Forum Replies Created
- Pauk wrote:I also take note, that you feel 50% of people may believe, that falling house prices will ultimately be a good thing.
Incorrect to assume as such. In a debate like this however, it's even-sided, for example, like your word against mine, you believing falling house prices is good and me believing it's not. Neither opinion is stronger than the other unless substantiated with concrete information. I'd advise you to conduct a survey into the 32% of fully-owned households in Australia to determine what their feelings are about falling house prices, and do the same for those that have a mortgage (ie. in the process of purchasing) and those who are renting.
I suspect the results will be most revealing. Namely, the 'haves' would rather house prices stay the same as they are currently or trend upwards as they have done historically. The 'have nots' will desire lower house prices so that they can buy into the market.
Pauk wrote:All that is required is anti-speculation laws and taxes, like Germany.Consider also that Germany has its own problems, problems that you and I do not want to have, such as an aging population with currently negative (-0.2%) population growth rates. In fact, Germany's population growth rate has been in the negative territory since before 2005. Furthermore, Germany has been in the news recently for the wrong reasons. I doubt if its economy is sound. Was anti-speculation laws and taxes in part to blame? That I cannot answer as I'm no expert, but it'd be interesting to entertain the possibility.
Detached houses win so far…
ummester wrote:fword, I get how you are saying land is unique and mass produced consumer goods are not but1) Why is land in Australia still worth more than land in America, or Ireland, or so on?
Constrained supply and excessive demand, both problems of which exist in the most desirable parts of the country, and for specific types of property. In Melbourne for example, it would be simplistic to say that there are an excessive amount of apartments springing up in the CBD and there will eventually be oversupply. Or, that vacancy rates in many suburbs of the outer Western municipality of Wyndham are recording in excess of 10%, therefore there are no supply issues. Both of these assumptions ignore two important points:
– living in the city, being close to amenities, cafes and being in the 'thick of the action' might be desirable to lots of people, but they may not necessarily desire to live in an apartment. Therefore, we are providing the 'wrong' kind of housing in an area where it's desired.
– living in various suburbs of Wyndham may be undesirable to potential buyers or renters, hence even if the type of housing is 'correct' and matches that of the demand, the location may not.
In conclusion, resolving supply issues does not rely on opening up new subdivisions and selling cheap house and land packages in the outskirts of the city. It relies on the provision of the 'correct' type of housing in the 'correct' locations, something which as you can see is not easy to do. We cannot wave magic wands to instantly create empty blocks of land amongst already established housing. Instead, what's required is decentralisation of businesses and amenities that concentrate heavily in the CBD. For better or worse, this could take decades to achieve. There is an ingrained mentality for people to still flock to the 'big smoke' and businesses cannot shift their operations to the outer suburbs or satellite cities overnight.
Furthermore, in a comparison with America and Ireland we are also ignoring the 'livability' of Australia and its current economic strength. Australia's claim to fame is its livability. If we look at the most recent ranking of the world's most livable cities, Australia has 4 spots in the top 10. Again, the equation is simple. Livability leads to an increase in cost of living, houses, food, petrol…just about everything else.
Back in the days when I first came to Australia, food and property (and just about most other things too) were cheap. Can't say the same these days. Also when I went to America for a vacation recently, it astounded me as to how cheap most things were in comparison…food, disposable goods. Housing prices, debatable. Comparatively speaking I'd say America and Australia are on par. When we look at a standard 4 bedroom detached house in the suburb of Buena Park, CA for example, it's no cheaper than a standard 4 bedder in a comparative outer suburb in Melbourne. Both Ireland and America are up to their eyeballs in hot water at the moment. They're 'livability' isn't improving any time soon.
ummester wrote:2) Why is food so cheap? Each carrot that grows is unique to the next. Why does no-one care about a carrots uniqueness?Food cheap? Why, it used to be much cheaper. Also, let's read my original statement carefully once more: "A piece of land in a specific location is solitary in its existence." A piece of land is a piece of dirt which is the same everywhere around the globe. However the key words here are 'specific location'. I don't need to point out how different locations can be. But you'd need to tell me how different carrots can be!
Well, to be fair, there are for example, organically-grown carrots and ordinary carrots. They may look the same, but even then we pay the premium for the former.
ummester wrote:3) Why is labour so cheap in many markets? Each human being is arguably more unique than land or carrots.Oversupply. Greed. Exploitation. Lack of a union and bargaining power. Are you now glad this doesn't happen in most parts of Australia? Well it does exist to a certain extent, but not as much as I've seen elsewhere.
ummester wrote:I agree, falling house prices are not a good thing in the short term. They suck for economies that have become dependant on them, like America's was and ours is. But long term, surely an economy that is independant of a single asset class is more valuable because it is more unique.Whether or not falling house prices is a good thing is subject to debate which I think will be even on both sides. However the claim here that people who own their house outright care not that house prices fall is downright crazy. That's the point I'm trying to make.
1. 32% of all homes, not 32% of the population.
OK, you're still dodging the point. I argue that people WILL definitely give a hoot if the house that they fully own falls in value by 40%. This is humorous, how can you claim people wouldn't care? Did you do a survey? That's 32% of households in Australia that you've got to survey before coming to a conclusion. After all, wasn't this the crux of your post, that "falling house prices are a very good thing"?
2. If I buy a car or a TV I expect it to be worth 30% less the moment I take possessionLet's add another ridiculous statement to this then: If I buy a house, I expect it to be worth double what I paid after holding it for 7-10 years. Look, it's the analogy I wanted to draw your attention to, just trying to drive home the point as above, and I'm underlining it this time just so that anybody who's reading can actually see it.
When I was using that analogy, I was referring to an item that is worth less than a couple of thousand bucks, and even then I see people who feel the pinch having bought it and then see it go for sale within the week. They're usually sore enough to return it and try to buy it back again at the reduced price. You're telling me you won't do the same? Therefore It's plain crazy to assume people won't care if their house which they now own outright, and was worth $1 million dollars previously suddenly is worth $600K within 7 years. What a ludicrous assumption to make.
Anyway, while we're on the topic of televisions versus houses, the reason why disposable goods decline in value the minute they leave the store is because an identical example exists in many stores the world over, or can be easily made again and even improved with technology. That's why these things depreciate. A piece of land in a specific location is solitary in its existence. Identical examples do not exist around the world, and neither can an identical one be ever made again. Locations also, generally improve over time, making the land in that area more valuable.
4. Housing will decline to its intrinsic value, or 3.5 times a single wage, or when the mortgage (90% LVR) payment is 1.5 times the rental yield.Where did you draw those figures from? Perception of 'intrinsic value' of a house is subjective. Try and take those figures into places with mega-expensive property like Singapore or Hong Kong and they'd hold no water whatsoever. Obviously a house is worth more to those guys than your measures would suggest. Having lived in at least one of those places for half my life, I'd say that Australians are a truly blessed bunch. Head over to Singapore for example, and see what $350K would buy…you'd be lucky to get a shoebox apartment.
Besides, are you suggesting that housing in ALL locations and regardless of quality will decline to the same 'intrinsic value' as measured above? So a shack in an industrial slum will be worth the same as a mansion by the beach? Man, this is wrong on so many levels I don't even know where to start!
6. Did you miss seeing the information about the $5.6 billion spent on public housing? In June last year, half the building approvals for units were public units.
http://www.economicstimulusplan.gov.au/housing/pages/default.aspxWhat I'm more keen to know is whether this effort going to be enough? How long exactly is the queue for public housing? How many units exactly are they building with $5.6 billion? And how do people qualify for said public housing?
7. At a tax free threshold of $40k, the average battler will pay $5500 less tax per year.
Only to be taken away by land tax of 1.5% on a property/ land value of $350K. Classic government strategy, taking with one hand and giving with the other. Besides, do you know how many average battlers are there in Australia? Lots of them! Have you calculated how much that would 'cost' at $5500 per person? Can Australia cover this 'deficit'? Put another way, even if the government taxed the snot out of everybody else, would they break even?
8. It is unclear as to if rents did not increase the last time NG was taken away.
http://www.macrobusiness.com.au/2011/03/calls-to-restrict-negative-gearing-grow-louder/
http://www.businessspectator.com.au/bs.nsf/Article/negative-gearing-property-prices-rent-investment-pd20110321-F66MY?opendocumentLet's counter that with two references from published books: 'Mastering the Australian Housing Market' by John Lindeman and 'Renton's Understanding Investment Property'. For good measure, I'm going to throw in a third: 'More Wealth from Residential Property' by Jan Somers, which also discusses the added strain on public housing during the two years that NG was abolished. I'm sure there's numerous other references that you and I can find on each side of the argument.
Pauk wrote:Me in blue.. just to keep it fresh and tangy…
32% of the homes are outright owners. It was 47% in 1965.It may be that the pensioner or part pensioner is fine with the income stream, and those pensioners do not care, as much as a leverage buyer, about falling prices.
There must be some misunderstanding here. I am not concerned about they number of outright owners now compared to that in 1965. The point I was trying to make was that of those who fully own their house (ie. the 32% of the population you mention), in most cases, the majority of the wealth of these individuals lies in their own home. To say that this group will absolutely not care about their house prices falling to the tune of 40% is fallacy.
Using a different analogy, say you bought a brand new television two days ago and now they have the same product on sale at 20% less. You'd be sore, even if you knew that the television would never be sold and it'd be used till the day it either dies or is well obsolete and due for replacement.
Pauk wrote:It is designed to be anti-speculation law and to decrease the attraction to residential property speculation.Yes I know exactly why you are lobbying for such change. However as you know, there are side effects to every action that can backfire. The 'side effects' are precisely what I'm discussing here. You cannot lobby for changes without duly accepting the risks involved and taking steps to mitigate those risks. So, do tell us, how do you plan to address the issues that people will face when having to foot the bill for a massive land tax when living expenses are already skyrocketing and becoming unmanageable, especially for those on a lower income?
I see such struggling people at my place of work each day and I cannot believe you intend to make life harder for them just to combat suspected 'speculation' in residential property. It is crucial to identify the problems already present and not add to them. In medicine, we call this principle 'First, do no harm!'
Furthermore, land tax is worked out as a proportion of the value of the property. Who is responsible for doing such valuations? Are we using current council valuations or bank valuations or appraisals from property agents?
Pauk wrote:Noted, however I still disagree with the premise.When it comes to your suggestion on estate tax, I think you'll find opinions will be very divided. Surely, if you're due to receive some form of inheritance in the future, you'd rather have every cent on it rather than the ATO get a slice before you even see those assets.
Pauk wrote:Nothing wrong with a nation of renters. As many renters now as outright owners. It is the other 38% that are the worry….Of course there's nothing wrong with a nation of renters. I didn't say I was against it. My point was that your discussion about competition between investors and FHB is moot. Eventually we'll reach the stage where property could become very unattractive not only as an investment, but as an asset. There's no FHB or investors to compete with each other. NOBODY is going to buy houses, leaving the government to provide housing for the nation, at your expense and mine, and the situation ain't going to be pretty.
Once again, we're interpreting this in the light of property prices actually tumbling with the implementation of the suggestions you had listed in your original post. However we should consider also that property prices and rents could ironically increase under such conditions. Historically at least, we've seen that property prices and rent increased during the short two years that NG was abolished. Landlords could simply pass on the costs of the new land tax to renters. So perhaps we could have a nation where the vast majority of folk are renters, and a few mega landlords with massive property holdings, being able to dictate rent as they wish. Sure, you could lay down a law to say no rent increases greater than 2% beyond CPI, but they'll be a lot of shadowy dealings with tenants competing with each other to see who can offer the highest rent to the landlord to gain the lease to the property. This is already happening, BTW.
Alternatively you could get a situation that an Egyptian lady recounted to me, from the days she used to live in Egypt: rent in Egypt is cheap and people stay long term in the houses that they rent…many generations may go through the same house. However, to secure the lease to the house, you got to come up with a big lump sum to convince the landlord to rent to you. In so doing, you're purchasing rights to rent that house, and those rights ain't cheap. This Egyptian lady told me that buying the rights was as good as buying the house! Happy to be corrected on this, but coming from someone who lived in that country, I'd say it's pretty compelling.
Pauk wrote:Land tax, increased GST, mining tax, international nuclear waste storage revenues ($100 billion) etc…Well, back to the point about people struggling with living expenses even today. How do you propose life is going to get any easier for these folk with the introduction of these taxes? Increasing the tax free threshold may alleviate some of the pain, but I don't see this adding up. Here's why: mining tax, and even the carbon tax that was recently introduced to Australia is like shooting yourself in the foot.
Believe me, I'm cynical as well about Australia's two-speed economy, and frequently joke that the only people making money in today's environment are either the banks or the miners. But taxing the heck out of the miners is not going to solve the problem. They'll find some way to pass on to the costs. And that's right, they'll pass their costs to you and I, the consumers. They're not going to simply absorb the costs and reduce payouts to their staff or investors holding their shares. If we think petrol prices are getting stratospheric and hitting new highs every month, just wait till all these taxes come into play!
Pauk wrote:They are livingin tents in Gladstone and renatl increases due to mining and natural disasters needs to be created, now.Yes, but what's the solution? Do we expect the government to step in and build houses out of thin air overnight to alleviate the supply woes? Do we expect the government to do ANYTHING at all?
Pauk wrote:No age limit and wiped out when they buy Australian property on their return..
Let's modify this a little and say that anyone with a HECS debt continues with their repayments regardless of how long they leave Australia and regardless of age. The payments cease only when they buy Australian property. That is, if you can convince them to buy property that could now either be in a slum that we know as Australia, or property that is now drastically unaffordable because landlords hold all the cards and you got to buy the right to rent from them.
Reminds me of that cartoon image I saw in the newspaper over the weekend. A rich tycoon holds up a sign saying something to the effect of, 'For the right to toil, suffer and die upon this planet, apply here.'
Pauk wrote:Quite wrong. The outright owners are the biggest group not to care at all if prices drop 40% over the next 7 years. They have their 'home' and it may be irrelevant if it is at either a top price or a bottom price. They just do not care.Still disagree. For the vast majority of Australians, most of their wealth lies in the home that they own outright. If house prices take a dramatic fall, many of the fellow Australians around you will be far poorer. Many Australians are unaware of how to release the wealth they have in their own home without actually selling. However, disregarding even this for a moment, it is possible for a retired older couple to sell their home and rent, and put the money towards a nice trip around the world or a great car. I do not even need to ask my parents if they would be concerned about their house value falling by 40%. It's obvious that they would be.
Pauk wrote:Yes perhaps over a long time, say 20 years, Now, start at 0.5% and go to 0.75% within 5 years.That's still $1,750 pa for a $350K house. I do not know of too many people who live in such houses and of that demographic who can pull an additional $1,750 out of their wallets for land tax. I've had some clients in tears just worrying about meeting their electricity and water bills. We have more deep-set problems than a land tax is going to resolve. Far from it, a land tax of such proportions only compounds the problem. Also, it kills the great Australian dream for even more people because we'd rather rent than contend with high land tax. With your other measures, property is going to become a very unfavourable investment. So who's going to provide all those properties for people to rent? The government. And guess who's going to be paying for this, the equivalent of rent assistance for not just a portion of the population, but the entire nation? That's right, you and I, in tax and by the bucket-load. Oh wait, you only pay tax if earning over $40K pa.
It is cheaper for the government to provide negative gearing benefits to property investors rather than to provide subsidised housing to the public. If it were the other way around, would they not have done so already?
Pauk wrote:It really is a sperm lottery if you accept no death tax.If we do as you say (and also increase tax-free threshold to $40K pa, which would undoubtedly increase taxes for those above this threshold), we are not helping Australia to progress and prosper. We're simply creating a nation of underachievers. High flyers and overachievers who naturally earn a higher income will head overseas and tax evasion will be rife amongst those who do remain, just to stay under the $40K threshold.
Pauk wrote:That investors are already in competition with FHB. It will make older homes more affordable as investors and speculators, stay away fro them in droves.See above point regarding land tax and even our discussion immediately above regarding death taxes. The FHB class is officially dead if we go ahead with your proposal because nobody would want to own a house. Everyone would prefer to rent with the government providing our housing and with us all STILL paying for the said housing. And I doubt if the government can maintain rental properties as well as some landlords. Population will take a dive because the only people who will be staying away in droves are the more successful people in Australia. And yes, I mean they'll be leaving the country, not just refusing to invest in it.
Pauk wrote:You are by paying tax now. Do you know what is about to happen to our pension costs in Australia over the next 15 years? Do you know that 80% of the 5.2 million boomers, will require full or part pensions. You are going to pay more tax.Precisely correct. And so I'm bewildered…you still want to increase welfare payments? Bear in mind now that in this scenario, it wouldn't be long before the majority of the people in Australia will be those earning $40K or less and paying no taxes. So, who's going to supply the money for welfare payments? The politicians? The welfare system will spontaneously implode.
Pauk wrote:Good, because some Brisbane suburbs went up 10% in one quarter following the floods there and Gladstone is a shocking mess now.Look, laying down 'laws' these days is uncool. You got to find a solution. Obviously the rent increases in those areas so happened because of the lack of supply, and there's actually demand to support the said rental increases. What are we supposed to do about that? Someone provides the service and somebody else is prepared to pay for it too. Nobody is forcing renters there to pay those prices. They could live in a tent is they so choose, or take a flight in and out each day.
Pauk wrote:Any young Australian that spends time overseas working and then decides to return permanently, is our asset.Define 'permanent'. What measures should we implement to ensure an Australian so returning will actually stay and work in Australia for the rest of their life? Also, do they necessarily need to be 'young'? Are there going to be age limits? What about a person who decides to come back, work for say, 2 weeks and then live of the massive welfare benefits that would now be present under this scenario with increased welfare payments?
xdrew wrote:I suggest you treat the market with a degree of caution. And look whats ACTUALLY happening in it. Because that way you can be the best judge of whats happening and whether you can be moving your investments in the right direction.
So I gather that at the moment, the property market is showing signs of stabilising but not actually beginning an uptrend as of yet? This is my understanding of it anyway, and of course its simplistic because I'm not well educated. But that's the gist of it, I suspect.
ummester wrote:Flipside is, the easier the lives of people around you are, the easier yours will also become.Imagine where everyone just worked a single job to afford their house and then imagine how much more pleasant service you would get from untired workers in customer contact/service roles.
Imagine where the primary investment oppurtunities for people with that bent, like yourself, were productive. Say you choose an inventor to invest 400k, who develops a product that benifits society as a whole.
Imagine an Australia not so occupied with property prices.
I'm gonna end up posting a John Lennon song:)
Haha. Frankly, I have no qualms whatsoever that my life will be exactly the same regardless of how much easier the lives of others become. My life gets easier for me only because I'm doing something to change it and make it better. Sorry, but the levels of altruism I once had have all but vaporized in the few years I've spent at work. I believe people are still capable of good deeds and helping one another, but I'm not expecting the actions of somebody else to help me out!
Customer service people do not give bad service because they're tired. They just can't be bothered. Good customer service…you get paid $X. Bad customer service…you still get paid $X. Besides, a lot of customer service jobs are offshore at the moment, provided by people who couldn't tell if I were living in the heart of the city or in a faraway regional center. The hilarity of the situation has reached epic proportions. Some of my clients have joked about 'customer service', saying that when someone on the other line picks up and speaks with a certain accent that they are not familiar with, they will hang up immediately.
Some of the other reasons why people fail to give better service at work include being uninspired, feeling unappreciated and feeling underpaid and overworked (even if they're only working one job). Very simply, it's just low morale, or, 'I just can't be bothered.' I've observed some that are worse, giving bad service because they are just plain lazy. They're not overworked. Far from it. They are well to do, no debt to worry about, not even a mortgage or a car loan. These folk want to work the minimum and get the maximum pay out of it. If you've ever had to pick up the pieces from your colleagues at work, you'll know exactly what I'm referring to. Plain irresponsible behaviour.
xdrew wrote:I dont have to read those articles.Because consistantly … and regularly the 'experts' in the paper have been proven wrong.
I am not going to mention names .. but there is a certain person in the investors section of the paper that gives me a regular giggle with her insights. She's been SO wrong … i read her for the laughs now.
The market HAS bottomed .. and before it starts up again its going to need a supply of people able to get loans. IF as predicted the credit markets overseas seize up .. then even with cash, equity and baseball cards .. you wont be able to pick up a loan from the banks for love or money. That'll plug the flow of cheap money. And as people compete for getting whats available .. that will raise interest rates by several notches.
Or you can listen to the newspapers. Try the comics section. Do they still publish Garfield?
OK, comics aside for a moment, entertain me, I implore you. What should we do?!
Pauk wrote:When did it become the goal of an advanced society, like ours, to make the cost of living, including house prices, dearer for the following generations?Since when was this ever a 'goal'? People set out to make life easier and better for themselves, NOT make life miserable for everybody else. Don't develop a complex here.
Pauk wrote:Falling house prices are a very good thing.Depends on whether you currently own a house or not. If you scrimped, saved and invested your way into finally having the title to that roof over your head, no, it's NOT a good thing.
Pauk wrote:1. CGT on the PPOR at 20% if sold under 10 years. (exemptions for legit reason to move. ie work family health etc)Affects some more than others. Has less effect on those in higher tax brackets. It affects the middle and lower income people the most. That means, the poor have less chance of improving their current situation. The richer have a better chance. Counterproductive to the rest of the measures you suggest.
Pauk wrote:2. Land tax of 1.5%, all property, no exemptions (pensioners and other low income groups can accrue this until the house is sold)You're joking, right? That's land tax of $5,250 pa on a $350K house and $12,000 pa on a $800K house. People are struggling with mortgage repayments and living expenses, and you want to slap them with a land tax of mega proportions?
Pauk wrote:3. Death tax of 20% on estates over $1million.So, you're against things that make life more costly for future generations and now you want to reduce their inheritance? By the way, $1 million is NOT a lot of money in today's terms. I say that when people die, let them be and they should pay no 'taxes' starting from the time of death. Estate tax should be 0%, not 20%. Just think about it. Each of us is ALREADY paying tax every time we earn money. Why should we pay tax again on assets that have already been taxed in the past?
Pauk wrote:4. No stamps.Agreed. There's been some talk in the papers recently about this. Some murmurs are going around to suggest this should be scrapped. However the government is sure to introduce a separate tax under a different name to compensate for the loss of revenue from stamps, or to otherwise increase other taxes.
Pauk wrote:6. NG on new builds only.Counterproductive. This will cause investors to flood in and buy in the areas that are currently most affordable (house and land packages) and in demand from first home buyers.
Pauk wrote:7. GST to 20% and the tax free threshold for wage earners raised to $40k. Increase welfare payments accordingly.Far out, I'm not putting my hand up for contributing towards INCREASED welfare payments. Maybe others may agree to such humanitarian efforts!
Pauk wrote:8. Rent increases no greater than CPI +2% by law. Natural disasters aand mining booms are creating hugh rental stress.Hey, I'd be happy to be able to put up the rent by 5%. I only did a 1% increase in the past year.
Pauk wrote:10. For someone who emigrated away from OZ and has been away longer than 5 years, their HECS debt get cancelled on their permanent return.And you'll get a situation where people take advantage here by getting education at markedly reduced fees before running away to work elsewhere and benefit a different country (before they come crawling back after their 6 year overseas stint). I disagree with this suggestion.
ummester wrote:I don't quite understand why agents would want to get more to list when many markets are in oversupply ATM.Beats me too. However I think the markets are in oversupply of less desirable property…less desirable could mean, not as 'nice looking', in poorer condition, not matching the demographic or price range of the folk looking to live in that area, messy neighbours, further from amenity and public transport, non-ideal orientation or layout etc. It is hence simplistic for people to look at median prices of certain suburbs and claim that prices have fallen 10, 15, 20%. We got to look closely at the quality of properties for sale. In some cases, they are selling properties that I won't even touch with a 10-foot pole.
Property values can vary by 10% easy, even within a particular suburb. It all depends on whereabouts in the suburb a property is actually located. A property located in a more refined part of a suburb generally sells for more than even the exact same property in a more dodgy part of the suburb. Also, a property located near the boundaries of a suburb may reflect the premium prices of a more expensive suburb across the road, or may sell for not much more than a cheaper neighboring suburb. What about properties on a main road? These also generally sell for less than a similar property in a more secluded (but not TOO secluded) street or cul-de-sac.
The study of property for the purposes of investing is hence a fine balance between the knowledge of the big picture and also the finer details.
xdrew wrote:BWAHAHAHAHA
Ok .. for anyone who is sensible .. DONT READ THE NEWSPAPERS. Simple as that. Every second article is doom gloom and how there will be an eventual reckoning. If I trusted the papers I would have missed both major booms in the last 5 years. So .. I didnt .. i actually used my head and it made me richer.
June 2006 – Markets overbloated .. destined for a rethink – THE AGE
(sept 2006-Feb 2007 prices go up by 30% on average)
Feb 2009 – sharemarkets set for more turmoil .. investors flee – THE AGE
Invested big in stocks (blue chip) as of March 2009. Who is laughing now?
Papers are a hard sell to morons. Look at the facts .. look at the figures .. and ignore the papers.
xdrew, obviously you haven't read those articles. Specifically, the first article I alluded to was discussing that the market had already bottomed in Sydney 3-4 months ago and the market is at a similar stage now in Melbourne. If this is correct, it bucks the trend of 'doom and gloom' that commonly see in today's newspapers. And IMO, at the first signs of life in the property market, cashed up people should already have bought, or be ready to buy immediately. I think a lot of people are waiting for the stars to be in alignment, or a glorious light to come from above before they are convinced to buy…just as well, because those with more courage and vision stand to make substantial gains, and the rest will just be what they've always been…ordinary.
The second article discusses the impending supply of house and land packages on the city fringe to meet the demand for housing. Essentially, this article would suggest to me that buying house and land packages in the outskirts is not a good idea at the moment. Buying in more established suburbs closer to the city is obviously a better choice if the city's fringe is soon going to be filled with McMansions on 300-500sqm blocks of land. On that note however, there's a difference in demographic between the first home buyers who are likely to go for house and land packages in the outskirts versus families or upgraders who would be buying in more established suburbs. Hence I disagree with the article saying that demand will be met simply by putting more houses out at the city's fringe. We got to meet housing needs where it's most wanted, not simply slapping down a new subdivision in the sticks and hoping that will deal with the problem.
Matthew…once your thesis is complete, and you have a PDF copy, I'd be very interested to see it.
Oh, for those still reading, I read an article in yesterday's newspaper just today (go figure). Anyway, for those who have this Saturday's Domain, look at page 16 for the article by Chris Tolhurst titled 'Know whether the market is turning'. Also, read the article on page 15 by Kate Roberton, titled 'The fringe of a revival'.
Are these articles indirectly telling us when to buy and where not to buy respectively? You be the judge.
Gus66 wrote:What you need to ask is "are all the skeletons out of the wood work"?Haha, are they EVER?
ummester wrote:Your in now, make the most of it. Trying to get out could actually turn out worse. If you have your finances in order, you should be fine.Interesting that we mention getting out of the market. They say the road to hell is paved with good intentions. However, I've planned not to get out of my properties for at least 10 years after purchase. There's agents ringing me up every few months and asking if I want to sell. Surely they must be disappointed to hear that I'm not selling. On the whole however, the agents are telling me to hold the properties and not sell now unless I absolutely have to.
desilucky wrote:So If I have more deposit next year, and if prices come down than I will be more better off… Or shud i go ahead and buy now……. My gut feeling is prices are going down,,Reading through your post, I figure that you must either be thinking aloud, or otherwise posing rhetorical questions to the forum. Nobody is going to be able to tell you with absolute certainty what is about to happen in the immediate future.
Let's consider human nature for a start. Public perception of the state of the market usually lags behind that which is true. This means that when people are swooning over property prices like the boom will never end, then it indicates that prices have already peaked. When people think the market is down and is continuing to head downwards, prices could well have stabilised. The brave few who predict the market is going to recover are already busy doing their research and too busy buying up to actually be commenting in forums like these.
So that leaves us with two main groups of people who will be commenting here:
1. The people who think the property market is shot and headed down.
2. The people who really don't know and hence can't give you a clear answer.Hence, are you really giving yourself a fair shot at an alternative opinion? Not really.
For the most part, continuing to rent is the way to go for now. Considering the previous run up in house prices, yields are down in most areas (ie. the areas where your average Joe will be looking to buy). Therefore it makes renting in these areas comparatively more affordable than buying a PPOR. So I have to echo what was mentioned above: that you should rent but put your 'savings' towards an investment. If you have a 'dream house' in mind, there is always the possibility of buying that house to rent out first while continuing to rent yourself, and take advantage of tax benefits if the property is negatively geared, or to gain additional income if the property is positively geared.
Unless you're very experienced with property, you're not going to make money overnight. And that's not the point with property. When you buy an investment property, consider what is likely to occur after 5 years, 7 years or 10 years, NOT worry about what's going to happen in the next 5 weeks.
Just as a property boom with unprecedented capital gains doesn't last forever, neither does a property bust. But if you ask me, I'd rather be buying when the sentiment is bad than be clamouring with 50 other buyers for one house when the market is absolutely boiling over and the vendors hold all the cards.
Personally, I'm already fully invested, however our family is in the market looking for a house for my brother to buy. I spoke to a couple standing thereby after the auction had passed in at an unheard of price (ie. low) and this couple was wondering if they should go in to negotiate. One of them said with some degree of panic, 'I don't know what to do. Some people say that house prices are falling by $200 a day.'
I told him this, 'Well I assure you, that's NOT going to last forever.'
The house subsequently sold for an absolute bargain price, and even my brother who is absolutely sticky on buying ONLY bargains was regretful not having finance ready and not being able to bid on that day.
It's also interesting because during the auction, the auctioneer declared, 'C'mon first home buyers! When the market is hot you say prices are too high! Now we have a bargain and yet you do not bid! We can't win you either way!!'
Easy to dismiss the auctioneer's words as 'sales pitch' but it has some truth in it. Most people get stuck in a rut and decide to sit on their hands and do nothing except complain.
Key thing is to decide what decision YOU are comfortable with, then make a move.
Personally, I'd take a long term view. Your post doesn't state where exactly you're living. But Australia is very popular with migrants and that's not about to change. I stay in Melbourne, rated most recently as the most livable city in the world. Do we truly believe that Melbourne will become a vacant slum in the long run? Not a chance, unless an unforseen disaster occurs. And if we're going to spend our lives worrying about 'unforseen disasters', we might as well hole ourselves up in an underground chamber and be miserable, because we're not truly living at all.
mattsta wrote:''This has potential to be significantly worse than the Lehman Brothers collapse and the subprime crisis because now we are talking about nation states,'' Mr Norris told BusinessDay.That's quite concerning. I guess I may have to brace myself for the oncoming GFC2 – What are you all doing to protect yourself (or at least be cautious)?
1. Stability of job & income
2. Enough savings to meet mortgage repayments for 30 months or more
3. Parents are additional 'last resort' safety net with enough savings to easily bail me out if I failBTW, point 3 was a joke. Parents, loving as they are and regardless of how much they are prepared to sacrifice, are not there to be used or taken advantage of. Their savings are theirs to spend, not mine to inherit.
Bottom line is, I'm not selling out of my properties just because the GFC is coming. That's like having a deep love of living near the sea but deciding not to buy or live there because there MIGHT be a tsunami. If you spend life worrying about EVERYTHING, you'll end up doing absolutely NOTHING.
In addition to the above, when you're looking at investment property, consider also the vacancy rates in the area of your interest. Check SQMresearch for more info. Vacancy rates at Wyndham Vale are currently sitting at 10.6%, a little too high for my liking.
keiko wrote:Yep deffinatly, it will be interesting if enough people answer. I keep reading that most people want to live in apartments in the CBD's hence the reason for putting this post up
Depends on whose opinion we read, I suppose. For example, if you head over to the API blog, Michael Yardney believes that apartment living and a low-maintenance lifestyle is the way of the future. The RE agents have caught on to this, now advertising houses on subdivided blocks in the suburbs as having a low-maintenance lifestyle on 'compact' blocks. Catherine Cashmore on the same blog however, has written about buying family homes on land instead of apartments.
Ultimately, I'd rather live in a detached house. The increase in maintenance for the house and gardens are a small hassle compared to improved privacy and personal space.
