Forum Replies Created
- RVP wrote:how i should invest my savings
paying back two loans
There's your answer ( I removed all garbage from your post, and the answer is left ).
bardon wrote:Queensland Budget lifts stamp duty threshold for first homebuyers
How many first home buyers can buy a property at 400.000 at 9% interest rates ?
It's just a way to get the last few jump in a crashing market in order for the problem-people to be able ot sell their house ( all be it at a loss or not ). I see this as a way to bail out a few people of their mortgage stress.
"This is your last chance to find a buyer, because we give that buyer money to buy your property."- kind of messageI have heard that Rudd is planning to limit the amount of credit that banks can lend as mortgage will be controlled by law. Something like 4 times gross wages. Don't say noone warned you. ( Even if the warning came from Europe )
kum yin lau wrote:Scamp, 'average' house prices aren't 3-4% of annual income. I was earning $13000 p.a. and houses were $100000 + in the capital city. I bought one @ $166200, my 1st house. That's 13 times my income. But you're right. Got me into tremendous stress. Still kept it for 11 years & sold it for $310000.Times have changed. Food isn't free anymore, gas and oil aren't free either anymore. Interest will be at 10% by december. Anyone having 12-13 times their gross wages now is by definition bankrupt. Bad luck on the gamble, stepped in the elevator too late, bad investment strategy : call it what you want, they're screwed, usually for life.
Today's youth has only seens property values rise to tremendous levels. I can't blame them for thinking property always goes up. People like me who have seen houseprices crash, are more cautious.
It's time people realize that houseprices can go down too. Real estate can be a big liability.if the domain is emex.com.au ( which I assume it is ) then you have no problems in keeping the domain.
That name is used all over the place, it can't be registered as a global trademark. If you get the trademark in Australia, then you can sell that plus the domain name for 50.000 easily if they are a big company.Don't be fooled by legal action. They have no legal grounds to stand on. The domain is yours, the name isn't registered, who cares what they want. On the other hand, if they REALLY want it, you might sell the domain name to them for 50.000 ?.. if they say no then apparently they're not really interested , and they won't press legal actions either ( since legal actions are crazy expensive ).
I have also predicted that banks will be limited ( by law ) in mortgaging people. I think the law will be amended to 4 times your raw yearly income. As soon as this is officially implemented, the houseprices will come under even more pressure. This, in my opinion, will be the major factor in dropping houseprices. More so even than the interestrates rise. Even if interest rates rise 1-2% ( which they will do ) people will still be able to find ways to fund their mortgages by taking up a second job. Taking away buying-power, by limiting the amounts of mortgage to be given by banks ( monitored by RBA ? ) will do a much better job at driving house prices back. The major reason why houseprices have bubbled is after all, as we all know, only because banks have been borrowing people more than ever before. Without this money, there would be no bubble in the first place, since wages would determine the house price. Banks will either limit themselves to 4 times salary, or they will be limited by law to adhere to this ( for instance.. after a big bank falls because of the subprime crisis ). They have been bailed out once, there will be no money to bail them out a second time.
That said, someone asked for signs of recovery :
– more houses sold than houses being put up for sale is a good indicator
– rising wages
– good consumer sentiment ( this, btw , is now at an all time low )Basically, when asking prices go up , it says nothing. The actual price for which a house sells ( about 50k-100k less than asking price atm ) is important. And even then, there are people who still have money at the moment. In my opinion, the few houses that are being sold at the moment are houses that people 'always wanted but never were for sale'. They are for sale now, so people buy them up , even if they have to pay asking price ( which is too high ). Soon these sales will stop as people realize they won't be able to pay the interest and food and oil.
Also, 'median' houseprices can ( usually DO ) go up in a stagnating or lowering housing market. This is because the amounts of cheap houses don't sell, but the loaded up people still sell and buy their houses ( the McMansions ). The rich aren't affected by the bubble or economic times as much as the poor are, therefor the median houseprice can go up, don't be fooled to think that 'median' means anything more than a spruiker term.
The only 'median' you should use to determine if prices go up or down are prices in the area you want. Comparable houses. Anyway, I think I have already proven that the market crashed, just look at the news. Anywhere between 10% – 50% price reductions all over. This is just the start.
It seems the new motto is "Better sell now at 20% less , than in 1 year at 50% less"I see that people want me to explain further why houseprices will drop, and what the signs are for recovery.
First of all, and most importantly, never trust anyone but yourself. Yes, take advice, try and get as many views as possible, then analyze them yourself and figure out with your own intellect if they make sense to you. Many people will talk about a certain region or priceclass, this may not apply to your area of interest. That being said, my own reasons of why houseprices will drop :There's no housing shortage. If there was, how possibly could there be more and more houses for sale on the market ? There is a MONEY shortage, not a housing shortage. People cannot pay the houses anymore, hence they have to rent. Since everyone wants to rent near the CBD or nice places, those rental places will be gone , hence everyone believes that there is a rental shortage as well.
Anecdote : When I look on the roads, I see very very few Ferrari's. Does this mean there's a shortage of Ferrari's ? No, it just means that they are overpriced and thus people buy other types of cars. Same goes for the housing market. Everyone wants to buy a house near work, or next to the water or in a nice area. If they look further out ( which they will do when they start losing their jobs ) they will find many cheap houses.I have said a few times on GlobalHousePriceCrash.com that for my area of interest the prices will probably bottom out around january 2009. Why not before ?
Even if interest rates go down, the monthly repayments will still go UP. How can this be ?
For one, banks will individually rise interestrates, whatever RBA does doesn't matter. They do this with a good reason which I won't explain here, fact is simply they will do it. But more importantly, a lot of 5-year and 3-year fixed mortgages will be reset to variable interestrates around september 2008 up to june 2009. That means many people who used to pay 6% will now have to pay 10%. This means on average an increase of 1500$ per month extra payments. This, on top of the higher oil prices, the higher food prices and the loans and credit cards they have, is a very bad economic climate. This will lead to forced foreclosures as people will use credit cards to pay off monthly mortgages, and eventually go bust.Oil prices are at an all-time high now. People think that this is limited to their car petrol prices only, but this is very short-sighted. In every production chain, there is oil involved making the process more expensive. Think of transport costs, plastics, energy costs, commute costs .. just to name a few.
Debt levels are at extremely high levels. Everyone seems to have a debt nowadays, people used their equity to buy new cars and luxury items. Mobile phones, internet shopping etc…
Unemployment is looming around the corner. Unemployment is said to rise from 4% to 5% in the next few months.
China's economy is said to slow down. China is a major buyer of Australian export goods.
USA is in recession, their economic problems are not over yet, it seems they are in for a second crisis. This means two things : Oil prices will keep going up , and war. ( Iran ? )
UK has always been a major immigration country for Australia. Poms ( UK people ) are having a huge housing crash. This means they have less money to spend in Australian houses, *IF* they are able to migrate at all.
Rudd will fight inflation at all costs : That's his goal. When houseprices are overpriced, you can only solve it in 2 ways :
– Let inflation catch up with house prices
– Let house prices deflate to catch up with buyers affordability
If inflation is fought , house prices can only go 1 way, and that's down.The Australian news and reporters are now aware of the overpriced houses, sellers AND buyers are aware of overpriced houses. This means the market has turned from a sellers market to a buyers market. Since houseprices aren't made up by shortage or supply like any normal market, but by feelings ( fear and greed ) this means that house prices are bound to go down.
Buyers can afford to wait, sellers can not. Everyone realizes this now, it's just a matter of time before something has to give : Initially, sellers ( real estate agents really ) will keep the asking prices high, in an attempt to keep houseprices fictionally high, but when real estate agents get in financial trouble they will change their tactics. Instead of selling fewer houses are outrageously high prices, they will sell a LOT of houses at outrageously low prices. The competition will turn from pushing prices up , to pushing prices down so they ( the real estate agents ) can keep earning money by selling more houses for cheaper prices. If this becomes a trend, then the crash really starts. If you see things like "foreclosure bus tours" you know things aren't rose-colored anymore.
Well, that's just some of the reasons. For more indepth articles , just go to http://www.globalhousepricecrash.com
Ozboy wrote:This isn't a scam, this is how many people have made alot of money out of the Australian property market, particularly between 1995 & 2002You still don't get it do you ? … This is the whole problem.
Speculation is what pushed prices up to unrealistically high levels, unsustainably high levels. The high houseprices of today are the result of speculation that the houseprices will rise by more than 10% p.a.
Houseprices in turn DO rise because everyone in the Ponzi scheme wants a share in the seemingly unlimited cashmaking machine called Real Estate investing.
Well, this is the whole point, the cash machine has run dry. We have seen it in USA, we have seen it in Ireland, we have seen it in UK. All these markets were overpriced due to speculation. In Australia, the land where houseprices are the MOST overpriced of all countries, is at the moment starting to drop. We have seen drops of 10-20% ( 10… to 20 … PERCENT !! remember this well ) and we will see falls of 50-70% in some area's. In the luckiest area's the drops might be limited to 30% or 40%, but price drops are coming.Now I will explain YOU something, Mr. Blind man.
Why do you think that houseprices have been allowed to go up ? It's the amount of money that lenders want to borrow you which make up the houseprices. We're looking at 30-40 years mortgage already. But that's not the frightening part. The frightening part is that the amounts of money involved are at a staggering 8-9 times annual wages !!! This, in all perspectives is crazy. People aren't able to spend ALL of their wages on paying back interest at 10% can they ? No of course they can't they need food, water, electricity, cars and petrol to drive to work, they need at least 40% of their wages to LIVE and FEED themselves.
In the past times, this was no problem, since houseprices went up ( due to speculation mind you ) and they would use equity to pay for most of their lifestyles. This has come to a sharp HALT. No more equity , no more free money. Houseprices have gone down. People now use credit cards and other credit to pay for their lifestyles instead of their house-annex-ATM.Give my story a good read. Think about it. Then remember that the NORMAL house prices are 3-4 times your annual wages : ie : 150.000 – 200.000 average houseprices. NOT 450.000 average houseprices.
450.000 -> 200.000 is more than 50% drop.
And that , my friend, is what I call a reality check. Don't come up with "people have made money on it in the past", you are fooling yourself Mr Blind man. Use your brains, use your intellect, and you will see for yourself the truth in what I say. It's a big Ponzi Scheme, it's a pyramid-game in which the people who jump in last will be the ones that get burnt. And they will get burnt for amounts of money they cannot possibly pay back in YEARS to come… Believe me, it's already happening.
This list wasn't meant as a discussion. It was meant to list the things that can ( or have gone ) wrong while property investing. I must thank the first reply for doing that, he gave me an insight into a few things I hadn't thought about. Please refrain from posting replies that don't add things to the list of things going wrong.
michaelparis wrote:continual focus on the pain, and negativity of a "snapshot in time" without due regard for the bigger picture does not in my opinion serve any purpose, other than to scare people.This is not a snapshot in time, it's a list of things that go wrong in good times, as well as the current bad times.
What's wrong with warning people about the pitfalls of investing ? I think this forum is called "Help Needed!" and this is EXACTLY the form of help that new property investors need. Even experienced successful investors like me ( yes, I'm a property investor ) can still learn from this list.I'm warning people about the pitfalls. And I'm warning them that property investing is risky business in which things can turn and go terribly wrong. People need to be warned that things can take a turn , and that they will not be bailed out by anyone. If they accept these risks, and they accept the risks in this post, only then they should consider starting the investment.
What I have seen so far is a lot of smalltime no-brainers, carelessly and blindly getting into property, without knowing or acknowledging the risks involved : And luckily for them there's people like me here to WARN these suckers who are about to lose all their belongings to some real-estate snakes.
Are you a farmer ? Then go for the rural land
Are you a gambler who likes to lose a lot of money ? Then go for Penrith
Are you a smart man who likes to save money ? Then do some research before you invest.Even doing some BASIC research like looking on http://www.news.com.au or turning your television on will tell you that investing in property now is risky and dangerous.
My tip : learn to use Microsoft Excel, and take a quick lesson in elementary economics and mathematics.
Then at least you have a small chance to not go bankrupt rightaway.wow… that's the worst advice I have heard in years : Get more debt in order to finance your debts.
btw : sorry to say, but your properties just lost 20% value. In other words, you lost 460.000$ in about 3 months.
In another 3 months, when you lost another 460.000$, do you think this was a bad investment or will you get even more debt ?Do you realize that the average house now sells for 50K-100K less than it's "value" ?
You're already too late selling, you won't sell anything for any of the crazy prices you *think* they are worth.
You are the reason houseprices have gone up, sell your houses now you still can. Get back to 0 debt, if you have anything left after that, good for you, if you have more debt than you can sell your properties for, then at least your debt is minimized.What do you think the banks will lend you ? They're running dry, they're smelling fear, they will foreclose you rather than give you more loans to pay off loans.
What do you think happened in USA ? It's people like *YOU* who caused the housing bubble. And it's people like *YOU* who will *PAY* for it. After the banks and lawyers are done with you , you'll wished you never got yourself into debt like you did. You're a shame for real investors.
Think about what happens to your rent incomes when your renters stop paying because they become unemployed. Oh yes, it's coming. Wakie wakie !
Ozboy wrote:Obviously the plan would be to hope for price increase so that I can 'flip' the new property before settlementYour plan is the same one as the following :
Al Capone asks you to run some money for him to his business partner. Instead of going to the business partner , you decide to go to the roulette and put everything on 1 color. If you lose, you're in problems, if you win , you're rich.Ask yourself if the above plan makes sense to you. If it does, then I say go for it. If you even remotely have a braincell or two though, I'd say stay off the drugs and start working instead of coming up with scams like these.
The actual reason for me posting this post on this forum was to warn people about the possibility that houseprices could go down. The only way to have people read this post was to have a 'spruiker-like' title, exactly the same way the RE agents and property investors usually spruik. Ofcourse the market will crash, we all know it. What everyone also knows is that smart people , smart investors will ride it out and in the long run make money.
The problem ( and again, that's the reason I wrote this ) is that there are so many people who cannot properly invest or do maths correctly, that it endangers both the economy and the tax-payer's money. Did you know that 30% of the australian households are in financial trouble because of their mortgage ?
Just think about it… 1 out of 3 people in your street cannot pay their mortgage… they pay mortgage with credit cards , or non-existant (fake) equity on their property or IP.
And that's what I want to warn people about : don't stress yourself into a situation in which you cannot possibly pay back money with.*EVERY DAY , 130 families file BANKRUPTCY in SYDNEY alone !!*
*30% of the australian families are in FINANCIAL TROUBLE*How more obvious can I be. Just see reality, don't gamble now if you're not *ABSOLUTELY* sure you know what you're doing and that you can take the hit if things start going bad.
Don't become 1 of those 400 daily bankrupt families…
vicgirl wrote:Now about the fixed rate mortgages, will they all mature at the same time in September? LOL…Yep. The joys of people fixing their interest at the lowest possible rate for 5 years.
They all fixed it in the low tide, for 5 years : 5 years ago.
Not all in september ofcourse.. only about 900.000 in september. The rest up and until June 2009.APerry wrote:"Australia doesn't have a shortage : it's got a massive oversupply."Absolute and utter garbage!
http://www.smh.com.au/news/national/sydneys-vacant-buildings/2008/05/25/1211653847174.html?page=3
there you go. 120.000 empty houses in sydney alone. That's only the known ones.
LetsRent wrote:Its hard to imagine investment housing demand dropping with rental demand so strong (and increasing) and the yields that are now available on investment property due to increasing rental returns.Increasing rents are the worst kind of inflation. Do you think Rudd is allowing inflation to go up ?
No ofcourse he won't. Be ready for a change in renting laws, where rental prices will be fixed by Rudd's government instead of the property owners.Rudd will *NEVER* let the rents inflate. Remember my words.
The plan :
– councils will make up standard rental prices per region
– government will make a list of aspects of a rental house. These include amount of light ( window size , height from the floor at which windows starts ), number of rooms, number of bathrooms, pool ? garage ? parking availability, location, amount of garden, total space of the house etc.Based on these calculations, you will get a median price, which you can get inflation correction on.
And that, my friends , will be the start of a new type of investor, and the end of the old investors.
Oh yes, banks won't lend you more than 4 times your wages, and 'equity' can't be used in getting new mortgages. Believe me when I say this will all happen.
Dear Hayley,
My personal opinion :
At this moment the foreclosures are being bought up by the last few people with cash money. The price they are paying on auctions is way too high, the risks are too high too. Remember that when you buy a foreclosure ( at an auction ) you have to :
– Pay cash
– Sometimes will not have the possibility to inspect the house
– Risk buying a double-mortgager : You will auction off the first mortgage, then you find out that in order to GET the property you need to pay off a SECOND mortgage. This can be especially painful.plus a lot of more risks.
That being said, there's not enough foreclosures yet to make foreclosures interesting for the cash-buyer. Too many people think they're making good deals, buying with feeling instead of head. I'd wait a bit.What you can do is you can ask some local banks ( local ones, not the big 4 ) and tell them you're looking to buy a foreclosure. Banks usually use a RE agent or a Auctioneer to sell the houses, but some newly foreclosed houses might not have been processed yet. If the bank has a buyer 'ready to buy' , that will help them out and they might give you a discount on the house , since they won't have to pay for maintenance, cleaning up , trash-away jobs, sometimes a whole new reconstruction of the partially demolished house etc…
As a last tip : Remember that people who are being foreclosed are by definition people without money. They have thus not done ANY maintenance to their house for the last 2 years at least. Usually the people being foreclosed are unreliable and irresponsible. You can thus expect the house to be in a very , very bad shape.
All in all, you should be able to get a foreclosed house at about 30% less than the 'market value'.
The 'market value' at this moment is 30% less than the 'asking price'. So yes, ask 50% less than the asking price if you go for a foreclosed price.Like I said before, there's a few fools with cash left at the moment, they're buying up the last few foreclosures before the next HUGE foreclosure wave. There won't be many people with cash left, and then you will see the real bargains like we do now in USA. Remember that the crisis in the USA started 1.5 years earlier than the crisis in Australia. We have a long way to go ( down ).
Quote:If Braddick is right, the dark clouds gathering have numerous silver linings. So while many people are intimidated by the negative atmosphere into doing nothing, those with the foresight to be counter-cyclical investors will do well in a buyers' market.
Yes. But you need money ( CASH.. not some 10% loan ) to do this.
And the average member on this forum is either in deficit or has a few bucks, not nearly the 300.000 needed to invest safely.If they had 300.000, I'd be a whole less worried. The problem , and this is what caused the bubble and the subprime crash, is that people will invest other's people money into a casino called Real-Estate.
btw : What people don't realize is that "that other's people money" = YOUR FUTURE SLAVERY SERVICES !Yes… you will pay DECADES of hard work to pay off your debts. You will earn NO money, you will only pay, pay pay… and that's what I want to warn people for : Don't fall for the 40-year slavery trap called "mortgage" or "property investment"… make rational choices, not greedy ones.
300.000 * 9 % = 27.000 / 52 = 520 dollars per week to hold the property.
Why do you think it costs 75$ a week ?Plus they have a debt of 200K, which costs them : 350$ per week.
That would be 870 dollars per week ( 3480 dollars per month ) purely interest.
That is , that's the least they will pay without actually paying any mortgage.They already gambled once and lost 200K, why would they want to lose another 300K on top of that ?
They should now accept that they need to work very , very hard, for a very , very long time to get rid of the 200K debt. After they are out of debt, they will have learned a lesson : nothing is free, and property is a gamble just like any other investment.There is no 'easy money'.
Please explain why they expect to pay 75$ per week when I come out at 870$ per week, and that doesn't even include repairs to the property , taxes, etc… Are they living in la-la-land where money grows on the tree and 1+1 = 3 ?
Tony,
Just take 10 random houses for sale now, and offer 20% off the asking price. I guarantee you that you will get at least 1-2 accepted. And that's only 20%. Wait till the interest breaks loose, people going from 6% to 10%, that's 120 percent more to pay back over 30 years. Believe me, people who don't need to sell won't put their houses up because everyone knows the houseprices are going down. Soon sellers will start panicking.
There's so many extra properties for sale every week, it's scaring. Don't fear that you will 'miss out' on anything, there's SO MANY choices now, and every week there's 1000's of houses more on the market.
Do you think that a financially healthy family would put their house on the market right now ? With all these talks about crashing houseprices ? Do you think RE agents will accept to put the houses on the market at the old crazy prices ? Ofcourse not, they need to make money, and the sellers need to sell because they're getting in financial trouble.
Yes, I plan on buying a house, I even plan on buying two, and I intend to pay less for my 2 houses than I would pay now for 1 house. And believe me : it WILL happen.
Prices will crash, and people will be in financial trouble. Whoever buys now at asking price is going to be part of the crash instead of watching it happen.
You say it yourself : You can't get a loan for the current prices. Do you think you're the only one ? Do you think banks perhaps won't lend people 10 times their yearly wages anymore , because you're right, in the near future banks will only allow you to lend up to 4 times your yearly wages.
There's no more buyers left, the few ones who would be crazy enough to buy at crazy prices are now being held back by the banks who won't lend them the money. No buyers = No sales = Foreclosures at 50%.
Believe me : Banks will accept 200.000 for a house worth 250.000. Some banks have been writing off BILLIONS due to the subprime crisis. What do you think that means ? It means they lent too much to people and have been selling houses at fractions of what the lenders bought.
Same will happen in Australia, only in Australia it will be worse, because wages are lower, houses are more overpriced and mortgages are higher than anywhere else, and interest rates are higher.
Do you think that is a healthy combination which justifies buying a house today ?…
attrill wrote:I have 2 loans fixed at 6.65% until 2009 when they will revert to the prevailing rate. In the last few years the rents have risen to a point where these properties will still be cash neutral. This is more a case of luck than astute financial planning.Many are in your situation Attrill. Buyers know this, and are now waiting for people like you to tumble over, and foreclosures some on the market for 50% of today's price. It's what is happening in USA now, it will happen in Australia too. January 2009 will give more insight in the real trouble people are in. But if your bank devaluates your house by 20%, and you are negatively geared, then you will have to borrow at the variable interest rates of 10% to 11% ( if not higher by that time, there's already talks about raising interest again this month ).
Why don't you fix your interest now for 5 years ? At least you won't be one of the foreclosed ones.
Closing your eyes or putting your head in the sand won't let the problem go away : act now, fix your interest at 8.75% ( yes , you can still do this with your bank ) before you HAVE to do anything.
Interest at this moment will only go up , because Rudd wants to fight off inflation at all costs ( that's what he says anyway ) Just read the news, and make up your mind. I would not be surprised to see another 0.25 interest increase in June and one more in September.
Remember the 17% interest rates ?… they're coming back.
