I can afford a house

[wayneL]

Well no solutions yet.

No different to when I bought my first house earning $26/week.
Same scenario different yet similar numbers.
Same warnings,same waiting for a drop in prices,more concern about interest rates and affordability (Thats yet to come).

If you want to own a property or 2 then do something about it.
If you dont----stop whinging about why everything in the world makes it impossible for you to do so.

(sigh)

We've been through this so many times, yet you default to the same logical fallacies.

***Look to other anglo housing markets to see what is happening.

This has been discussed ad naseum... enough for people to do their own research. If you want to buy now, do it.

As far as I'm concerned, things are starting to happen as I suspected (with Oz lagging), and I'll just be waiting to see how it plays out. No more exercises in futility for me.

Ciao

 

[theasxgorilla]

As far as I'm concerned, things are starting to happen as I suspected (with Oz lagging), and I'll just be waiting to see how it plays out. No more exercises in futility for me.

I agree that the worlds financial economy is screwed at some point off into the future. But Aust doesn't lag IMO, it leads. While other economies based on R&D and manufacture and information technology are having their profits eroded away due to increasing competition from abroad, the Australian economy has seen the value of it's product grow and grow and grow. And the barriers to entry for a commodities based economy like ours are about as good as they get...you get my drift?

If China goes all Keynesian on us during some form of financial crisis and the government steps in and turns production inward then demand could remain and resource based economies like Aust and Canada and Norway will weather the difficulties better than places like the US and the UK and Germany.

Australia is about the best place to be looking forward...and the goverment is planning even more tax cuts.

 

[robots]

hello,

yeah great stuff wayne,

it keeps going around because many want to get it, but not an average RE , people WANT a penthouse in the sky or acreage 5km out of a capital city

no affordability issue, so a couple on say 90-100k/pa cant buy a house or unit?

of course they can, people are deluded

save hard, work hard the best solution, the handout crew wouldnt except that

people should be given incentives to save, similar to gov co-contribution if choose purchase RE

couple of thoughts

thankyou

robots

 

[Flying Fish]

I agree that the worlds financial economy is screwed at some point off into the future. But Aust doesn't lag IMO, it leads. While other economies based on R&D and manufacture and information technology are having their profits eroded away due to increasing competition from abroad, the Australian economy has seen the value of it's product grow and grow and grow. And the barriers to entry for a commodities based economy like ours are about as good as they get...you get my drift?

If China goes all Keynesian on us during some form of financial crisis and the government steps in and turns production inward then demand could remain and resource based economies like Aust and Canada and Norway will weather the difficulties better than places like the US and the UK and Germany.

Australia is about the best place to be looking forward...and the goverment is planning even more tax cuts.

I think wayne was referring to the housing market lagging behind the rest of the world with frespect to a drop in houses.

 

[theasxgorilla]

I think wayne was referring to the housing market lagging behind the rest of the world with frespect to a drop in houses.

I'm sure he was...but its all connected. Why should Aust house prices fall because other parts of the world fall when the fundamental product we sell here is going up and up and up and price? Taxes continue to fall and the currency is strong...shouldn't residing in such a country command a premium???

 

[tech/a]

I'm sure he was...but its all connected. Why should Aust house prices fall because other parts of the world fall when the fundamental product we sell here is going up and up and up and price? Taxes continue to fall and the currency is strong...shouldn't residing in such a country command a premium???

Exactly.
Your at the station waiting for the train which is on a one way track a couple of stations in front of you.

People have been waiting for pricing to be "More affordable" for Decades.

There is to me ONE RULE.
When its cheaper to buy established housing/Commercial/Industrial R/E than it is to buy a block and Build it---then buy your heart out.
If not then buy for lifestyle NOT INVESTMENT.

There you go a PRACTICAL input into a benign discussion.

(Hey just used the ASF Spell check---Brilliant!)

 

[Knobby22]

The "Other" poster,Baen is one of the most negative I've seen post here.

I dont pussy foot around in life,people know exactly where they and I stand on any issue.

Bean and a few others here need a wake up call.
If you wish to support whinging/whinning and negativity go right ahead.

I make no apologie to the Beans of the world.

You've one shot at life.
Understand that only YOU can stuff it up or make it the best it can be.

People forget how well they're off,they have no idea there place in life on the planet.I dont care how badly off they "THINK" they are there is ALWAYS someone worse off.

This sort of post



Has no direction. Post it sure but give/suggest SOLUTIONS.
Like some of my employees,eager and ready to point out issues and problems and promptly leave them to someone else to solve.

There are those who add to society and those that subtract.

The solutions to helping the younger generations by getting property supply rising and allowing families to buy a home which are increasingly owned by investors is obvious...unfortunately there are no votes in it.

Negative gearing and depreciation claims should only apply for new properties (built off the plan).

The government should be building more low cost accomodation near transport infrastructure and should be building this infrastructure to a much higher level.

This would get the housing built and ensure investors invest productively to help the country.

However these would temporarily lower property prices by maybe 5-10%, therefore no politician will have the guts to face up to the property people who will kick up a stink - e.g. spruikers (real estate agents) and heavily geared investors.

Tech/a would probably approve as he is a builder but someone like Julie would probably not and vote liberal to stop it. (I can only see Labor doing it and then only with amazement).

 

[Julia]

The solutions to helping the younger generations by getting property supply rising and allowing families to buy a home which are increasingly owned by investors is obvious...unfortunately there are no votes in it.

Negative gearing and depreciation claims should only apply for new properties (built off the plan).

The government should be building more low cost accomodation near transport infrastructure and should be building this infrastructure to a much higher level.

This would get the housing built and ensure investors invest productively to help the country.

However these would temporarily lower property prices by maybe 5-10%, therefore no politician will have the guts to face up to the property people who will kick up a stink - e.g. spruikers (real estate agents) and heavily geared investors.

Tech/a would probably approve as he is a builder but someone like Julie would probably not and vote liberal to stop it. (I can only see Labor doing it and then only with amazement).

Knobby, I don't think we have a "Julie", so I assume you mean me, Julia, with the above statement?
Perhaps you could explain why you think I would be against the provision of cheaper housing to accommodate people who are currently finding it difficult to get into their own homes.
On the contrary, I would be completely in favour of this happening and find your assertion a bit insulting. It so happens I spend many hours of unpaid time assisting people in the category you are talking about via several different community programmes and probably have a greater appreciation than most people of how difficult some of their lives are. Just one example: for years I have lobbied my local MP for subsidised accommodation for people with a mental illness, ditto women escaping domestic violence, so that these folk are not forced to seek accommodation in miserable caravan parks where they are subject to more abuse.

I've also clearly stated on more than one occasion that I don't like the idea of tax cuts and would much prefer this money be spent on infrastructure which would promote social cohesion rather than exacerbate the current "I'm all right, Jack, so I don't give a **** about you".

So, if you could let me know where I've indicated that I would be against providing low cost housing, then I'd welcome the opportunity to set the record straight.

Julia

 

[nizar]

People have been waiting for pricing to be "More affordable" for Decades.

Though generally I agree with you, I read an article some time ago, that, as a multiple of annual income, median house prices are more expensive in Sydney now than they have ever been.

I also read that Australia, using the above ratio, has the worst housing affordability in all of the developed world.

No source though. Maybe others have read or heard the same.

 

[krisbarry]

Yep it is true, since records started being kept in the mid 80's, all evidence points towards 2007 being the most unafordable time to buy a house in Australia. Both locally, nationally and on a global scale, Australia is the pits!

Comparing average levels of wealth, average jobs, average suburbs, average house prices etc.

One suburb in Adelaide (the city of Hindmarsh) you need 11 X the average hindmarsh salary to buy a house in that same suburb. Believe you me, the city of Hindmarsh, although close to the city is the pits to live in. Its a flat ugly suburb.

 

[krisbarry]

But hey I am not allowed to complain anymore, cause it goes against my psycholigical well-being.

I CAN AFFORD A HOUSE....I will keep telling myself that

 

[Flying Fish]

Exactly.
Your at the station waiting for the train which is on a one way track a couple of stations in front of you.

People have been waiting for pricing to be "More affordable" for Decades.

There is to me ONE RULE.
When its cheaper to buy established housing/Commercial/Industrial R/E than it is to buy a block and Build it---then buy your heart out.
If not then buy for lifestyle NOT INVESTMENT.

There you go a PRACTICAL input into a benign discussion.

(Hey just used the ASF Spell check---Brilliant!)

Decades? I don't really thing so, a few years maybe. Plenty of affordable housing around in the 90's and lots of people got into realestate.
I undesratnd what you say about sitting around idly, but I reckon a window of opportunity is fast approaching for those that have been patient and prudent and not been sucked in by all the media hype and scare tactics. Time will tell though......

 

[krisbarry]

Complaining about something, solves nothing....the end result of complaining is that nothing gets solved anyway. Whinging and whining actually adds to the problem and causes internal and external grief. Which in turn feeds more anxiety, more fear, and more problems, and solves nothing to getting the result at which you wanted to achieve in the first place.

I am with Tech/a all the way, get out there solve the problem yourself. Find a way into the market. No matter how wierd or wacky it may be.

I know that I am doing the right thing, as so many people are passing judgement on me for doing the wrong thing. That means I am succeding!

Here is to wealth building, in whatever way, shape, or form!

 

[Flying Fish]

Actually come to think of it, a good yacht costs about 150K. Lots more fun and you can up anchor anytime you like lol

 

[nizar]

Actually come to think of it, a good yacht costs about 150K. Lots more fun and you can up anchor anytime you like lol

LOL i don't know about your standards but you don't get much in a boat even for 700k

 

[nioka]

LOL i don't know about your standards but you don't get much in a boat even for 700k

It would depend on whether or not you are a "boatie" or a "yachtie". There are plenty of good yachts for less than $100,000. Then there are house boats.

 

[theasxgorilla]

There is to me ONE RULE.
When its cheaper to buy established housing/Commercial/Industrial R/E than it is to buy a block and Build it---then buy your heart out.
If not then buy for lifestyle NOT INVESTMENT.

I buy for both! Such is the delight of renovating beach side property in well-to-do areas!

 

[BIG BWACULL]

It would depend on whether or not you are a "boatie" or a "yachtie". There are plenty of good yachts for less than $100,000. Then there are house boats.

This in the trading post
Roberts Adventure 25 Fibreglass Sloop Popular Roberts Adventure 25ft Sloop, full fibreglass construction. 10hp Vetus diesel motor, rollerfurl genoa and good mainsail. Sleeps 4 in forward vee berth and 2 quarter berths. Wheel steer, all controls lead to cockpit. 2 burner spirit stove, 12v fridge/freezer plus icebox. Autopilot, sounder and new GPS chartplotter. Beautifully equipped and is a great single family yacht that can be sailed easily single handed. Has cruised to Whitsundays and to Tasmania., VGC $28000
Beggers cant be choosers :

 

[greenfs]

Following is a MUST READ report issued by Plan Australia a wholly owned subsidiary of Challenger Group, prepared and presented by its MD Alex Moulieris...

Each month we aim to update you on new projects, important information and any current industry issues, which we feel will be of interest and relevance to you.

This month's article focuses on the current financial market melt down - how and why it has happened and what it means for the future.

Turmoil in the Mortgage Markets. What Happened?It has certainly been an exciting time in broker land lately with the financial markets melt down and its knock-on effect of waking up the politicians to broker regulation. Of course, the meltdown was a direct result of unregulated broker activity, as is global warming!! Over the last couple of weeks I have had many questions on the above but today I would like to talk about the financial markets as its impact is upon us right now. Most of the questions I have received regarding the state of our financial markets ask "what exactly happened" and "how did this happen" and of course "what's going to happen". I thought it may be useful to pull together and summarise some of the recent commentary on the subject and try and form a view of how we may be affected.

This problem certainly demonstrates how globally intertwined our financial systems are. A problem that originates in the US through unprecedented mortgage defaults creates the collapse of mortgage origination firms and hedge funds and sends global equity markets into free fall. The upshot is that nobody wants to buy debt securities today without bigger risk margins, causing an increase to funding costs for all lenders including ours in Australia.

How did this happen? It seems that many different but related factors came together to create this disaster. A US property boom which made home ownership difficult was made easier by sub-prime lenders freely extending substantial levels of credit to people who in reality had no capability of repaying the loans. These people may or may not have had a poor credit history but regardless did not have capacity to repay the quantums that they borrowed. These people were offered loans on low start up interest rates of 1 or 2% pa reverting to a standard rate after a couple of years. All this was underwritten not at the rate to which the loan reverted; rather it was underwritten based on the reduced honeymoon period rate. Add to that, the loans were typically fixed rate don't feel the recent impacts of 16 US interest rate rises taking rates to about 7% pa.

When the mortgage reaches the end of its low interest rate start-up period it "resets". Of course at reset date these people have no way of meeting the new and higher repayment amount. The resets started to occur earlier this year and are continuing still now, in fact they will keep occurring until next year. Apparently there were some 7 million of these loans written! To magnify this problem further property prices have started to fall and any equity in these homes are beginning to disappear and in many cases moving into negative equity.

Why has it affected us in Australia when we don't have a default problem? Without going into the complexities of the capital markets, global lenders to Australian banks or non-banks have been spooked by the issues in the US and as a consequence are either demanding greater "risk" premiums in the form of higher interest or indeed not lending at all. Essentially in an environment of fear and loss it is easier and safer to park money in cash or government bonds and wait.

This phenomenon is not unique to RAMS or other non-bank lenders as all Australian banks and lenders these days securitise mortgages or raise money as corporate debt from the capital markets. If we have a look at the ABS stat's (see following table) it tells us that today only about 20% of a banks funding comes from their retail deposits hence all lending institutions are impacted in some form.

RAMS is an example of a local good quality Australian mortgage business that is in great shape one day and literally the next day has a serious funding problem. RAMS was funding the majority of their loan book on a short term basis when the markets collapsed and all the investors ran for cover. RAMS now has to replace short term funding along with its new loans with a higher cost source of funds. Investors who have come out of hiding now want a higher margin for the higher perceived risk.

To illustrate this higher cost of funding Macquarie Bank earlier this month finalised the sale of a $500 million mortgage backed debt issue of which $485 million of AAA rated paper achieved a margin of 40 basis points or 0.40% over the 30 day swap rate, (being the rate that banks lend and borrow between each other). Six months ago the same paper was achieving a margin of 16 to 17 basis points. This means that the cost of wholesale funding is up 20 to 25 basis points. Similarly Westpac issued 1 billion of medium term notes the other week at a spread at 51 bpts versus 11 bpts, the historical levels. Add to that, the 30 day swap rate has increases to 40 bpts above the RBA cash rate from 12 bpts which means that all mortgages, bank and non-bank are now another 28 bpts higher as well. If I was to explain that graphically it is as follows and clearly shows that the current borrower rates are unsustainable as lenders are losing money.

So why haven't all institutions moved their rates yet? This is an interesting question because if we look at when the Reserve Bank lifts or lowers rates the banks are quick to pass on the interest rate rise or reduction. It is almost like there is an unwritten rule amongst them that when the Reserve Bank moves they all move uniformly and at the same rate.

Under today's situation the same law doesn't seem to apply. We have seen some banks and non-banks move but the ‘Big 5' seem to be holding, presumably because each bank is concerned if they are the first to move and the others don't follow they will be competitively disadvantaged and also will be left out there alone to bear the fire of the media and the customer.

This is not a good situation; I can't imagine what it is costing the banks while they are trying to work through this latest of margin erosion albeit ANZ has estimated the cost at around $20 - $25 million per month. I am very supportive of the banks moving rates to reflect the increased cost of funding and would be happy for us, their business partner, to help explain this to the customer.

In fact the sooner the rate move is made the better because the event that is causing the problem is fresh in the mind of the general public right now so the explanation for the rise is easy communicated and understood. Secondly, how will a new borrower feel about the bank that repeatedly tells them that everything is OK with rates and then puts them up anyway, do you think the borrower will feel cheated?

At the end of the day I do not want to bear the brunt of margin erosion that we would be happy to assist alleviate by helping to explain the facts to borrowers and thereby making its passage easier.

What is the lending environment going to look like after all of this?

We will certainly see the end of heavily discounted sub-prime and low-doc lending. We have over the past couple of years been in an unusual period where higher risk lending has been priced at near prime rates. As such we should not view the repricing of credit that is happening or about to happen as unjust but rather back to where it should have been. Investors will slowly re-emerge, they need to invest, and mortgages are still good investments but in future they will price them more carefully for risk.

For the standard full doc borrower I expect rates will be higher as well but not to the extent of the riskier end. Overall, the market will re-emerge with logical and sustainable risk/reward pricing albeit a number of smaller under capitalized players may well disappear through this period.

 

[Knobby22]

So, if you could let me know where I've indicated that I would be against providing low cost housing, then I'd welcome the opportunity to set the record straight.

Julia

I meant as a property investor who would lose money if this was implemented and I I used you as an example of a property investor which is why I said "like" as in someone who is a serious property investor who would definitely lose money.

I wrote this quickly. It was foolish in that I know you are a very feeling person and not a standard property investor and I shouldn't have used your name and I am ashamed I did.

Changing the tax laws would automatically lower rent costs and provide housing for the average family. It would also lower housing prices! For this reason it won't happen.