Are you so bullish because your a liberal voter?, one week before the election budget emergency, doom & gloom next minute huge boom -everywhere. in the famous words of our queen "*please explain*"?
Are you so bullish because your a liberal voter?, one week before the election budget emergency, doom & gloom next minute huge boom -everywhere. in the famous words of our queen "*please explain*"?
You severely underestimate the power of sentiment. The herd moves as one and sometimes all they're looking for is one single excuse or trigger and BAM off it goes in a different direction.
If you had $400k in cash to invest then yes, TDs may look more attractive but a property investor would view such an amount as an opportunity to borrow another 2 million from the bank to acquire more investment property.
Probably the most significant factor to influence future prices is the $A. If the fickle US growth falters with QE phasing out, and the USD falls... that will hit our household affordability and hurt the fed revenue again... only worse than with a mining boom like before.
Ok, so USD decreases (hence ours increases in relative terms). I assume you are thinking this indirectly affects "household" affordability, as I usually think increased dollar is good for purchasing imports... so please explain your thoughts to me..
I can make arguments that a decreasing dollar is good or bad for housing and vice versa. It is difficult to really have a good understanding of the dollar effect since Rudd the fool opened up foreign investment into our residential housing stocks more greatly (what an idiot)
MW
The problem with quoting such data is that it ignores the bigger investment picture and therefore injects a bias. The average annual loss number must be weighed in the context of all tax offsets associated with the investment. All factors considered, the question then is simply whether or not the property is cash flow positive or negative and to what extent.Only about a third of those who report to the Tax Office that they have an investment property make money.
Earlier this year, Cameron Kusher from RP Data looked at the Tax Office's negative gearing numbers for the 2010-2011 financial year, the latest available. He found the average annual loss for these investors is about $210 a week, or just under $11,000 a year.
But anybody buying a property today as a loss-maker, relying on capital gains to make good, should be very careful. It is likely that too many investors place too much importance on the tax breaks from negative gearing. The Reserve Bank warned recently that it expects growth in house prices to be more in line with income growth than a repeat of the earlier price boom.
Most of the property investors I associate with analyze the cash flow of any potential acquisition prior to making a purchase decision. Only focusing on the potential capital growth of a property is the mark of an amateur investor.
Household affordability is driven by employment, debt levels and interest rates. Debt levels are still quite high, unemployment rising and expected to continue to keep rising in the near future just with fed budget cuts that translates into more unemployed, without allowing for additional from continued retraction of mining development.
Everyone knows interests rates are close to bottom if not there and realise any increases will bite into disposable income and affordability.
My estimate is that the only short term hope for a strengthening Aus economy and property market is further lowering of the Aus $. That will not happen as much as I'd have hoped because of US monetary and fiscal policy. They are about to sneeze again and we will get the cold this time because our Gov and RBA isn't effectively countering the US and FED moves to try to protect their economy. The USD hasn't really gained in it's own right, it gained on the back of QE (which must end eventually) and because other currencies in the USDX weakened more.
In short, because the Howard government pretty much sold off the family farm on top of the early mining boom to balance a big spending budget and Labor largely squandered the last of the minng boom... we are to a large extent, as they say, up the creek without a paddle, in terms of the gov providing increased spending to boost the economy this time.
High household debt, equity mostly flat or falling, unemployment rising and a broke gov means property hasn't got much upside, but lots of downside.
I'm sure with specialised knowledge and some capital behind you there's still pockets of value in the market, but in general terms how much longer can rental yields keep falling? How much longer can a real negative 5-6% yield be maintained in the residential market?
I thought in 2007 with interest rates going to 9% it would cause a shake out, then rates fell so rapidly post GFC, and home vendor grants propped up the market, now financial repression is encouraging further speculation.
Roger Montgomery voices his concern about SMSF trustees being enticed to speculate on property...
He is trend chasing again..
this is the current topic of the day, get it when its hot and get a bit of exposure
while ASIC and various authority throw a few headlines in paper he read
I remember him saying he got future gold contracts delivery when gold was hot...I wonder if that future is now
I am not taking sides here, just responding to Luci Ellis from the RBA http://www.thebull.com.au/articles/a/41475-rba's-ellis-downplays-housing-bubble-talk.html
You see, this time it is different, whereas a decade ago there was a bubble.
The earlier period was marked by rapid growth in credit and in housing prices, low and falling rental yields, household spending exceeding income, new housing finance products, easing lending standards, and "really, really strong" investor interest.
And the difference to now ??
Try a bit of evidence of reality
https://www.commbank.com.au/content...ffordability Report Mar Qtr 2013 - Final.docx.
What's this? Even the Unconventional Economist agrees that housing is becoming affordable?
http://www.macrobusiness.com.au/2013/05/housing-affordability-continues-to-improve-2/
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