Forum Replies Created
There is, its called kiwisaver.You have to have lived and worked in NZ for at a minimum 3 years ($6k per couple) or 5 years ($10k per couple) to receive it.
The system also allows you to access your kiwisaver superannuation contributions to help pay for the house.
What are the chances you could be a speaker at the next one Nathan? Maybe have a chat with Steve McKnight. I think you could provide a good perspective on some of the opportunities out there that other speakers won’t be covering.
fWord wrote:And so the debate rages on. You know, there was an irritating voice that started to play in my head. It sang annoyingly,'Would you like to take a survey??!!'
A survey that reveals the following:
– Are you a bear, bull or a 50-50?
– How many properties do you control?
– If you control properties (whether your own home or an investment property), how many do you own 'outright' (ie. unencumbered)?
– Amongst the properties that you control, what are the approximate dates of purchase?
– Last question: do you NOT control any property now and wish you did?Not an exhaustive list of questions, but a good start. If we ever started something like this, it would be very revealing. The opinions of people on threads such as this are usually very much divided. That's because these opinions stem from a thought process based on their current situation. I suspect that, in the end, the property market will do whatever it wants, despite what any individual might say. 'Getting it right' is nothing to brag about, whichever way things turn out to be. That's because if a person 'gets it right', he/ she does so by chance.
People who are reliably able to pick a trend shouldn't be wasting their time here, or on television talk shows. They'd be out there spending all their time making billions of dollars.
On 99% of the Australian market, I am a bear, but have limited areas I am a huge bull on.
I own 3 properties, purchased in ’09 and ’10 during GFC.
Property 1, Melbourne land, purchased $320k, currently selling for $469k
Property 2, Melbourne house, purchased $348k, current value $400k. Have sold as a wrap, hugely cashflow positive ($625 per week)
Property 3, Gladstone house with 868 sqm of land, zoned high density residential, purchased $352k. Currently negotiating to sell 400 sqm for $200k to the person developing next door. Will retain the house and remaining land for another 3 years then sell at the peak of the market in Gladstone.My perspective:
– Purchased land in Melbourne as the equivalent Sydney locations were twice the price. Melbourne (and other Australian Capitals) have now peaked, so it is time to sell
– Gladstone is a town of 40k people with $40+ billion investment in the next 3-4 years, that is $1 million per person
current jobs on seek.com.au = 1146
current rentals available on realestate.com.au = 78
expected additional workers = 10k+ and their families
this huge imbalance represents a great opportunity
very low risk as the lng companies have huge forward contracts for $10s of billions for the next 20 years, so the projects will go ahead
right time to exit, just before the construction phase finishes in 3 years timeFuture opportunities to be explored:
– More Gladstone properties for capital growth
– US properties for cashflow (20%+ yield in some areas) and eventual capital growth
– Australian cities once they have dropped, find the best deals with the best yieldsI see myself as a value investor. In most of Australia, there is currently no value, hence I am a bear. I hope this clarifies my point of view.
Cheers,
MattI have a property currently for sale in the area with Sudha Pon from Sanctuary Lakes Real Estate. I originally purchased from her also. I have been impressed with her, she is very good at keeping you up to date on the status of your property and what is happening in the market.
Europe is a mess right now, the flow on effects in the debt markets from a default from Greece could be greater than GFC1
http://blogs.telegraph.co.uk/finance/andrewlilico/100010332/what-happens-when-greece-defaults/
Resource depletion will be the only issue of note in the next few years.
Silver runs out first, (within 2 decades) then oil. Resource depletion will be the only high impact issue. Climate change won’t be seen as an issue at all in the future by comparison.
Great thanks Kong, very informative video.
Confirmation of some of my predictions in the last couple of days:
Concerns about banks being able to rely on LMI providers to bail them out.
http://www.smh.com.au/business/mortgage-insurers-a-greater-threat-to-banks-fitch-20110517-1eqns.html?rand=1305700251520Credit downgrades for the big 4 Australian banks as they are highly reliant on overseas funding
http://www.smh.com.au/business/moodys-downgrades-ratings-for-big-four-banks-20110518-1eso8.htmlI was under the impression that you were allowed to have one or two wraps without a license and that it was only when you turned it into a business that you needed a license.
June 10-12
I was going back through some of my older posts and found this gem…
the average mortgage in NSW is $414k,
Source: last line of this Jan 2010 article http://www.smh.com.au/business/westpac-rate-rise-pushes-customers-to-switch-banks-20100105-lsbd.htmlwhile the latest median household income is I could find was only $1036 in NSW (2006 census), so lets assume it may be $55k per annum now to allow for wage growth.
Source: http://www.leaseinfo.com.au/docs/research/2006%20National%20Census.pdfBefore people claim that primarily those on high incomes own investment properties, I am also aware that 75% of those that make negative gearing tax claims in Australia have an income under $80k (this came from the ATO, but can’t find it at the moment).
It is clear from these figures that loans must have been made in line with the Journalist’s findings of 7.5 times income mortgage lending.
In Surry Hills where they were enquiring, $500k is a 1 bed apartment.
Thanks for your contribution Mosqui.
I have been looking at US property investment for the past few months, the main thing that would stop me is the risk of the USD crashing as happened in Argentina. The other side of the equation however is that this would most likely occur in a hyperinflationary environment.
In Argentina during hyperinflation, what happened to the property market? Did it go up at 1000% also? What was the best investment at the time in Argentina? What happened to rents?
Here is an earlier benchmark from a news article http://www.news.com.au/money/property/first-home-buyers-urged-to-beat-rate-rise/story-e6frfmd0-1225791082144
“BANKS are urging first-home buyers to lodge mortgage applications ahead of the next rate rise so they qualify for the biggest possible loans, an investigation by The Sunday Telegraph has found.Despite financial markets factoring increases of 2.5 per cent by December 2010, potential buyers risk having the amount they can borrow scaled back if they delay lodging applications.
The danger of such a tactic is buyers being rushed into loans they can barely afford today, which become unaffordable when higher rates kick in.
A Sunday Telegraph journalist sought a home loan through major banks last week. Based on an income of $61,000, a deposit of $55,000, and a good savings record, NAB offered a loan of “at least $450,000”.
“You could bid on a property at auction this weekend knowing that is the least we will lend you,” a mortgage adviser at NAB’s Surry Hills branch said.
He said the loan amount could be even greater once the buyer went through the official application process, when some “human discretion” could be applied.
“But you will need to hurry to get in before there is another rate increase as that will reduce the amount you can borrow,” he said.
A $450,000 loan, equal to 7.5 times stated income, would require repayments of $2496, based on the NAB variable rate of 5.29 per cent — more than half of the buyer’s income.
And if rates increase by 2.4 per cent over the next year, as tipped, repayments will rise by $700 a month, leaving less than $1000 a month to live on.”
So since Oct 2009, when the peak of lending to first home buyers allowed a person on $61k to borrow $450k, the equivalent income today allows a borrower at NAB to access only $354k. The equivalent income that a person needs to earn today to access a $450k mortgage through NAB is $74,500. Ouch!! Incomes certainly haven’t risen by anything close to 20% in the past 18 months to compensate for this reduction in borrowing capacity.
Also interestingly the person who is earning $61k and got a mortgage for $450k, has monthly repayments at 7.5% of $3,145.77. Their after tax income is only $4,080 for the month. This leaves them with just over $900 to pay all their other bills for the month!!
Sub-prime lending if I ever saw it.
I am planning to track the borrowing power calculators of the major banks on a semi-regular basis to see if borrowing power is affected over time in line with…
Step 4. Since Australian banks can no longer fund their debts on the international market, they restrict credit to home buyers.
The current 7-8 times income offered for mortgages is now reduced to 4-5 times income. 95% lending becomes 80% lending. This creates a viscious spiral as buyers on $100k combined income that bought a $700k house with a $35K deposit now find that other couples on $100k income they were planning to sell to now require a 20% saved deposit and could only borrow enough to pay $500k for the house.The current benchmark (6/5/11) is based on the following parameters:
Single
Personal residence
Annual income = $120,000
After tax monthly income = $7,250
No outstanding debt
No dependentsBorrowing Capacity as at 6/5/11:
Westpac $710,850
NAB $743,700
CBA $625,373
ANZ $708,000If we see these figures drop significantly in time, it is a sure sign of an imminent significant correction.
This is the kind of deal that Carly typically does, although it would never come with the DA already. That is normally what you are contributing to the deal…. find a property where the owner doesn’t realise its potential and create a deal that cuts you in on the action at no risk.
What the exercise didn’t seem to include, was Carly’s 80% cut of the profit in the deal you found for assisting you to pull it together.
I was thinking through Bernanke’s plight today.
His role as the Fed’s Chairman as set out in the Federal Reserve Act is to “promote effectively the goals of
1. maximum employment
2. stable prices, and
3. moderate long-term interest rates.”He has a significant problem however….
In order to keep maximum employment (i.e. not lose even more jobs) he must keep interest rates near 0% and keep printing money to fund the huge fiscal deficits and be able to afford to pay the interest on outstanding loans
On the other hand, as long as he continues with these policies, the USD will continue to decline rapidly, leading to increasingly higher prices in US, as their purchasing power diminishes.
Many suggest his policies could even lead to hyperinflation, in which case point 3. “moderating long-term interest rates” would be impossible. Eventually interest rates would have to rise rapidly, just to control hyperinflation.
There is no way that he can effectively manage the US economy to achieve his stated goals.
In the meantime I found this article from Westpac to be a very interesting read… it states that 1/3rd of house purchases in USA are now cash purchases!! It shows clearly just how hard credit is to come by to purchase property there. Until the issue of credit availability is resolved, the US market cannot recover.
http://www.scribd.com/fullscreen/54104096A must read article on the Australian housing bubble,recently posted by another contributor to this forum in another thread.
http://www.unconventionaleconomist.com/2010/09/australian-housing-bubble-in-search-of.htmlGreat article thanks Cheeves. I previously posted a very similar scenario to that outlined here https://www.propertyinvesting.com/forums/property-investing/general-property/4336193
The article also clearly backs my assertion that removing 20% deposits is a direct contributor to housing bubbles in this section
“As explained in the book, The Great Crash of 2008, it was the rise of the non-bank lender in the mid- 1990s – raising funds via securitisation activities on the wholesale debt markets – that initially caused an intensification of competition amongst mortgage lenders. It was these non-bank lenders, whom have no formal regulator and no rules outside of regular trade practices and corporations law, which led the decline in Australian credit standards from the mid 1990s by introducing ‘innovative’ loan products like low-doc loans in 1997, then ‘no-doc’ loans in 1999, and more recently they were beginning to issue ‘non-conforming’ (sub-prime) loans just before the global recession intervened.
Faced with this new competitive threat, Australia’s banks responded in kind by reducing their deposit requirements and tapping new sources of funding offshore. Gone were the days of requiring a minimum 20 per cent down payment and the banks funding their loan portfolios from domestically sourced funds (mostly deposits); instead, 5 per cent down payments became commonplace funded increasingly by the banks issuing bonds to foreigners.”
Thanks for this, very interesting reading.
I find the fact that Texas has had the highest growth since 1991 and hasn’t crashed to be very telling.
Texas has survived the GFC very well, with reasonable house prices that didn’t go through the boom-crash cycle that many other states went through.
I have read that Texas has a law that the minimum deposit for a house is 20%. This has stopped the huge credit growth that has occurred elsewhere, because people have had to save for a deposit before purchasing. The saved deposit also ensures that they can afford to pay off the house.
This should be a key learning for Australia and other countries to ensure that their housing market remains affordable and doesn’t crash in the future. The availability of 95%, 100% and even up to 110% lending is a common theme in the markets that have crashed, not only in USA but internationally.
