Housing plan to tackle affordability

[money tree]

The only people I see screaming disaster from the rooftops are those who missed or didnt take advantage of any of the last 3 booms.

"So there stand the doomsdayers happy that THEY arent caught up in this looming crash---as they dont have anything to get caught up with!!
How stupid those who invested are!!

You accuse others of being pretentious and continue posting arrogant statements like this.

Housing IS a problem. Your chest-beating attitude of "look at me, I made a fortune, didnt you, wheres the problem?" adds nothing positive to the discussion.

This forum is filled with mostly young people like myself who struggle to afford a house. For an older person to look down and laugh at our predicament is neither helpful nor tolerable.

 

[tech/a]

http://www.homepriceguide.com.au/


This is what I use.

My area still increased 10% last year.
Agree re gearing now is the time to minimise gearing.
I'll let you know how hard it is to sell in the next month or so.
I'm selling a couple of IP's to decrease gearing myself,had 20 through on first open and no complaints about price.---I dont sell through auction.

Tree.
As a financial planner I find it hard to understand why you didnt take part in the property boom? The Three I know didnt either---they ALL looked at my buying as pure lunacy---everyone of them pushing more SUPER. I was in no better position than they were in 1997.

I certaintly feel for younger and particulaly older single mums AND dads who seem to think that its only a dream to own a home.I've made some positive suggestions above-----your additions to these are??

To those who see my comments as self serving or chest beating------- my apologies thats not how it was/is meant.

 

[mit]

NO taxpayer bail outs of failed investors / developers. Those who take the risks should be the same people who profit if it goes well. This is NOT the taxpayer! (Unless the investors were planning on handing all their profits straight to the tax office which I very much doubt.)

There is a term that I like to describe this. It's called "capitalising gains and socialising losses", farmers are notorious for it.

 

[krisbarry]

Well said, Money Tree, I agree with you!

Off to work I go... so I can afford that new house of mine.

I have it on layby (payment plans) at KMART. A pop-up tent!

This way I can pop the tent up and live with mummy and daddy for the rest of my life.

God peoples get over yourselves....we have a crisis out there and people fail to see it!!!!

This will affect millions of people!

 

[money tree]

As a financial planner I find it hard to understand why you didnt take part in the property boom?

Well as I have stated here many times, I got my Diploma in 2003, after the boom.

Secondly, I have always been self-employed and getting a loan is difficult.

here is our story of dissapointment:

In early 2002 we were living in a flat in Top Ryde. One of the top floor flats went on the market. They were asking $200k and I thought it was overpriced. The flat got no offers.

In Dec 2002 we relocated from Sydney to Brisbane. During a holiday in August 2002, we looked in a real estate agents window in Beenleigh. We could not believe our eyes. Our neighbours houses in Top Ryde, Sydney were around $350k. The houses we saw in the window were $30k. Also I remember a 'money' program one night where Paul Clitheroe was talking to people who got ripped off on QLD property. They apparently paid $120k for houses that were actually worth $60k. I thought to myself "friggin hell, only $60k for a house?!" At that point we discussed moving up. I argued that although QLD salaries were about 20% lower, the tax system was based on Sydney salaries
and QLD houses were cheaper so less was proportionately spent on tax and mortgage. This meant our disposable income would be higher. And we got a better lifestyle.

Well it took us about 4 months to tie up loose ends and move to QLD. As we were leaving the flat upstairs sold for $287k. A little depressing. When we got to QLD we rented a house for $200 a week. We found out the owner just paid $220k for it. We knew the QLD boom was starting to take off and wanted to buy. Because we did not have stable employment, we could not get a loan. We watched as prices rocketed.

At the end of our 12 month lease (Dec 2003) the owner said rent was going up to $350 a week. I was shocked and asked why such a large increase. The agent said the property was now worth $350k and as such a higher rent was justified. More than a little depressing. Had we taken both opportunities when presented we would be about $200k better off......

 

[Bloveld]

Efficiency leads to redundancy.

old jungle saying

 

[Hanrahan]

There is a term that I like to describe this. It's called "capitalising gains and socialising losses", farmers are notorious for it.

Love it! Can I have it?

You're right, farmers are the ultimate socialists.

 

[mit]

Go ahead, I think it came from Paul Krugman talking about capitalists in America

MIT

 

[Hanrahan]

Tree.
As a financial planner I find it hard to understand why you didnt take part in the property boom?

Tachy; You should refrain from such personal comments. The four years from '00-'04 were unprecedented in my lifetime (I suspect I'm older than you) with respest to cap gain on property. In fact, I have two stories of long term owerners of property, one with an absolute, beach front, dress circle, quality home in a provincial city and another with a Syd suburban 3br br ven house, in neither case did the estates share the spoils. One had very little absolute gain, the other less than inflation over the 50 yrs they were owned.

Being bold is great but not always profitable. For pilots it can be even worse.

 

[tech/a]

Hanrahan.

You maybe older,if you are my condolenses.Truth is that most people fail to save at all let alone in line with inflation.My first home cost the princley sum of $19,900 dumbest thing I did was sell it for $39,000--should have rented it and bought the other home,in hindsite i could have done that.
Today the same house is worth over $300K 27 yrs later.
Has nothing to do with being bold (Is that really how you see it?) and everything to do with being systematic with the numbers you are working with.As a pilot you'll understand that.

Kris

Its obvious you havent been in this position before,I have and worse.
Short story
Its in the eighties I'm in my 20's and I own commercial realestate lots of it.
A few of us were.We knew that higher rent roll===better sale prices.We'd buy them then give 6 mths rent to un tennented properies then lease for as long as we could get.Then we would sell.Fantastic we doubled initial outlay on many properties.So we bought MORE.Interest rates rose to 12% then 15% and finally 18.5%---businesses--small ones were going to the wall---we couldnt rent space--our own businesses couldnt pay the interest bill---so the bank did something really intelligent---they added another 6% penalty interest, on top of that which we couldnt pay already.24.5%!!!!

If ever you or anyone needs to get out of a bind like that call me---seriously.

But people were losing their homes left right and center---their employers were going out of business--interest rates were higher than ever.Mortagee sales were everywhere,courts were choking with bankruptcy's.

Those that are over stretched now are those who were late and are over geared--they are a large MINORITY.There are 100s of babyboomers like me who are now cashing up and gearing very low--If interest goes to 12% and property drops 30% I wont give a hoot---because Ive been there before and I wont EVER be in the same dumb ass position ever again.

You want to talk about the greatest tradgedy of all in years to come then talk
SUPERANUATION Forget about knocking those of us who are taking care of their financial security and start PANNICKING cause your super and that of many like you wont even scratch the surface of your financial needs.

Even the Governments pannicking----"Give them self managed superfunds for god's sake so we cant be blamed for insisting on professionals to take care of it-----theres a chance there wont be enough there!!!!!!"

Tree.

I do understand how hard it is --I've been there---hindsite is only benificial if you take heed of it in the future.My financial adviser friends---older than yourself--to this day---can identify an opportunity but do you think they will take one???----not in your life!!! So they stay advisors working on theory---and working for people who they wished they could emulate---Their clients dont know the truth--they see the facade.

Now can you see why I have such a low opinion of Financial advisors!?

Knock me if you like but if and when anyone wants to talk to someone who has been there done that for FREE and wants an opinion(My opinion) from EXPERIENCE then call me------it aint that hard wether your 17 or 70.

 

[Smurf1976]

Just contemplate for a moment what happens if we go back to 1980's interest rate levels.

Don't think it's likely? Neither did those who borrowed in the 80's.

"Permanently low interest rates" justifying sky high house prices sounds a lot like the invention of the internet justifying paying a fortune to invest in anything .com did in 1999.

Just a matter of time.

 

[tech/a]

Just contemplate for a moment what happens if we go back to 1980's interest rate levels.

Don't think it's likely? Neither did those who borrowed in the 80's.

"Permanently low interest rates" justifying sky high house prices sounds a lot like the invention of the internet justifying paying a fortune to invest in anything .com did in 1999.

Just a matter of time.

Smurf.
Frankly its a crying shame if people DIDNT take advantage of the lowest interest rates in 30 yrs!!

Yes of course it will return to the mean but seriously there is a vast difference to USING the opportunities that present themselves and watching them go by due to fear of an uncertain future.

OPPORTUNITIES are just that---they decay with time----those at risk NOW from overgearing wernt taking advantage of an opportunity---it had/has in most cases passed!

 

[krisbarry]

Interest rates rose to 12% then 15% and finally 18.5%.

Your missing the point, yet again. Low interest rates now are the same as having cheaper housing and higher interest rates as was the case in the 80's. You cannot use that line to defend your position.

The key issue is wages, which defines the capacity to borrow money and repay loans.

Housing prices have increased so much over the past 4 years that it has not kept up with wage levels and hence excludes more and more people from being accepted for house loans.

So you can beat your chest and proclaim that you have made it in the property market and for that I commend you. I also commend you for your valuable experience. But I must also add that it is a very different world out there now, to the one you were growing up in.

Spare a thought for those that are about to embark on this venture too.

As with University it was free in the 80's now it cost considerably amounts of money. The choice for the young who do not get accepted for a HECS full fee paying course will be to put Uni. on hold to buy a house or forced to pay upfront fees. Courses can run for at least 6 years and cost well over $250,000 (fees only). These students will only ever have one option or the other.

So things are very different now!

 

[Smurf1976]

OPPORTUNITIES are just that---they decay with time----those at risk NOW from overgearing wernt taking advantage of an opportunity---it had/has in most cases passed!

That's exactly my point. The opportunity has passed and if anyone wants to invest in real estate then in my opinion now is not the time to do it, especially not if it involves a mortgage greater than 100% of the purchase price as is now often the case.

It would make far more sense to rent for now if you don't already own property and invest in something else where the opportunity for growth hasn't just passed by.

There's always a bull market somewhere but right now I don't expect it to be in Australian residential real estate. I could, of course, be wrong but given the recent steep price rises followed by a collapse in sales volume the onus of proof is on the bulls as far as I am concerned.

 

[tech/a]

Kris

I'm in the process of compiling some research with regard to your arguement.
I'd just like to be clear on what that is.

I delieve your saying house affordability is now further than ever from the reach of the Average Australian.

I'm also very aware of HEX fees my son (Kris) is doing his Masters in Physics at Adelaide Uni now with prospects of his doctorate.Kris isnt motivated by money just an insatiable urge discover---his time for financial security will come.

Smurf.
While the opportunity to profit immediately may have passed to the average buyer---with sound planning people still can purchase a home in my veiw--- even if its their first.

There are STILL opportunities out there Smurf----I bought one 2 mths ago.

 

[krisbarry]

Another key factor is the emerging trend towards causal/temporary/agency style employment in the workforce, something frowned upon buy major banks and finical lenders, when applying for home loans. More than 25% of the workforce are now in this category and this is growing at an alarming rate.

 

[krisbarry]

Tightening of the mortgage belt.

The Australian dream of home ownership crushed

http://www.cpa.org.au/garchve03/1167housing.html

 

[tech/a]

Kris.

I see you have no interest.
Fine.
Hope your requests fall on more sympathetic ears.

 

[tech/a]

Seems the Reserve Bank has a similar opinion to mine on SOME housing issues.

On casual labour.
I have many fulltime employees.----No partime or casual.
Now the latest "Brain wave" from the Industrial Relations Board is to give men 2 months maternity leave and you can take 10 days leave to look after sick family.

I have 2 guys that will take that option and ALL will use up the 10 days family care.
Do you know what that actually costs a company!!
You know who ultimately pays---you and me Joe Public

Part time and Casual labour---hmmm I wonder why.

I see many here driving on a one way freeway and they are blisfully unaware that there are other freeways! All going to the same place.

 

[krisbarry]

On casual labour.
I have many fulltime employees.----No partime or casual.
Now the latest "Brain wave" from the Industrial Relations Board is to give men 2 months maternity leave and you can take 10 days leave to look after sick family.

I have 2 guys that will take that option and ALL will use up the 10 days family care.
Do you know what that actually costs a company!!
You know who ultimately pays---you and me Joe Public

Part time and Casual labour---hmmm I wonder why.

I think its fair.... Women have entered the workforce at such a fast rate that it has left very little options for men than too take up the slack. Men should be given equal rights to look after their children too.

Business is business mate, and we are not all robots. Life happens...and S**t happens too.

The governement aint interested in building child care centres so the community (business' too) need to take some responsibilty in factoring in family commitments.

Gone are the days Tech/a you arrived home from work to find dinner on the table and a family gathered around. Now days its mummy and daddy at work till late in the evening, the child at home alone, spinning a micro meal in the microwave and sitting down to eat it in front of the TV watchin' the Simpsons.

Yes times have a changed. Best not to fight it mate!