Forum Replies Created
If you have a signed contract you are locked in unless he becomes in breach. I would read your contract well, and ensure that it covers all you were verbally promised. If it does not, any chance you may have to do something about it would be now. Not sure what you can do, but I would check now.
As to stepping away because of his past background, I don't think there is anything you can do..
Last night on the ABC news channel one of the speakers, did not catch the name but senior in the RE industry, said and among the many reasons for the slump, buyers market, etc etc etc, is there is no property shortage, actually the reverse with many more sellors than buyers and lots of "off the plan " stuff coming on…
and why do all the "go property "advocates that think property is bullet proof assume that anyone who thinks the correction is immenient has no investments …come on…
Dan42 wrote:Here are a few differences, off the top of my head.
1) The Australian economy is relatively strong, we have low unemployment, and a budget that will be in surplus (apparently) in 2013. The US economy is a basket case, unemployment is over 10% and they are TRILLIONS in debt.
2) It's interesting that the areas mentioned in the link (Florida, California, Nevada, Arizona) are all states with non-recourse loans. We don't have non-recourse loans in Australia.
This doesn't mean that house prices won't correct, or more likely, stagnate for a few years, but are we likely to see massive, US style drops in house prices? I doubt it.
BTW, some of the bearish types here have been predicting the 'bursting of the bubble' for the last three years. What's so different now compared to last year, or the year before?
And before anyone says it, no, I'm not predicting huge gains or sayng that now is a great time to buy. I just think a period of no growth is much more likely than a huge crash, regardless of what happened in some US states.
think the biggy is the gumnut.
they have stopped cramming in more bums on seats as the electorate now punishes gumnuts because of perceive failing in infrastructure…Gumnuts hate to borrow, so infrastructure lags, and so we punish
Sydney must be getting close to putting up the full sign (Bob Carr even said that when he was still in office)
Next is the stimulus is wound down, that will reduce the massive premium on Bob The Builder and his merry matess, that will flow in with less money sloshing around, and reduce some building costs (actually in the Hills acreage has a lot of the builders who have been building their mansions, some for as long as 7 years are now finishing them as they are not out there gourging like Attila the Hun any more)
,and finally, we are being softened up for a TOUGH BUDGET, so people will feel poorer, have less cash, and less wealth, as they can't drawn down on the increased equity that has charatcirised so much of the last deacade…
US style crash no, slump, with no growth in the foreseeable future yes.
Back 20 plus years ago when a huge amount of Oz property was funded by local borrowings it was easier to bring it down like that. but if we are borrowing most of what goes into the mortagage market from overseas then how do we reset our rates below what countries like Ireland and Greece are borrowinng..
If demand drives up the cost of money the reserve can drive down its cash rate, and just become irrelevant.
over to others..
ummester wrote:. Many of the people I have it with get very sensative and upset about claims that their house may not be worth as much as they think its is though.
.
A couple of years ago a family member was mentioning their place was worth 800K, followed by the usual, "will sell up some day, sell the IP and retire up the coast."
fast forward three years
the neg was killing them they had capitalised interest losses again and again, plus took a holiday, borrowed on the capital gain etc etc. (sound familar)
on the market goes the home, no choice really. Will take best offer over $730K, way too low, but that is what agent recommends.
Four months later sold for $630K, and they moved into the 270K rental with still a debt over them
Very few people undervalue their homes…(and those that do, usually are headed for retirement homes.)
just human nature
ummester wrote:gmh454 wrote:I commented a few months ago at how many boomers who are about to retire are sitting on neg properties. (met predictable replies) . Talked about this with other accountants, and we are now seeing them sell, and talk about unloading, they cannot sit any longer. They certainly are not buying.They have to sell places that aren't cashflow positive – what's the point of a NG IP when you are retired?
gmh454 wrote:as NSW and Vic, Federal and Qld will show, the lack of infrastrucure is bringing down all goverments. People are unhappy aboyt congested roads, trains, hospitals, and bringing more people before the facilities will see governments treated very hashly.State governments have become reliant on revenue from house sales. Not sure about all states but it represents 1/3 of the total income for ACTs state government.
If you think infrastructure spending is bad now, wait until no-one buys houses or price decreases effect stamp duty.
there is always the old standby of Land tax…
Couple of other points –
I commented a few months ago at how many boomers who are about to retire are sitting on neg properties. (met predictable replies) . Talked about this with other accountants, and we are now seeing them sell, and talk about unloading, they cannot sit any longer. They certainly are not buying.
China when their bubble goes, may need to nationalise their banks, when that happens more cheap money goes home
Going the "bring in the buyers route to create a shortage- prop up demand etc" may not be the option. They were not trying to prop up property investors, but prop up the building industry itself"
reason 1., why this may not be required is that due to Qld, and the continued demand for infra structure for mining, we may not need to create builders jobs, anymore
reason 2. as NSW and Vic, Federal and Qld will show, the lack of infrastrucure is bringing down all goverments. People are unhappy aboyt congested roads, trains, hospitals, and bringing more people before the facilities will see governments treated very hashly.
pmack wrote:Urging first home buyers to buy with government grants and low rates and then 12 months later, instigate a reversal which puts them in an even worse position is absolutely criminal and these are the people lest able to absorb rising costs, let alone the current rate rise taking affect in January.
they did their job, they stimulated the economy
having young people " take one for the team" is a well worn Australian tradition.
In the 1980s if you were not young enough to have your piece of Australia with loan in place then you got to pay 17-19% on your loan while the older Australians with their smaller loans got 11%.
Can't remember the majority of those on 11% rising up …
remember their is no " I " in team…. it will make a man of them, ….unless of course they are women …or are men wearing womens clothes ….
Well there is only ever one answer for this….property next year will go up …. 15%.
why so..well with so many in arrears some will be forced out of their homes and they will have to rent …this will put rental pressure back on the housing market …increased demand …so property will clearly go up …15% (it's always 15%)
just need to put the right spin on these things…
jontapp wrote:Yes Sydney peaked in April 2004 at $530,000 and the last peak was March 2010 at $590,000. An increase of $60,000 over 6 years. What can that tell you about affordability??
umm ….. that next year it must jump $470,000 to $1,060,000 ….. well it's seven years, is it not.. must be the time to buy…
wonder what the rent on $1,060,000 would be …maybe 450 pw, …. but think of the tax break…
can you guys point out the quote where I said they bought OVER ten years ago. I said IN THE LAST TEN years..
AGAIN last ten years…think about it ..
maybe the light will go on…
somehow doubt it
Harb, I give up, I talk apples and you quote me as oranges….
I try to get back to apples and you turn them into grapefruits.
harb wrote:,is funny is that you gave it as an example when you were trying to make the point that anyone who bought in the past 10 years is bleeding. How much would that house be worth these days, if he spent 500k on improvements I'm guessing at least $2M ? Its a shame that someone as naive as this person didn't get some advice from you or his financial adviser to tell him
1) not overcapitalize on the property if he intended to sell it
2) demolish and build a new one for less then $500k
3) since he spent 500k in improvements keep it for a few years.
4) wait for prices to stop going up before selling<moderator: delete abuse>
Harb you are killing me.
This poor naive client (who has a Harvard MBA and beat Kerry on a deal) then did the the following
bought another Mosman property and resold it for 300k profit before settling,
bought in central highlands 65 acres, for around 650k, did close to 1m improvements then sold for low 3s
bought three blocks inline at Waitara, for around a mill, put in around 1mill (probably a bit more) and built something the size of a town hall, sold it for 13.5M, bought 10 acres at well you may be able to work out who by now, so I may leave his current address private.
oh yeah forgot in between did Palm Beach 2M + 2M improvements 2 years later sold 6.25all done within last 15 years…what can I say….. he loves playing Bob The builder.
and not one cent of Cap Gains….
Oh..and I Think he is happy with accounting advice
and Harb, moderator corrections, language Pleaseeeeeeeeeeeeeeee
but I still say there are loads of naive baby boomers who are bleeding…
harb wrote:gmh454 wrote:The thing I am seeing this year, is that for those (most of them) who bought a property in the last 10 years, they are all bleeding. Now I know that is because they are not clever little cashflow + types, I guess they went to the wrong seminar, – the neg gearing one.
You sure its 10 years ? Even Sydney and Melbourne buyers are way in front if they bought 10 years ago. If you look at Adelaide, Brisbane Darwin Hobart and Perth buyers they are around 300% up on 10 years ago and rents are about that much up as well. Take Perth as an example (because it has been lagging behind the other capital cities) where properties selling for 150K 10 years ago are now selling for well over 3 times that and renting for $450+ per week. How can you say they are bleeding when he interest repayments are around 200pw LESS then they receive in rent ? I'm not an accountant like you but even I can see that someone in this position would be positive geared.
My piece relates to my clients, which is a microsm of the population. I gave their age range and back ground, and all but two who bought in the late 90's will come out behind. The best so far was a city apartment bought 98, sold in 2005 for a loss after capitalisng purchase and sale costs – and it had been negative every year. (and that was the peak growth period), lots of these people bought new or near new apartments, they let others sell them property (Often with sellers fees built in at 10%).
I never said, you or any of the other smart operators here who only make huge gains, and I never saidanything about Perth, or the trolls who drop in from time to time with the "next year it's gonna boom" spiel, but my clients. The naive investors who drove up the market and ask any accountnat with a few over 55s and I think they can tell you of some if not a lot of their clients who have done the same.
Also on the stats on property question. One of my clients made the property pages over ten years ago when he sold his Mosman house for 950, 000. The piece saif he bought it for 410, 000 less than ten years before. It forgot to mention that he put over 500,000 in improvements into it. Take into account stamp duty and commission, and yep he lost
But the piece only mentions the buy and sell,….funny about that.
Interesting to catch up, I have been sitting out waiting for all the government intervention to wash through..
I am an accountant as some may remember. I don't do many individuals as we are mainly a business practice. However most of the individuals are a similar age to me, I'm 56. Some a little older some a little younger.
The thing I am seeing this year, is that for those (most of them) who bought a property in the last 10 years, they are all bleeding. Now I know that is because they are not clever little cashflow + types, I guess they went to the wrong seminar, – the neg gearing one.
But I sit here watching them either borrow more to keep up the negative payments or draw down on their super to feed these things. Mostly units, returns 1-2 % nett, (one actually is close to a neg gearing loss before the interest !!!!) .
Almost all under $80,000 ann income, some now retired have no taxable income at all, and larger and larger losses carried forward (okay will help with the cap gain – though that does not appear to be a problem for most)
Luckily none of them ever wasted $20 for a phone call and asked my opion first, but I wonder how long they can afford to bleed.
Apparently the "Henry report" is recommending a "second home owner grant" starting with this years may budget, and there is rumour of possibly a third home owner grant somewhere in the pipeline…….
sorry if this has already been posted,
I was wondering on this again this morning. We have had zero population growth in the age group that matters (Costello's kiddies don't factor yet), massive building in the last ten years, whole new suburbs have sprung up, massive medium density, continually going since around 1998, and all fueled by immigration, which very seldom factors in the wave of Aussies who have moved overseas.
Now in recent years a lot of people on 417 Visas bought in during the boom, will be heading home, rising unemployment will make further immigration a very sensitive issue, and the building continues unabated.
I think the building shortage was over hyped. I remember about 30 years agom when a friend of ours found a unit to rent in Bondi after months of looking, we all went out and celebrated. Certain areas have always had vacancy of less then 1%. This has recently been extrapoloated to a national wide shortage.
The only argument for Australias overvauled property is the supposed shortage. Unless unemployment comes down, and immigration comes back up, the shortage underpinning the market will weaken substantially..
wonder what they will do to protect the building industrty then…
Very interesting to read that from last year, gives me a warm fuzzy feeling…
ABC just ran a piece in Sydney on the downward pressure on rents in the mid to upper end…
always thought the "rental house so rare you had to sell a kidney to get one," was REI BS, will be interesting to see how long before it filters down..
also saw Perth is starting to spit blood, or so the figures would appear…will be good see Harbs viewpoint
wealthyjvd wrote:every single recession we have had, property prices have come out strong each time, why is this any different.,sorry, we will experience some drops, but not of 40+% pfft. ridiculous analysis.
first recession for you, is it ???????
I think he might be more interested in selling…..that is if he owned there…of course which he dosn't …..
