Forum Replies Created
Falling prices, reduced demand, increased interest rates… any rational investor with a hint of foresight (and some liquid reserves) would see these as positive signs. The panic you see in the market place is surely restricted to over-stretched CG speculators and long-term investors who have maxed out their LVR at the wrong time of the market cycle?
I don’t think development is for everyone, and an increase in new builds would only compound existing over-supply issues.
Cheers, F[cowboy2]Originally posted by JackHu:You should try to establish a good credit rating so you can borrow large amounts of money quickly on an unsecured basis.
Is this some kind of joke or the result of a bad e-trip?
Hi Brady5,
Interesting thought, but how do you find out the ‘wholesale price’ for a particular property?
Cheers, F.[cowboy2]I guess you really want that dishwasher, huh?[biggrin]
Hi SiS,
That demand you speak of, do you have a feel for whether it is driven by property speculators or long term residents?
Just curious,
F.[cowboy2]how do they get their money back from the $300000 car that you paid nothing for and they loaned you the cost of car + rego + insurance etcHi Kerwyn, I think you’ve accidentally added an extra zero in there. I doubt there is a financial organisation who would lend Three Hundred Thousand dollars with nought down![biggrin]
I do believe that the larger cities tend to double every 10 years, the one I live in certainly has. Most of the statistics I have seen seem to indicate that also.I don’t really think we should open this tin again, but briefly, you’ve neglected to factor in inflation. House prices have increased over the long term by less than 2%pa above inflation. For nominal house prices to double every ten years, inflation must run at an average of around 6% (otherwise renters won’t be able to pay the rent and first time buyers will be non-existent). Taking into account the effect this would have on interest rates (anyone for ten percent plus?), is this really a desirable scenario?
Cheers, F.[cowboy2]
Originally posted by woodsman:F, I think you overlook the associated industries that have grown around property related investment. Yes, most are service related industries, however, this part of the economy represents a significant portion of economic activity.
No, I didn’t ignore this;
Property investment can have a short term positive growth effect on the economyThese ‘associated industries’ are not sustainable unless households have an unlimited appetite for debt.
Do not people use their excess equity to also invest in the sharemarket. Many will use these funds with a margin loan to increase their leverage into the sharemarket….Is this not a productive use of their equity?I am somewhat comforted by the thought that this may be true. However, I doubt this is the most common way the additional debt has been spent.
Now the property boom is responsible for the ageing population. [biggrin] I think the delay in people having families started long before the last property boom.I concede this is true. I intended to illustrate the intergenerational friction commonly spoken of by my non house owning friends and workmates.
Now if we’re not going to get back on topic, could somebody please post the contents of This article as I am unable to get my registration to work![angry2]
Cheers, F.[cowboy2]Originally posted by Dazzling:I believe ‘property’ is extremely productive. Many examples of this can be shown in every city;
[blush2]Err, yes. Sorry, I was strictly speaking of residential property.
Looking at the long term graphs for property over the past 100 yrs, I have no doubt ‘property’ will continue to rise.I suggest you overlay inflation on a second y axis or adjust the ‘property’ trend line for inflation. Does this change your view? (Residential property only [biggrin])
To save time, try page 13 of David Rees Commsec Presentation for the graph of Sydney house prices to wages (extends to -100 years). Wages are roughly aligned to inflation, so you’ll get my gist.Heck, I’ve jumped in boots and ‘all, so my money is where my mouth is I suppose.And I’ve recently jumped out, so ditto, stand to lose by being wrong. Once again, I agree that commercial property is a whole different kettle of bricks.
Cheers, F.[cowboy2]With due respect Woodsman, I didn’t intend to cheerlead, just point out an alternative view, and that there is pressure for reform of PI tax concessions. Whether anything comes of it or not, property investors need to remember that some 83% (?) of Australians don’t own more than one property, and some of them vote too.
Why is it property is singled out more heavily than shares?Property investment is unproductive.
Share investment is productive.
Property investment can have a short term positive growth effect on the economy as people spend their new found wealth and borrow to invest in construction etc, but this is unsustainable. Eventually debt must be repaid, even if it is ‘equity’ debt secured against a percieved increase in the value of the family home or investment property(s). An excess of property investment draws funds away from sustainable economy-friendly investments in the present and places negative pressure on retail (and those same investments) in the future as debt reduces discretionary spending. It places a burden on first time buyers, reduces the feeling of ‘place in society’ that ownership brings for those priced out, forces young couples to delay starting a family therefore increasing the burden of an aging population… shall I go on?Share investment leads to increased productivity by allowing companies to grow, build infrastructure, employ more workers, increase exports, raise wages etc. leading to a healthy, sustainably growing economy and increased tax or lower tax rates…
If tax laws on investing are biased toward shares over houses, I would argue that this is perfectly fair and good government policy.
The other issues you have raised – ‘Land Tax, stamp duties, mortgage stamp duties, exit taxes’ – are just some of the costs to be considered when investing in property. If such investment is not financially viable then don’t do it! Simple. I do agree that land tax needs reforming, but only because land prices have risen out of line with inflation (once again largely under pressure from property speculation oddly enough)! If land prices fall as I predict, this will remove the pressure on businesses and reforms will be unnecessary.
All said, I still think there is a place for a balanced level of rational property investment. I’m watching and waiting – when and if it makes sense for me to invest in residential property I intend to do so. This will require consideration of current and future taxes and concessions as well as price and return. Does this make me a hypocrite? I guess so.[blush2]
Anyway, back on the subject of API Magazine’s assertion ‘that property is about to start to climb again?’…[biggrin]
Cheers, F.[cowboy2]
Originally posted by woodsman:Ahhh foundation, you are nothing if not consistent.
Why thank you~![biggrin]
As long as people continue to make assertions such as
In 10 years time it is going to more than likely doubled in priceI guess I’ll just keep playing the record…[biggrin]
On the other hand if only I could get my membership to somersoft.com to work – they have become much less irrationally exhuberent of late – I might fit in there a little better!
Cheers, F.[cowboy2]Hi ASB,
I would take these:Properties have been falling since 1990, depsite it being cheaper to pay a mortgage than to rent.as indicators that a small(ish) speculation in Japan just might pay off (I don’t know whether property near the ski field has followed these trends though). If you can work around the problems Terry has mentioned and find CF+ property close to the ski fields I’d give the idea some consideration. And PM me with a weekly rate…[biggrin]
Cheers, F.[cowboy2]Originally posted by christobell:If they were to remove the Tax breaks ie N.G. there would be a lot of Mum and Dad investors out there hurting badly..A lot of these people have multiple properties relying heavily of the tax cuts..what will happen to there properties? I guess they will not be able to pay the mortgages.
This:
The RBA has been trying, oh so politely, to tell Howard that his tax system is to blame. The usual suspect is negative gearing. This Government is the first in history to cover the mortgage burden of property investors for three years in a row. In the 2000-01 and 2001-02 tax years, total rental deductions exceeded rental income by $696million and $622 million respectively. The next round of tax statistics, due before the May budget, are expected to confirm the shortfall doubled to about $1.2 billion in 2002-03.from The Australian is the latest in a growing chorus of media articles and financial commentaries opposing the growing burden imposed by property related tax breaks on the economy and tax payers.
I expect the first casualty of change will be depreciation, followed by the staggered removal of CGT concessions for multiple IPs. I doubt any government would have the balls to introduce such changes retrospectively, but absolutely believe this will be introduced for future property purchases.
And just think about it – you’re worried about the ‘Mum and Dad investors’ with ‘multiple properties relying heavily of the tax cuts’, but what about the young family who are priced out of buying their first home on account of these same property speculators yet still have to subsidise these ‘investors’ through the taxation system? Is this really fair?
Cheers, F.[cowboy2]1) Houses are much more expensive than cars…
2) Property is not a risk-free investment.Originally posted by kerwyn:This is a thing that is not going to drop in price the minute you open the front door?
It can drop in price before you even get to the front door! Talk to ‘investors’ who bought options for apartments off the plan in Melbourne & Sydney 2 years ago…
In 10 years time it is going to more than likely doubled in price not be worthless?I strongly disagree. I think many people are currently buying houses that will be worth less in real (inflation adjusted) terms in 15+ years time.
Cheers, F.[cowboy2]I disagree.
A few reasons:
+ House prices at record highs compared to wages & rent
+ Household debt at record highs
+ Consumer confidence plummeting with every rate rise
+ GDP at zero & set to stagnate
+ Unemployment set to rise
+ Inflationary pressures growing
+ Interest rates being forced up by ^ and US hikes
+ all but the most VI media becoming bearish
+ pressure to remove the ‘middle class welfare’ of PI tax breaks
+ PI sentiment low / nearing negative in most areas of Australia
+ First time buyers holding out for lower prices
+ ‘Growth areas’ (WA & SEQ) almost entirely driven by speculators…I’m really struggling to balance these with any +ives for HPI. I don’t believe house prices will be supported by immigration or a shortage of land.
Alternative views welcome.
Cheers,F.[cowboy2]Similarly to GeoffB, my beach shack was revalued last month at around 20% less than late last year. However I agree with the valuation – other houses in the area still at ’03 prices aren’t moving (whereas in ’03 anything and everything sold as soon as it was on), so if I was to put mine on the market, I’d expect to need a lower price to move it. But I don’t want to sell, so I don’t care…
Cheers, F.[cowboy2]Originally posted by Gorden:I used to get info from a lawyer who worked for a major bank and would know of repossessions…this was legal but not exactly legitimate..
Depending on the actual status of the repo, this could constitute a breach of the federal Privacy Act and therefore the law…
Hi JackHu,
I’m not having a go at you, but would you mind substantiating your assertions with some kind of fact basis or analysis?
I strongly disagree with your points 1, 2, 3 & 4, however, I think the rest of your post was accurate and helpful.
Cheers, F[cowboy2]Originally posted by Mobile Mortgage:Hi Foundation,
Providing your loans/finance is structured correctly, it is possible to avoid cross colaterisation and use equity in a PPR for the purpose of investment and not have the PPR held as security over the investment, Cheers.Yes, I’m aware of this, however, many investors still use their PPOR as security… which was my point.
However, I’m also aware that even simply raising the LVR of my PPOR mortgage(s) to 80 or 90%(mine currently sit at around 0.75%![biggrin]) would expose me to the danger of negative equity as house prices fall. Negative equity can prevent ordinary people from moving house, buying a new car, or even replacing a broken down washing machine in the worst case… Not my cup of tea.How long would it take you to save 1 million dollars?About 50 years.
How long would it take you to borrow 1 million dollars to invest?About 2 days. And I wouldn’t need to stake my house and my future stability on it.[biggrin]
Cheers, F.[cowboy2]I think the RE market was driven too far by people not understanding this concept.I agree.
We have lived in places that we could never have afforded to ownI agree. (Try a 1.5m property for $127 pw![biggrin])
You get a lot more bang for your buck renting at the momentI agree.
At some point buying will again return to its historic norm position slightly above the cost of renting. This may occur by price stagnation for many years until wages / rents catch up or quickly with a price crash. Either way, I’ve better things to do with my hard earned for the moment!
Cheers, F.[cowboy2]I would never, ever use my PPOR as security on investments. Investments can lead to luxury, but warmth & shelter are two of life’s most basic needs. Why risk it? Learn to save instead.
Cheers, F.[cowboy2]
