I suspect it depends on who you are and whom you know.
Which, from my understanding, is about as enforced as the laws in Australia relating to non-resident, non-citizens buying residential property.
Which, from my understanding, is about as enforced as the laws in Australia relating to non-resident, non-citizens buying residential property.
I've been going to a few auctions lately, and I'll say that once you hit the $1.2-$1.3m mark it's all foreigners.
Perhaps the g'men can get around it, but not the ordinary folks like us....
This bubble ain't gonna burst easy, but boy when it does...I suppose it will affect allot asset markets, and maybe if they can't liquidate what's at home they'll liquidate foreign assets...no idea. Nothing has ever been seen on this scale?
CanOz
What sort of time frame are you look at CanOz for the bubble to potentially pop?
I have heard from a few people that very recent figure coming out of China are very scary indeed. If China does burst, we'll be stuffed here in Australia.
Read in the news today that Lend Lease's SP dropped like 8% due to announcement of restructuring because of flat construction industry. Not sure if Lend Lease does any residential stuff, but not good news in the property area in general.
Very tricky to get the money out though, 50k per year is the max currency conversion per person.
CanOz
Corrupt people bends the law and dipped their hand in the money and they cant work out how to get more than 50K a year out of the country?
Laundering money is also illegal wonder how the underworld guys do it to buy their cars and mansion
The issue that worries me most, not so much because of the impact on house prices, but because it will cause huge issues for the banks and then the rest of the economy, is the net negative investor class.
We've never had a recession where $5-7B a year is lost on rental properties. Prior to the halving of CGT on assets held over 12 months, over the medium term investors were breaking even. Since 2000 cumulative losses are north of $40B (worse if adjusted for inflation).
I'm not sure what the stats are in terms of those who are positively geared over negatively geared, but it doesn't take too high a % to get into trouble before we have a destructive feedback loop of falling property prices feeding int increasing bank bad debts, lower credit growth, high unemployment, banks unable to lend due to high debt loads. It'll be just like the USA or Spain.
I wonder how long the Government will be able to stand strong against bailing the "investors" out.
Tally Ho with the mega FHB grant targeted to the purchase of existing dwellings I presume.
The point being, most property investors believe in the old spruiker's line of doubling every 7-10 years. Unlikely from here, IMO.
It would have been a couple of years ago, and I don't have it to hand, but there was a survey done of property investors and how long they would continue to hold in a period of flat capital gains. It wasn't pretty. The point being, most property investors believe in the old spruiker's line of doubling every 7-10 years. Unlikely from here, IMO.
Its worse than them believing, they actually need almost that level of growth to support negative gearing losses (less so now with lower interest rates). Not to mention a very liquid market in case something goes wrong.
Astute property investors
focus on positive cash flow properties (once all tax deductions and concessions are taken into account). In that case, negatively geared property generates losses for tax offset. Capital appreciation potential is not the primary reason for holding the asset.
Negative after tax cash flow property investors are the ones relying on capital appreciation, and given the continuing flat or negative outlook for property prices in many local markets, are the investors/speculators most likely to head for the exits.
Astute being the operative word. In my opinion although not an extinct species, they are few and far between.
Smart, experienced investors understand that positive cash flow properties are generally not found close to the CBD and don't look for them there. It's all about cash flow, not capital gain. Some go the commercial property route to achieve this but it's higher risk.Again, positive cash flow properties are rare in the big cities. Obviously this depends on the size of your deposit but the deposit needs to be taken into account when computing cash flow. You might not be in trouble, but you will still be losing money.
What proportion of investors fall in this category? There were survey results a while ago that said something like the majority of property investors had incomes below 80K.
I need to go update my spreadsheet and do the numbers...
Compare this to other options (4% at call cash? volatility of the share market) and you need to be a pretty big property bear for a long period of time to banish the idea of buying a place. Especially if you don't own a PPOR.
my 2c
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?