthy area.

Just down the road from where I live an entire new subdivision of 200 or so lots has been almost totally unsellable for around 2 years now. Less than 10% had sold last time I checked and the whole thing has been downgraded in scale, changed agents numerous times and still it doesn't sell. Just like the 10 new villas that were supposedly "nearly all sold" 12 months ago. The bottom line is that 8 are empty right now.

I follow the real estate listings at www.realestate.com.au and it's the same story over and over. They list the house for sale, it sits there and goes from newest listing to oldest and then it gets taken off the market. OK, some do sell but the only quick sales seem to be for those blatantly admitting they're desperate to sell and willing to drop the price. Most just disappear from the listings apparently unsold. Not surprising of course when you consider the 50% or so fall in transaction volumes.

And I listen to the radio too. And it seems that a very large portion of total advertising (mainstream commercial station) is either real estate agents wanting your business or someone wanting to help you work out how to repay your debts. Or sell you more debt.

It may well be booming in Adelaide, Perth and Darwin. But it's gone awfully quiet in Hobart and it's no secret that prices are down in Sydney especially. And they say Sydney leads the nation when it comes to real estate... Gold Coast auctions have become a joke because practically nothing sells. And it's the same overseas too. The UK had the same boom as we did. And they've had the collapse in volume too. And now they have falling prices. Not by much, but falling nonetheless.

I don't doubt that money can still be made in real estate. Buy in the right area, improve the property etc. But for the majority just looking to buy somewhere to live in their local area then, in the Eastern state capitals at least, there doesn't seem to be too much urgency.

Regardless of your own views, I think you ought to read http://www.jenman.com.au/NewsNews1.php?id=9 it's a bit old but still very relevant IMHO.

 

[Rafa]

I don't think anyone can sit here and say house prices are going to keep rising... Nor, to everyone’s credit, has anyone even attempted to say that. I think we all know that for the next few years (5 at least...), if not longer, prices will stagnate, 0% real growth, or maybe even a 10% fall... Should give those not in the market plenty of time to save up, as well as wage growth etc, plenty of time to catch up.

But that doesn't mean one can't make money from property. Just have to be smart about it, find that compelling reason why the particular suburb will grow. Like all things, in the next few years, the dud suburbs will fall by bigger percentages than the blue chip suburbs. If you’re in the business of developing property, then you should still make money provided the business case stacks up.

What it does mean, is that the average joe blow (not you mod! ) won't be able to make money in property. It’s the same like the share market in the last year, pretty much all you had to do was be in the market and you'd make money...!

(tho I still managed to hold a couple of dud stocks that cost me a lot!)

 

[mrfirkin]

Sorry if I sounded like a bastard, but market forces, like nature will catch the unwary.

How true. And one day it will surely catch us all. You can't take it with you. :

 

[tech/a]

I can't help but notice that nobody seems to have a convincing reason as to why house prices would rise, apart from a few specific areas, over the next few years.

In general terms housing will I feel continue in most capital cities (with the exception of Some inner areas of Sydney and Melbourne) to rise albeit it muted. Gone are the days of 50% a year. 3-10% wont be uncommon. A 2% rise in interest rates would put a halt on that as well.

Demand causes prices to rise --sever lack of property will cause sharp rises--as demand is filled prices stabilise. A glut in property availability in areas will cause prices to fall in some cases to increase demand.This is normally bought about by developers rather than the genreral public trying to off load houses they cannot afford---This simply means the developer wont make as much (on those he discounts to encourage interest) but he will have done his numbers and will simply move on.

We have come to point where people will not pay, CAN NOT pay, any more that present prices and indeed many have bought knowing that the only way they can meet repayments over the longer term is with a fall in interest rates.

I think we should be---SOME--.

The comment about depending on lower interest rates came from a local real estate agent who added words to the effect of "It's crazy, people borrowing almost 100% of the house price plus the buying costs and borrowing for furniture and they have car loans, credit cards etc too. A lot of these people are going to be in trouble sooner or later. It just can't go on. They're in way over their head with so much debt. I can see a lot of them having to sell in a few years." This agent was based in Hobart's Eastern shore suburbs, a reasonably wealthy area.

I really think this agent was either GREEN or alarmist.
Lets look at this---100% loan + duties and costs + Borrowing for Furniture + Credit Card/s debt + Car loan/s.
Show me a bank that will loan to this case!! LO DOC loans I here you yell.
Even LO DOC have serviceability criteria and their buffer is 2% on their 8.5%. Simply these people wont get a loan.
BUT SOME DO---Lending insto's have got that covered too--MORTGAGE INSURANCE---Less than 80% down you pay mortgage insurance---simply if you then cant maintain your commitment to the insto and they reposes and fire sell their asset and it comes up short---insurance pays the difference.
Borrowers not financially crucified!!!

Honestly I know a lot of younger people (I went to school with a lot of them!). Those with the huge car and credit debt---DONT WANT A HOUSE--- they want a goodtime--no commitment.(Mind you theyve got it and dont see it!!)Those that do count EVERY CENT. These kids would back away from over commitment like it was the plague!

Just down the road from where I live an entire new subdivision of 200 or so lots has been almost totally unsellable for around 2 years now. Less than 10% had sold last time I checked and the whole thing has been downgraded in scale, changed agents numerous times and still it doesn't sell. Just like the 10 new villas that were supposedly "nearly all sold" 12 months ago. The bottom line is that 8 are empty right now.

A bad developement but this is an investor bleeding not those who are starting out!
I have one comment for the developer--due diligence.

I follow the real estate listings at www.realestate.com.au and it's the same story over and over. They list the house for sale, it sits there and goes from newest listing to oldest and then it gets taken off the market. OK, some do sell but the only quick sales seem to be for those blatantly admitting they're desperate to sell and willing to drop the price.

So do I. I'm not seeing that.(Could be Tassie)I have 3 properies for sale myself--I've sold one at full price although there was offers--The one demolished by theives is now repaired and will be on again next week---but had 20 couples through in the first and only open---the Third is currently under negotiation---very different this one---they want to pay more but not settle for 18 mths.

Most just disappear from the listings apparently unsold.

Could be that they ARE sold and simply removed.

Not surprising of course when you consider the 50% or so fall in transaction volumes.

Maybe the case in Tassie but 50% on the mainland--nah.
I have many contacts in the building industry--many friends.
There is a new buyer around--those with an I/P or so who are selling them up and getting cashed up and building/buying their dream homes---pretty well debt free!
New home approvals while down are no different to pre boom times!!
Hardly catastrophic.

And I listen to the radio too. And it seems that a very large portion of total advertising (mainstream commercial station) is either real estate agents wanting your business or someone wanting to help you work out how to repay your debts. Or sell you more debt.

REALLY.

It may well be booming in Adelaide, Perth and Darwin. But it's gone awfully quiet in Hobart and it's no secret that prices are down in Sydney especially. And they say Sydney leads the nation when it comes to real estate... Gold Coast auctions have become a joke because practically nothing sells. And it's the same overseas too. The UK had the same boom as we did. And they've had the collapse in volume too. And now they have falling prices. Not by much, but falling nonetheless.

OK again lets look at the statement---Adelaide Perth and Darwin arent booming but are steady.This is also the case with parts of every state.
Sydney Melbourne and Adelaide have parts particularly inner suburbia which are coming off a BIT.---demand is lower.Pretty well all auctions are under sold in comparison to the boom years--to be expected.SMART VENDORS wont be intmidated by agents who work like crazy to get vendors to lower their reserve---those that hold out often sell to a bidder at their price AFTER the auction.

S this doesn't mean that they dont sell----maybe Queenslanders have woken up to the greedy AUCTION agents-----Jenman may actually be getting through!!

I don't doubt that money can still be made in real estate. Buy in the right area, improve the property etc. But for the majority just looking to buy somewhere to live in their local area then, in the Eastern state capitals at least, there doesn't seem to be too much urgency.

Its harder to make a quid in R/E but yes it can be done and YOUNG FIRST HOME buyers CAN still buy housing and not be shackled to a bank forever.

You know banks are wonderful.They will lend you 1000's for a very small fee and if your smart enough to increase the value of your property by your own means or by sheer luck in being in the right place at the right time---they wont take a SINGLE CENT of your profit!!---and if its your own place of residence---NOR WILL ANY OTHER INSTITUTION.

Regardless of your own views, I think you ought to read http://www.jenman.com.au/NewsNews1.php?id=9 it's a bit old but still very relevant IMHO

Get a hold of his book
"Dont Sign Anything"---even if you dont own a property this is a MUST for any library---I bought 10 copies and gave 9 away to family and friends---BRILLIANT.

There are many ways to get into the R/E market for first time home buyers.
Moneytree was one here who found a way.
Rafa is on the right track.
My daughters Hostie girlfriend found a great way---wish I'd thought of it and was 25 yrs younger!!

Think outside the square--way out.

Its only YOU that limits YOUR POTENTIAL.

 

[Smurf1976]

I do see both sides of this debate. I would describe myself as moderately bearish on property relative to other assets. I just think that right now there's better money to be made than by buying houses.

Prices might go up a bit, they might go down a bit. But they haven't been going up in Sydney lately, in fact they are going down.

http://www.smh.com.au/news/business/sydney-house-prices-fall/2005/08/22/1124562790666.html

 

[wayneL]

Homebuilder insiders on selling spree
Analysts worry sales may presage downturn after boom

http://www.marketwatch.com/news/sto...5D3-4B97-8623-96A6CFC6C5BF}&siteid=mktw&dist=

BOSTON (MarketWatch) -- A rash of insider selling in recent months at red-hot homebuilders appears reminiscent of a similar trend right before the technology bubble burst in 2000, Merrill Lynch said Monday.

"There has been record insider selling within the last 10 months across a broad range of homebuilding companies despite very few sell ratings by Wall Street analysts and the general perception by investors that the stocks are undervalued," Richard Bernstein, the firm's top strategist, wrote in a note to clients.........................

 

[tech/a]

Smurf/Wayne.

I'm personally selling 3 of my holdings.
Simply to decrease my exposure to Lenders and increase free hold holdings.

I guess its a bit different for me I treat it as a business.It has to be nett profitable.
I agree with Smurf that now is not the time to build a realestate portfolio.
However if you are a young person who wants to get on the train there are ways to do this--- but you need to be outside of the square.

If your overgeared ---and you'll know if you are---Now is the time to mitigate your risk--like I am--Costello has been good to us and the market hasnt come off like a train.

Be wise--not a "Maverick"--( The name I call one of my trusts--hahaha).