The future of Australian property prices

[3 hound]

Renting out investment properties obviously makes a lot of money and sense for a lot of people but geez the few insights I have had hearing about bad tenants I would not go near it with a 10 foot pole.

A guy I work with, an old Boomer, bought each of his kids a house and rented them out until the kids became adults and then he got rid of the tenants and gave the houses to his kids. He did not increase the rents in 20 years because he said he would happily charge no rent to good tenants than have bad tenants. His theory was the value was in appreciation of the house and land, the rent was an extra bonus.

 

[sptrawler]

Renting out investment properties obviously makes a lot of money and sense for a lot of people but geez the few insights I have had hearing about bad tenants I would not go near it with a 10 foot pole.

A guy I work with, an old Boomer, bought each of his kids a house and rented them out until the kids became adults and then he got rid of the tenants and gave the houses to his kids. He did not increase the rents in 20 years because he said he would happily charge no rent to good tenants than have bad tenants. His theory was the value was in appreciation of the house and land, the rent was an extra bonus.

That guy new exactly what he was taking about, renting out property is a young persons game, there is no way older people want to do it.
I off loaded my rental properties 10 years ago, I would be divorced if I hadn't.
The Governments State and Federal will give all sorts of incentives, to make sure social housing stays in the private sector.
My own opinion on buying a rental property would be, buy something you want to move into later, because you will basically get Government assistance to buy it.
If you are only buying it to make money, you are buying a lot of heartache and work, to save the Government doing it, on the hope you make money.
Then if you are lucky enough to make money on it, the Government gets a cut of your profit with CGT, win/ win for them with no downside.

 

[3 hound]

That guy new exactly what he was taking about, renting out property is a young persons game, there is no way older people want to do it.
I off loaded my rental properties 10 years ago, I would be divorced if I hadn't.

My area is getting more populated with "complex families" that are 100% dependent on welfare. The cop that lived up the street got a promotion and left town and rented the home out.

I will just say the house came on the market for a very, very affordable price not long after. Some speculators bought it straight from the internet, it looked good on a webpage.

Thank god there are people that are willing to own rental property, bless you and thank you for your service.

 

[MovingAverage]

Your PPR only keeps the weather off you and your family, it has to be paid for with after tax dollars and there no tax breaks until you sell it.
Pouring all your earnings into your PPR for 30 years, isn't my idea of a clever move, but everyone to their own we all do things differently and come from various backgrounds one size doesn't fit all.

Absolutely agree with this. One of the best moves I made a few decades ago (now I sound old) was to get very focused on debt recycling.

 

[Gunnerguy]

https://www.abc.net.au/news/2022-05...-stress-interest-rate-rise-election/101026362

The banks just keep doing it .....

But also a single mum of 4 kids borrowing 6x her income.

From the article .......

More than half of respondents, or 55 per cent, that had taken out a mortgage with ANZ in the six months to December 2021 indicated that they had lied in their application documentation.

Gunnerguy

 

[sptrawler]

https://www.abc.net.au/news/2022-05...-stress-interest-rate-rise-election/101026362

The banks just keep doing it .....

But also a single mum of 4 kids borrowing 6x her income.

From the article .......

More than half of respondents, or 55 per cent, that had taken out a mortgage with ANZ in the six months to December 2021 indicated that they had lied in their application documentation.

Gunnerguy

Who is at fault and would you have done it?
The bank isn't lending money to 12 year olds, these people are applying for the loans and are lying on their applications, unless the bank can breach the customer's privacy, how do they decide other than by guidelines and the applicants honesty?

 

[Warr87]

Who is at fault and would you have done it?
The bank isn't lending money to 12 year olds, these people are applying for the loans and are lying on their applications, unless the bank can breach the customer's privacy, how do they decide other than by guidelines and the applicants honesty?

I agree. The only cavet is if the bank knows and/or suspects but turns an eye in order to collect fees now, and then make a profit when they re-posses later on. I wouldn't put that kind of predatory behaviour past the banks. People are still adults though and they bought into the hype of 'never going to go down. you can't lose'.

 

[3 hound]

I agree. The only cavet is if the bank knows and/or suspects but turns an eye in order to collect fees now, and then make a profit when they re-posses later on. I wouldn't put that kind of predatory behaviour past the banks. People are still adults though and they bought into the hype of 'never going to go down. you can't lose'.

Is it really worth the hassle for a bank to sign someone up if the bank has then go thru the task or repossession and then selling.

I can't see how it is financially worth the exercise let alone the bad public relations.

In short I don't think this is viable predatory behaviour.

 

[MovingAverage]

https://www.abc.net.au/news/2022-05...-stress-interest-rate-rise-election/101026362

The banks just keep doing it .....

But also a single mum of 4 kids borrowing 6x her income.

From the article .......

More than half of respondents, or 55 per cent, that had taken out a mortgage with ANZ in the six months to December 2021 indicated that they had lied in their application documentation.

Gunnerguy

So at what point do we say a single mum borrowing 6x her income is just f'ing ridiculous???? At some point these folks need to learn (the hard way) that just because you can doesn't mean you should. Of course somehow these fools will just blame the LNP for their own stupidity. F' me the world is full of bloody idiots

 

[sptrawler]

I agree. The only cavet is if the bank knows and/or suspects but turns an eye in order to collect fees now, and then make a profit when they re-posses later on. I wouldn't put that kind of predatory behaviour past the banks. People are still adults though and they bought into the hype of 'never going to go down. you can't lose'.

Is it really worth the hassle for a bank to sign someone up if the bank has then go thru the task or repossession and then selling.

I can't see how it is financially worth the exercise let alone the bad public relations.

In short I don't think this is viable predatory behaviour.

I agree with both of you, but the banks can't be given access to all your personal information, we don't even like giving the Government that sort of access.
So if someone is going to give false information, the bank can't say "no we wont give you a loan because we don't believe you", these people are adults they are asking to be treated as adults, then when it goes pear shaped they want to blame someone else for the mess.
This is how Australia is changing, everyone is looking for someone else to take the responsibility, it will be interesting if there is a property market crash.
No one jumps up and down for share market investors, when there is a market crash and margin loans get called in.

 

[MovingAverage]

Is it really worth the hassle for a bank to sign someone up if the bank has then go thru the task or repossession and then selling.

I can't see how it is financially worth the exercise let alone the bad public relations.

In short I don't think this is viable predatory behaviour.

when was the last time you heard of a bank repossessing and selling a house in Australia. This place is in for a serious reality check

 

[3 hound]

So at what point do we say a single mum borrowing 6x her income is just f'ing ridiculous???? At some point these folks need to learn (the hard way) that just because you can doesn't mean you should. Of course somehow these fools will just blame the LNP for their own stupidity. F' me the world is full of bloody idiots

There is an entire location, (I would say suburb but there are no services other than roads) that is comprised of mainly single mothers and other 100% welfare recipients on up to 5 acre blocks they have mortgages for. Corrupt old farmers that ran the council gave all the approvals to subdivide their most worthless farmland for housing.

The people came, it is a social disaster soaking up endless amounts of government services from mental health to child protection to police...etc.

The farmers took the loot and retired to the coast.

It is not an uncommon trick in semi-rural areas.

The social cost and negative impact across so many sectors would blow middle class Australian's minds.

 

[3 hound]

No one jumps up and down for share market investors, when there is a market crash and margin loans get called in.

Have you not heard of the phrase "too big to fail"?

I interpret that as the biggest private investors don't take responsibility for their own actions do expect everyone else thru government to bail them for their mismanagement.

 

[3 hound]

when was the last time you heard of a bank repossessing and selling a house in Australia. This place is in for a serious reality check

I honestly don't know, I don't really follow that side of things.

What are the rough figures on that?

 

[Warr87]

I agree with both of you, but the banks can't be given access to all your personal information, we don't even like giving the Government that sort of access.
So if someone is going to give false information, the bank can't say "no we wont give you a loan because we don't believe you", these people are adults they are asking to be treated as adults, then when it goes pear shaped they want to blame someone else for the mess.
This is how Australia is changing, everyone is looking for someone else to take the responsibility, it will be interesting if there is a property market crash.
No one jumps up and down for share market investors, when there is a market crash and margin loans get called in.

Well yes and no. While they don't have access to your personal info (and great!) but you can reasonably suspect that someone isn't being entirely truthful. You can apply for a loan, but they are not obligated to give it to you. You are not entitled to a loan. Is this happening on a large scale? Don't know. But the financial industry certainly has a past of bankers conveniently not pressing for more information when they should reasonably suspect someone isn't presenting all the facts, all in the name of pursing profit. That may seem like a strange criticism to make on a forum like this who are trying to maximise profit, but the distinction being that we aren't being predatory or unethical.

Of course, if it isn't obvious that people are lying and they continue to do so, then lose it all. Well no sympathy from me. I don't know all the facts, my position before was more adding a qualifier to the statement. I am cynical and wouldn't put it past the banks. It's certainly been long enough since 2008 for people to have forgotten what contributed to that crash. A crash effects everyone, not just homeowners.

And you are right about the responsibility. I think the propaganda like info pushed about the housing market being the only smart investment, always going up, followed by gov policies to prop it up, along with easy money. I wonder if the people pushing that info the hardest will take responsibility, or will they just say 'well, they should've made allowances for their own situation.'

 

[MovingAverage]

(I would say suburb but there are no services other than roads)

Your reference sounds like a lot of the the housing developments being built in outer western sydney. lack of social planning, infrastructure and services is embarrassing to say the least.

 

[3 hound]

Your reference sounds like a lot of the the housing developments being built in outer western sydney. lack of social planning, infrastructure and services is embarrassing to say the least.

There to, i was referring to a different state.

Clearly this unethical behaviour is wider spread than I thought. I think the requirement is you need small corrupt boss hog style councils in remote areas to do the approvals.

I doubt this could happen in areas where there are more educated residents that understand law and finance. The council's wouldn't try it.

 

[MovingAverage]

but the banks can't be given access to all your personal information,

I doubt very much the banks want that type of access anyway....that way they reserve the right to just step in whenever they like on the premise that you lied to them. Giving banks full access to your info is not good for their business.

 

[Gunnerguy]

The article generated a lot of responses in a short amount of time.

The phrase that comes to my mind is .....

Individual Financial Education, and the lack of it.

The other side of the coin has phrases like ......

Too big to fail. Commissions. Unethical. Dishonesty. Consumerism. Keeping up with the Jones’s. Entitlement.

I believe both sides are to blame, the borrowers and the lenders. I just think the proportion of the blame fluctuates.

Gunnerguy.

 

[3 hound]

The article generated a lot of responses in a short amount of time.

The phrase that comes to my mind is .....

Individual Financial Education, and the lack of it.

The other side of the coin has phrases like ......

Too big to fail. Commissions. Unethical. Dishonesty. Consumerism. Keeping up with the Jones’s. Entitlement.

I believe both sides are to blame, the borrowers and the lenders. I just think the proportion of the blame fluctuates.

Gunnerguy.

I want to throw in duty of care, high powered advertising and marketing work, there has to be some empathy and understanding that people with nothing can have difficulties resisting social pressure and predatory bank practices.

You would rightly allocate a good portion of blame to bar staff that kept serving a drunk (in fact it's illegal) so banks need to have a similar duty of care toward vulnerable people that are easy to exploit due to lack of IQ/knowledge/education/entitlement etc.

I ran a horse riding business for tourists, lots of people overestimated their abilities and lied about their experience. I wouldn't let them end up in a spinal injury ward just because they lied. Duty of care needs to built into the financial world like in every other industry otherwise it is just predatory.