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Scamp
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January 25, 2009 - 9:54 am
Hi Harb,
I feel some negativity from you. I hope your investments are doing well.
But don't be angry at me, I warned you a LONG time ago this was about to happen.
Even gave you the exact dates too…
Greed is a powerful addiction.
Scamp
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January 25, 2009 - 2:08 am
btw, it will take at least 10 years before your prices return to current prices.
I'm just talking about the bottom of the market between 2011 and 2021, not the return of 2007 prices, that will take much longer.
Scamp
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January 25, 2009 - 2:07 am
The property market will not go back up until at the very least 2010.
This is a very optimistic already. Expect the housing market to bottom out around 2011-2021, depending how much the government is planning to mess with this crisis. The more messing , the longer it will take.
Average houseprices = 4* average income.
Sydney average houseprices = 550.000
Average income = 50.000
Houses are overpriced. pricesdrops of 50-60% are needed in real terms.
Wages will fill the gap after prices drop 40%.
Can you endure a 40% drop in housevalue ?
( I took sydney as an example, but it could be any town, most towns are at 10* average wages )
Scamp
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January 25, 2009 - 2:02 am
I wonder how stu_macca's investment properties are doing now.
I guess the dropping dollar didn't magically add 30% to the profits of the mining companies after all , did they ?
Sincerely though stu I hope you're doing ok m8, I don't wish misery on anyone : Let us know how you're doing please.
Scamp
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January 25, 2009 - 1:32 am
Building now you can get 30-50% off the price of tradies. Tradies are DYING for work, and you can get your house cheaper than ever. Also commodities have come down so raw materials are cheaper. I think now is a good time to buy if you have the cash and means.
Don't buy anything , wait till at least 2010 at least. Depending on which intervention will be made by gov't, you will see prices bottom out anywhere between 2010 and 2020. ( yes.. really ).
Instead of calling the bottom, I will instead give you advice in another way, more practical.
Average Houseprices = 4 * average wages.
So if average wages are 30.000, your houseprices should be 120.000.
I believe average wages in Sydney are 50.000, so average houseprices should be 200.000
Since they are about 500.000 now, we'll see drops of around 30-40% still in sydney. Wage increases will fill the gap.
Adelaide and Brisbane will be hit hardest with drops between 40 and 80%
Good luck with your construction project. I do feel now is a good time to build, but don't buy anything, stay out of property for a while.
Scamp
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January 25, 2009 - 1:22 am
Agreed with Crashy. This warning comes 2 years too late Steve…
There were others ( including me ) who said this would happen over a year ago.
We even explained why it would happen and how long it would take before we would see the results.
Our warning came 1 year ago and predicted this thing to the exact month ( January 2009 ).
Scamp
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December 6, 2008 - 9:31 am
[Edited for offensive and irrelevant content]
Scamp
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November 29, 2008 - 8:49 pm
the bottom of the propertymarket will be when property prices dropped 50% from 2007 high prices.
when that is, noone can say. Depends how much money the government is going to spend delaying the inevitable.
Initially the bottom would have hit around 2009. The bailouts have now delayed that to mid 2010. Maybe some more bailouts or law changes will push it off or back. But 50% about what you will see the median drop.
And trust me : This is a good thing, not a bad thing.
Everyone seems to think low houseprices are a bad thing : They're not, they are a good thing.
Scamp
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November 27, 2008 - 1:41 pm
why ask for historical data when you can have data in the future ?
in 2010 , houseprices will be back to 3 times average income, which means average home will cost 120.000AUD$ – 200.000AUD$, depending whether you're in sydney or not. Anyone who questions this is biased or has a property already and doesn't WANT the prices to come down. Just wait, sit tight and enjoy the ride, because houseprices are going to come down with 50% at least, and in some cases extreme cases even 90% or 100% ( yes, you will be able to buy some houses for the price of a hamburger , just like in the USA ).
Scamp
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November 19, 2008 - 3:01 pm
what you should be worried about negative gearing, in particular the fact that it won't exist for much longer.
Can you still afford it then ? If you can't you obviously are in deep trouble.
Scamp
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November 18, 2008 - 8:54 am
James62 wrote:
What do other investors think?

what I think ? I think you should have taken my advice 6 months ago when you could still have sold your house for 360K. Houseprices will fall 50% overall. Some might drop only 30% , some will drop 90% or even a 100% ( you will be able to buy it for 1 AUD$ ).
Yes, that's what I think. Read my 6-month old posts if you want to know what is coming in the next year. Also it gives you some advice on what you could do with your money now.
Good luck trying to sell, you and 1 million others are all trying to sell your houses and there are no buyers with money. ( except me, but I won't buy your house for anything more than 200.000AUD$ which is still a good price, considering your house is only worth 50% of 360K ).
Scamp
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October 9, 2008 - 10:26 pm
devo76 wrote:
All crap aside. These are very interesting times and if you are under 30 you are about to see a environment that who have not seen before. Am i worried. Yes. It would be stupid not to be. Am i happy with my position. Yes. I have a good buffer,secure job,50% LVR and loans approved to buy more if a bargain appears.Fact is life goes on,Bad times pass. You must look at this as a time to keep safe but also look for opportunities.
And also dont forget to enjoy what this country has to offer outside of investing. You dont have to be rich to enjoy everything.Although i did just buy a 996 ducati yesterday. Man i love this bike.
I like the Ducati. Is that the one with the tailpipe under the seat ? ( and a low humming noise ).
Very nice bike indeed. I'm more of a chopper guy though. A fatboy or a road king for me
Yes, you're right, there's plenty of other things to do. I'm not going to warn people anymore about buying. If they want to buy, then please, let them. Dow crashed another 7% today by the way, these are very interesting times. Loads of money to be made if you take some risks. But for me , time has come to go kitesurfing and windsurfing at 'some' beach in Australia ( probably Stockton Beach ).
Scamp
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October 9, 2008 - 8:43 am
harb wrote:
Scamp wrote:
yep , me too, positive about the sharemarkets in the future. Much more money to be made on shares than on property. Renting and investing is a much better option than buying a property.
And how would you go about investing in the sharemarket if you had no money ?
Quote:
You cannot invest what you don't have. Banks will not give you money as easily as they did.
And that means 0.0% of the FHB's will get mortgages. This means noone will buy the starter homes, which means noone will buy anything else either. It's bound to crash, there's no question about it.
If FHBs can't get mortgages then they just have to rent but house prices bound to crash ? I don't think so..
I do think so. Let's leave it at that.
Scamp
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October 9, 2008 - 8:40 am
god_of_money wrote:
Hi Kevin… That is what exactly I was doing over the last 12-18 months pluging cash into PPOR loan.. my understanding the market has changed and in the current market… as IR is falling and dividend yield is more appealing in the next 12months.
I still don't understand why people are selling while the market is crashing…. Isn't it time to buy.. remember 1987/1997/2001?
When all ords hits 6800.. BUY BUY BUY….but now… look at broker recommendation… HOLD or SELL… isn't it stupid?
doesn't that count for houseprices also ? Why buy at the high end of the bubble ?
Scamp
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October 9, 2008 - 8:34 am
stu_macca wrote:
Must admit that one confused me Scamp. Just looks like a straight 30% margin gain. Reduced demand for steel caused by a recession could be a worry though (lots of coal gets used in making steel). Still, 80%+ of our energy generation comes from burning coal (unfortunately), and China still seems to have an insatiable appetite – no doubt enjoying the new price (in CNY) after seeing it double in such a short time.
Rents are now $1500/week. Similar houses selling for $600K. On the market for about 5 seconds (so you need a buyers agent).
Still no guarantees for the long term. And yes I am more than the little nervous given what's in the news. Will conclude that from discussions so far that mining's doing "quite alright".
Come on Scamp – I can take it!
1500 per week today. What happens when the mining corporation closes down ?
Then you have a 600.000 mortgage and rental income of 50$ per week ( 200$ per month ).
Good luck with that. You're not investing, you're gambling. There's a big difference there.
And in fact, the odds are against you. Very , very much against you.
Scamp
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October 8, 2008 - 12:05 pm
god_of_money wrote:
I am confused…. interest rates on the way down.. with prediction of some economist predict further cut next year…
Used to be lots lots of bullish comments about investment when the interest rates reaching its peak…bla bla bla long term value…
dividend yield 10% and rental price still on the way up (better than 3-4 years ago)…. I can't understand why people shunned away from investing…. recession.. yes….. but is this time to buy… lots of preaching…buy low sell high???? I am not sure I got it wrong from invesment philosophy. Correct me if i m wrong
You cannot invest what you don't have. Banks will not give you money as easily as they did.
And that means 0.0% of the FHB's will get mortgages. This means noone will buy the starter homes, which means noone will buy anything else either. It's bound to crash, there's no question about it.
It will crash until wage * 4 = houseprices = median houseprices of 250.000.
That's 250.000 less than now ( 500.000 ) which means a 50% drop.
Scamp
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October 8, 2008 - 11:58 am
Ajax wrote:
Scamp,
explain your logic here
"AUD has fallen 30% already over the past few months. It will drop more because of the interest rate drop. This is 30% less profit for mining. "
If the AUD has fallen by 30% and continues to fall then all other things being equal mining revenue received for contracts priced in $US commodity prices would rise by about 30% . A falling AUD is good news for many Australian mining companies.
No it's not. It's good for the owners of the mining companies. The shareholders get paid in AUDs.
The money in USD won't come back into ozzie, it will be spent outside of Australia. But I understand that you think it's good for export, I just don't agree with you.
Scamp
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October 8, 2008 - 11:54 am
CHIS wrote:
Other countries in the world are on a totally different economic cycle to America. America sent itself broke on needless wars and ridiculous lending to sub primers.
Russia is booming
Asia is booming
Australia is booming
oh.. wait a minute.
Russia is booming : Is that why they stopped trade on the sharemarkets twice because they were crashing worse than USA ?
Asia is booming : oh… let's just ignore their 50% sharemarket crash.
Australia is booming : oohh… is Australia booming ? Last time I saw the ASX was down about 50% also.
Yes, it seems the USA is the only one in trouble.
Wake up
Scamp
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October 8, 2008 - 8:39 am
yep , me too, positive about the sharemarkets in the future. Much more money to be made on shares than on property. Renting and investing is a much better option than buying a property.
Why lose 50K a year and even more on capital losses, if you can make 100K a year with the same investment ?
Doesn't make a lot of sense to me. I'd rather invest my cash in shares ( the right ones ) and make money instead.
Plenty of opportunity is there, just not in property.
Scamp
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October 8, 2008 - 8:34 am
ErikH wrote:
My views:
The 30% drop in AUD had NOTHING to do with interest rates, but everything with the carry trade unwinding, that is institutions borrowing in low interest JPY and investing in high interest AUD/NZD. These trades were unwinding because of risk in the financial markets as a result of the credit crunch. This became a self fullfiling spiral where initial sales forced more sales.
In uncertain times the USD has done well as it is still seen as the prime reserve currency. The AUD has suffered from the carry trade unwinding, the move of funds back into USD and the drop in commodities (AUD is strongly linked to commodities).
The AUD is now oversold and is very likely to bounce back although the current downward trend may well continue for a bit longer. The interest rate cut won't have a dramatic affect as it was priced in the market and all other reserve banks will follow suit (but likely with smaller cuts, Bernanke has already indicated the US is looking at a rate cut).
are you for real ?
The USD is doing well ? haha.. you clearly do not know why the USD is having a dead cat bounce my friend.
European/Asian banks are having their hedgefunds sell off their stuff. This is ( unfortunately for them ) done in USD, which have to be bought and this increases the price. The fundamentals of the USD are GONE.
USD is in for a freefall , and this will happen when people are done selling off stuff and buying USD's.
The AUD drop has everything to do with the RBA rate cuts. You say it yourself , here :
that is institutions borrowing in low interest JPY and investing in HIGH INTEREST AUD/NZD. These trades were unwinding because of ( and here it comes ) THE LOWER INTEREST AUD
Fantasic, at least you tried to get it right. I corrected you , now you know what caused the dropping AUD : The RBA rate cuts.
PS : as a sidenote : Soon 'someone' will blame the drop in AUD is caused by the drop in commodity prices.
This is *NOT TRUE*. Although they will try and use it as an excuse. Yes there used to be a relation between the two a long time ago, not this time though. Just keeping you up to date on the 'excuses list'.