Mortgagee property sales happening already!!

[RichKid]

Actually BSL is up 20 cents today, and MTN up 3.5 cents.... miracles will never cease..

A little friendly reminder to get back on topic folks- thanks!

 

[krisbarry]

Yes I love the way these threads end up just plugging particular shares

 

[Julia]

A valid view. I assume that you would put that point of view to your relatives face to face if it happened to them.

Sadly there is a hugh gap in financial education in the unwashed masses - sorry "unwashed masses" but you are, in general, financially dumb. They are attempting to make up for wasted years [see the comment by Neil Jenman in the article.] In combination, these two elements create ANFO and all it needs is the detonator in the shape of spivs to rip people off and create havoc. This couple, and others like them, have been ripped off even though in the final analysis they are responsible for their decisions and the resultant outcome.

Well, there wouldn't be a lot of point in getting upset with the rellies if they had taken the decision, but if I knew they were considering such a thing, I'd certainly be making an attempt to point out the potential problems.

Another potential problem might occur in years to come as a result of the rapidly increasing popularity of reverse mortgages.

Julia

 

[Judd]

Another potential problem might occur in years to come as a result of the rapidly increasing popularity of reverse mortgages.

This is one issue which scares the willies out of me. At one level it has already caused the married couple in the article to lose [and that will surely happen] their home. They will. The extension of institutions offering 40 or 50 year mortgages, as has been mooted, is also a matter of concern to me. It is quite possible that financial institutions will then offer intergenerational loans (at least one is available in the UK) similar to Japan under which the debt is passed on to the next generation - I understand it is to avoid inheratence tax in UK.

If I were to put the boot into anyone about I'd like to put into the superannuation/finance industry which over the last few years have been ramming down the throat of baby boomers (I am on the cusp of being one by the way) on how much they will need in their retirement. My view only but it seems to be a case of talking up expectations instead of dampening down those asperations.

Always on the lookout for the statement that "If you haven't provided for your retirement, get used to it babe 'cause you're the one that put yourself in the situation." Haven't seen that disclaimer yet. *sigh*

 

[Realist]

Another potential problem might occur in years to come as a result of the rapidly increasing popularity of reverse mortgages.

Reverse mortgages, yeeouch!!

Stupidity and greed combined!!

 

[Realist]

Game, set and match to the property bears!!!

From todays AGE, the leading story in fact...

"Renting out housing has become Australia's most unsuccessful business, and by a long way. Two-thirds of landlords now tell the taxman they are losing money, and while some may be lying, most probably aren't. "

Safe as houses no more
August 29, 2006


Renting out housing has become Australia's most unsuccessful business, writes Tim Colebatch.

BETWEEN 1997 and 2003, the price of a home in Australia's capital cities doubled. But a new mega tax break in the May budget means this probably will never happen again.

Instead, house prices from here on are likely to at best flatten out, at worst fall somewhat. That's not what's happening now, but it's what will happen once the new tax break comes in and starts changing investors' choices.

With luck, that change will be slow and gradual, sending gentle ripples through house prices rather than swamping them in a deluge. But it will jeopardise the value of the $160 billion invested in rental housing by the million or so landlords who are negatively geared.

The upside is that it will benefit the young and the poorer half of Australians. After 20 years in which home ownership has become far less affordable, slipping out of their grasp, the pendulum will swing back their way.

In future, housing will be more affordable. In the zero-sum game between investors and first home buyers, the exodus of investors will make it easier to buy a house at a price you can afford.

Three points underpin this analysis.

First, house prices in Australia are essentially driven by investor demand. When investors surge into the market, as they did between 1987 and 2003, or as they are now doing in Perth, then prices soar. When investor activity settles or falls, prices settle or fall.

Second, the long surge in investor housing in Australia has been driven essentially by a cocktail of tax breaks. The negative gearing rules allow investors in effect to push part of their losses onto other taxpayers. And the tax break on capital gains means that when they sell, they pay only half the tax on profits that they would face on wages.

Third, rather than cut back the soaring cost of negative gearing, the Federal Government instead has trumped it, by offering investors an even bigger tax break: tax-free superannuation. Over time, we will see many people sell off their rental housing to shift the money into super.

After all, negative gearing has a lot wrong with it as an investment strategy. For a start, it involves losing money. Even in 2003-04, preliminary tax figures show, 938,000 rental owners declared losses of $6.1 billion.

Given rising interest rates and house prices since, by now they are probably losing $10 billion a year. That's a lot of money to throw away.

Renting out housing has become Australia's most unsuccessful business, and by a long way. Two-thirds of landlords now tell the taxman they are losing money, and while some may be lying, most probably aren't.

By allowing them to write off losses against tax, the Government spreads the cost among the 8 million taxpayers who don't lose money this way. At a rough estimate, the rest of us are probably paying $4 billion a year more in tax to subsidise landlords' losses.

But the strategy works for investors only if it ends with a lightly taxed pot of gold from capital gains. It works only if house prices keep rising at a fairly rapid rate. In 2004 and most of 2005, that didn't happen, and if the Government's new tax break gets investors out of housing, it won't happen much at all in future.

A lot of today's housing investors could face years of operating losses without ending up with much in capital gains.

Reserve Bank governor Ian Macfarlane told The Age last week that property prices in parts of outer Sydney had fallen by 20 to 30 per cent since 2003. "A lot of small-time investors who came in in 2002 and 2003 are probably way under water," he said.

Macfarlane said that over time, the generosity of the tax-free super pledge will see many investors move their money out of housing into superannuation. "It is likely that a significant number of people who formerly saw negative gearing as their way of securing a nest egg, will now find that superannuation is much more attractive. That should have implications for housing and house prices."

He adds, however, that the changes will be long term. In the short term, he says, Australia is now facing a housing shortfall that will see rents rise and give a fresh wind to investor activity. And if so, that will also push up housing prices.

For it is investors who drive up the market. Every surge in prices, including the current mini-surge here and the mega-surge in Perth, corresponds with a sudden inflow of investor activity.

Compare what has happened since the boom on the eastern seaboard peaked at the end of 2003. In Sydney, lending to investors fell almost a third; house prices fell 10 per cent. In Melbourne, lending to investors fell much less; house prices more or less flattened until rebounding in recent months.

By contrast, lending to investors in the west has jumped 125 per cent in that time, to levels matching Victoria and Queensland. And Perth prices have soared by 68 per cent ”” almost half of it in the six months to June.

If the super tax break remains in place, it might be the last of the house price booms that have been such a regular feature of Australian life. It might mean the end of the windfall gains for the two-thirds of households that own their home, and the windfall losses for the young and the renters who would like to own a home if only they could afford it.

At great cost to taxpayers, the Government's latest tax break could make that dream come true.

 

[Jay-684]

In the short term, he says, Australia is now facing a housing shortfall that will see rents rise and give a fresh wind to investor activity. And if so, that will also push up housing prices.

Thats the part I'm concentrating on... if I buy in the next 6-12 months I will only plan on holding it for 4-7 years, so the short term is more what I'm interested in

 

[TjamesX]

I was one of those people.
I had a difference.
I never attended a property seminar.
I never purchased an IP unless it was positively geared.
Sure I geared to 87% at onetime,now 37% After the sale in Sept goes through.
Id do it again if conditions/criteria were right. Infact it is still possible to positively gear.
IE more down,Build 4/6 High density keep 1 or 2.

There is just as much opportunity in Property investment NOW as there is in ANY investment including Share trading.

Tech, I haven't got a problem with positive gearing, thats smart investing. Steve Macknight was one of the proponents of this method and would have done better than 99.9% out of the last boom - but he has sold down his aussie portfolio.

But lets get serious about what was happening with the public perception around 2003-04, it was cool to own more than 1 property, it was cool to negative gear because you were going to make bucketloads as property kept going up. The movement of prices from 1999-2004 was one of the biggest injections of wealth to household owners ever, some took advantage, some splurged it all..... but I think most got caught up in the hype.

Property owners are still hyped up on the feeling to have your wealth increase a couple of hunderd thousand dollars in a few years, and they're trying to pick the bottom, hoping the next leg up is around the corner. How long does it take to save $30k let alone $200k on an average wage??? It's time to move back to reality....

i'm not saying that you can't make money out of property, the smart ones always do - but I am saying that the boom times are over for the average joe landlord.

As per the article in the Age

http://www.theage.com.au/articles/2006/08/28/1156617272592.html?from=top5

We would be better off with investor money going into other avenues than pushing up the price on the average house in a self fulfilling prophecy of capital gains. The fact is most recent landlords are cash flow negative and hope that prices can keep rising to justify their investment.

IMO

TJ

 

[wayneL]

Tech, I haven't got a problem with positive gearing, thats smart investing. Steve Macknight was one of the proponents of this method and would have done better than 99.9% out of the last boom - but he has sold down his aussie portfolio.

But lets get serious about what was happening with the public perception around 2003-04, it was cool to own more than 1 property, it was cool to negative gear because you were going to make bucketloads as property kept going up. The movement of prices from 1999-2004 was one of the biggest injections of wealth to household owners ever, some took advantage, some splurged it all..... but I think most got caught up in the hype.

Property owners are still hyped up on the feeling to have your wealth increase a couple of hunderd thousand dollars in a few years, and they're trying to pick the bottom, hoping the next leg up is around the corner. How long does it take to save $30k let alone $200k on an average wage??? It's time to move back to reality....

i'm not saying that you can't make money out of property, the smart ones always do - but I am saying that the boom times are over for the average joe landlord.

As per the article in the Age

http://www.theage.com.au/articles/2006/08/28/1156617272592.html?from=top5

We would be better off with investor money going into other avenues than pushing up the price on the average house in a self fulfilling prophecy of capital gains. The fact is most recent landlords are cash flow negative and hope that prices can keep rising to justify their investment.

IMO

TJ

Also the misapplication of capital we will pay for for a long time to come.

Our economy has become a Ponzi scheme whereby we flip ever more expensive property to each other. No real production whatsoever.

Why couldn't we have used all that capital in developing a value adding mechanism to all the dirt we dig up.

Instead, we have been hoodwinked into an causing an overpriced property market and collectively (the west) handing world economic domination to China on a platter.

In the future we will give ourselves an uppercut.

 

[finnsk]

Our economy has become a Ponzi scheme whereby we flip ever more expensive property to each other. No real production whatsoever.

Why couldn't we have used all that capital in developing a value adding mechanism to all the dirt we dig up.

Instead, we have been hoodwinked into an causing an overpriced property market and collectively (the west) handing world economic domination to China on a platter.

In the future we will give ourselves an uppercut.

I agree and i think that we as a country is ind for some very difficult times in the next 5 to 10 years

 

[tech/a]

TjamesX.

Frankly its a case of Investor beware.
Un educated investors will be caught. Those who were smart enough to buy early enough and have reasonable gearing will survive.
We have had 3 yrs to correct over gearing and those that havent still have a small window to do so.

Wayne.
I dont agree.
Housing has risen in pretty well most parts of the world on a similar scale to Australia's.Most definately China.
In the whole scheme of things affordability is still way way better in Australia than in most western countries and even some eastern.
Un employment is at an all time low.
Demand for our resources are at an all time high.Inflation is under control.
Exports are on the increase.Demand for our expertise is also increasing.
This is and will remain the land of opportunity---we are in a unique position.
Most will watch it all pass by,moaning and groaning about doom and gloom.
Fine--more opportunity for those of us who "Just go and Do IT"


Personally as far as R/E goes my personal view is opportunity lies in high density cheaper apartments for rental or purchase.
In Adelaide the under $300k market is still alive and well.
Demand is high in mainly the Northern Suburbs but also the South.
Buying to flip has gone.Positive gearing is only available to those cashed.

The investment challenge is just a little more difficult than it was in the late 90s early 2000s.Most are looking in hindsite and concerntrating on either what could have been or what will happen to those greedy bastards who were in the position to "Have a go".
There wont be nearly as much blood in the gutters than there could have been had inflation been rampant and interest rates rose before those with a plan were able to gear down.

Rather than people being obsessed with doom they should be obsessed with creating their own opportunities.
Unfortunately even 6 yrs of opportunity is far to fast for some!

 

[wayneL]

Wayne.
I dont agree.
Housing has risen in pretty well most parts of the world on a similar scale to Australia's.Most definately China.
In the whole scheme of things affordability is still way way better in Australia than in most western countries and even some eastern.
Un employment is at an all time low.
Demand for our resources are at an all time high.Inflation is under control.
Exports are on the increase.Demand for our expertise is also increasing.
This is and will remain the land of opportunity---we are in a unique position.
Most will watch it all pass by,moaning and groaning about doom and gloom.
Fine--more opportunity for those of us who "Just go and Do IT"


Rather than people being obsessed with doom they should be obsessed with creating their own opportunities.
Unfortunately even 6 yrs of opportunity is far to fast for some!

Bugger!

I knew I should have saved that article that show afforability in terms of price/wages is LOWEST in Australia. Will try to find it.

Tech. Why do you cast aspersions on individuals who either chose not to, or were not in a position to, invest in real estate. People may choose to invest elsewhere.

And anyone who goes out "right now" and "just does it" would not be making a value judgement. Property in general is not good value at the moment... by any measure.

As the article shows, some people who went out to "just do it" in the last couple of years have found themselves in a great deal of trouble.

And I don't agree inflation is under control. There is a worldwide trend towards higher rates because they are "losing" control of inflation... actually, the inflation figures as reported are fraudulent. True inflation is much higher.

Unemployment? Watch this figure start rising

Cheers

 

[tech/a]

Bugger!

I knew I should have saved that article that show afforability in terms of price/wages is LOWEST in Australia. Will try to find it.

Hmm well in the UK average Unit apartment is (london within 25miles) around 300,000 pounds average wage is 20,000 pounds.

Tech. Why do you cast aspersions on individuals who either chose not to, or were not in a position to, invest in real estate. People may choose to invest elsewhere.

Cant see where I have??

And anyone who goes out "right now" and "just does it" would not be making a value judgement. Property in general is not good value at the moment... by any measure.

In general terms agree but there are specific opportunities.
The Just do it now was and is directed at Opportunities IN GENERAL which is how I read my contribution.

As the article shows, some people who went out to "just do it" in the last couple of years have found themselves in a great deal of trouble.

More by poor judgement tha "The Market" this applies to most Markets of which property is A market.

And I don't agree inflation is under control. There is a worldwide trend towards higher rates because they are "losing" control of inflation... actually, the inflation figures as reported are fraudulent. True inflation is much higher.

Unemployment? Watch this figure start rising

Cheers

You maybe correct in which case being able to liquidate your invesments quickly may well be of a great advantage.So a spread for me is wise and purely share trading for others.

 

[wayneL]

Bugger!

I knew I should have saved that article that show afforability in terms of price/wages is LOWEST in Australia. Will try to find it.

Found it!!

http://www.theage.com.au/articles/2005/08/25/1124562981839.html?from=top5

Australian housing world's most expensive
By Aileen Keenan
Property Editor
August 26, 2005

AFFORDABLE home ownership has slipped further from reach with a US report revealing Australian real estate is the most expensive in the world when adjusted to median household incomes.

Access Economics director Chris Richardson said four Australian cities featured in the world's 10 most expensive, when median house prices were compared with median household income.

The data from United States-based research group Demographia, which was interpreted by Access Economics, found Los Angeles was the most expensive international city, then San Diego and Sydney.

Melbourne ranked eighth on the list, followed by Hobart and Adelaide. Brisbane was the 11th most expensive city.

Australia had the dubious mantle of having the world's most expensive real estate on an adjusted basis, followed by New Zealand.......

 

[tech/a]

Found it!!

http://www.theage.com.au/articles/2005/08/25/1124562981839.html?from=top5

Well its wrong!!

 

[Jay-684]

Interesting on the housing affordability article. A contradicting study done by century 21 in 2000 were asked to provide examples of the best homes (largest home for the money) available for US$250,000. Other criteria included commuting distance, desirability of the area and proximity to schools, parks and transport.

The list went as follows (from best value to least value) Note: this list does not include all major cities, but a selection.

1 Mexico City
2 Jakarta
3 Antwerp
4 Costa Rica (Escazu County)
5 Sydney, Montreal, Shanghai
6 Atlanta
7 Aukland and Miami
8 Beijing
9 Vancouver
10 Waterloo

Los Angeles (the most expensive in WayneL's article) ranked 12th, New York 15th, London 20th, Tokyo 21st and Paris and Hong Kong equal 22nd.

Although it was only done on a limited sector of the residential property market (and property prices have jumped markedly since then) it seems to contradict the above article...

 

[Jay-684]

Well its wrong!!

It would seem that either that article is wrong or mine is, because they cant both be correct.

Another interesting fact is the space that the US$250,000 purchased. Mexico city - 10,333 sq ft, Sydney (Castle Hill in particular) - 3000 sq ft, HK - 753sq ft

 

[wayneL]

Jay

My article compares prices to income, rather than nominal pricing as yours does.

Obviously, english property is more expensive than Oz for eg. But when considered as multiples of income, a different story emerges.

Cheers

 

[wayneL]

http://www.demographia.com/dhi-pavrls.htm

Housing affordability continues in crisis intensity in many markets. The most pervasive national crisis is in Australia, while the crisis is nearly as serious in Ireland, New Zealand and the UK....

 

[Jay-684]

Housing Affordability Index for Australian States (slightly out of date)

A lower index means housing is less affordable