Forum Replies Created
Depends on so many things, like:
What happens to interest rates.
What happens to unemployment.
How much of the market's value is leveraged.
How much is brought the next 2 years.
How much land is released.
How financially secure the majority of vendors are.
What happens with the credit crisis in the US.
What happens to other housing markets.The RBA is always trying to get a beat on these things to work out what to set it's interest rates at but some figures (like what value percentage market is leveraged) are not that easy to report on accurately.
Contrary to most opinions here, mine is that in uncertain times it is most prudent to wait.
mackar,
Indeed, as an investor, it still makes some sense to buy now.
I was speaking from the POV of the owner occupier. For them, I feel it makes more sense to rent and save the 20000 PA for a number of years and use that to decrease the amount of interest incurred with a purchase. Of course, during the past 5 years, prices have been rising faster than one can save which made buying more of an immediate concern but with the market stabilizing and or dropping in value, saving is now the better option.
Saving $60000 (whilst spending 60000 on rent) will still take 60000 off the amount the bank can charge you interest on.
L.A. Aussie – owner occupiers are not 70% of the market. In an RBA report form 2003, which I have linked to elsewhere on this forum, owner occupiers were put between 40 & 45%. I doubt the figure has changed that much over the last 5 years.
The financial institutions are a problem, I do not disagree with you on this. I agree with the 20% deposit thing but that is only really achievable for the average worker in the country if prices are lowered.
It is land, more than housing itself, that is overvalued. The state governments aren't releasing enough and land investors are snatching everything up to control the demmand and hence price of new suburbs.
Close to where I live you can get an established 3×1 on a 500m2 block for 315K. Land of the same size, with no house, is advertised at 300K. The house is obviously worth more than 15K but the person selling the land can sit on their price with more ease than the home seller. Land is where the supply and demmand factor really comes into play, not housing. Land release and sale is what the government has to control.
Some contextual advice that will help people.
Buying a 400K house will have first year interest payments alone of around 40K. That is rent at around $800 PW, most rent is half that. Do the maths.
I am not slagging off your ideals, just presenting an alternate POV. Property Investment can be more than financial and I feel that in forgetting that investors have gotten the country into a dangerous financial state.
Besides, I am learning things by being here. The obvious, but overlooked by me, buyers insurance that Harb just pointed out.
And finally, if but one potential buyer that is going to overleverage themselves doesn't because of posts by the likes of me, then that could be one upcoming family that is saved from financial heartache.
harb wrote:That's a funny thing to say. Does it bother you that someone is making a profit out of you ?If it's unreasonable, yes.
harb wrote:Unless you buy from an investor who pockets the cash without declaring to the tax man what difference does that really make ? Its like the other one "I'm prepared to make a cash offer subject to ….." Like someone would accept getting paid in sea shells for the house.
I would rather give it to a needy seller than the bank.
harb wrote:Also if you do have to get a mortgage don't go over 80% or you'll have to pay for lenders insurance.But that may not be in my best interests
2 reasons
1 – if i am correct, imagine the amount i will be able to barter down to in 2 years
2 – it would be hypocritical, considerring me sense of national duty:)Unless of course the person I buy from is selling something they brought before 2000, in which case they would still make a profit out of me. When I start looking around in earnest I will ask people their personal situations and use that to help me make a descision. As I would not feel comfortable trying to talk someone down who brought after say 2004, i would probably not buy from them. If they lie about their situation, I can't help that.
One other thing I have decided from reading a lot of the threads here is that I think I will opt to buy something for sale by the owner and avoid a REA. I might try and offer the owner some cash up front to further lower the price and therefore decrease my mortgage. ie instead of giving the banks a 30000 dollar deposit on a $250000 house, I will try and get a 95 or 100% mortgage on $220000. I'll have to read up on it abit more but I am sure 2 people are perfectly capable of making binding contracts with each other.
For overall social balance being as rich as Gates or Norman is meant to be the privillage of a few. In all society, of course there will be rich and poor, but the majority should be in the middle. What the Boomers have done over the last decade isn't become rich (not like Gates or Norman) they have just seperated the middle class.
The trouble with capitalistic ideals is that more aspire to them then what can possibly achieve them. What is happenning now, which as as natural as people in capitalistic societies aspiring to wealth, is the redistribution of that wealth.
BTW – I am over 30 and am well funded enough to enter the housing market. However, I refuse to buy something for more than I think it is worth. I also believe that by not buying I am doing a small bit to assist with a needed market correction, if I did buy I would be adding to the problem. I will buy when I believe the market has sufficiently corrected. If it doesn't, it is no skin of my back, I will just continue to rent and save. I am happy with my financial situation, I am just not happy with Australia's.
harb wrote:But before you do go the Scamp way, I have one question relating to that 30% drop across the board you expect.
You do realize that the majority either fully own their property or have bought for a fraction of the current costs.No, I don't realize or believe that.
I believe around 30% (give or take) is owned. Around 30% mortgaged at the correct value and around the same is mortgaged for way more. In many cases the mortgages are leveraged against other property that has been overvalued. Further to this, the property that is fully owned is (mostly) by the boomers and they will want to sell within the next 15 years (prefferably 5) so that they can spend their 'super funds' and not have to give it to the govt. or their kids – I know quite a few that do and one that has 20 houses to sell over the next 15 years (atleast 1 a year otherwise his retirement is shot – his retirement is still going to be cruisy, just worth 5-7mil in total rather than an even 10 – but that is allright, he probably only started banking on 10mil in the past 3-5 years, it's just hard to admit stepping backwards).
Further to all of this, I believe rent is at around about the maximum that current income can support so that investors wont be able to suppliment interests rates with it. I also believe the averge renter is going to get far smarter as things get tighter and start using tenancy laws against home owners. The current government is looking to fix this by subsidising both ends of the spectrum (they can't leave the investors in the lurch because that would negatively effect most of them).
There are already more selling than buying property and it isn't going to change quickly. The thing the boomers never thought about when they planned for thier future with property is that they would all want to off load it around the same time.
Property will be worth more than what it is now in Australia again – in around 15 years.
You talk of supply and demmand but have you ever considerred unsustainability and market flooding?
A countries economy determines the house prices, not the other way around.
Oh, there will only be 2 pillars left. ANZ is in serious trouble – but again, this is only something time will fully show.
Why are you botherring to debate with me so much anyway Harb? Don't you have property to buy or sell, fortunes to make and all that. Get to it – never know when age will fully catch up with you.
As in 'we would love to pass on the cuts' suckers… but we won't.
Anyway, this whole debating tiny changes one way or another is fruitless and becoming boring. I believe that over the next 2 years the price of property will drop by around 30% across the board. You don't. Only way we are going to be sure who is wrong and who is right is to check back in 2010. If the forums still running then, we'll compare notes.
I will still browse and read what investors are doing and how the market is changing but I can't be bothered arguing my basic point any more.
It goes in cycles and the greed cycle is ending is the western world. Human evolution needs cycles of both greed and understanding to evolve with stability. How glorious was being rich during the French revolution?
I agree with the hand up rather than hand out POV totally.
That said, though indigenous and low social economic groups are minorities, the report also talks about the working middle class with unreasonable debt due to overpricing.
The model in London is failing as we post, the reallity of the future is what we make it. I can't map exactly where all of this is going, but there is a social shift in Australia at the moment.
You talk about all of us wanting a better future for our kids, perhaps we a finally starting to re-realize that is a future with far more than financial wellbeing. Perhaps we are now looking towards reasonable and fair education, medicine, law enforcement and yes – house prices. I think socialism is making a comeback…
Mackar,
One must also consider what the majority can afford and how keeping prices above that is not good for the country. Not enough of us consider how much what we do effects other Australians any more. 30% property ownership represents a large social problem. The UN drafted a report on the crisis that was looming in Australia and addressed it to the Howard government years ago.
mackar wrote:but we are digressing from the topic of this thread.."boom or not". I still don't really aspire to the 'big bust theory' (at this time), but always enjoy listening to both sides of peoples debate as I may learn something, …possibly my theory has a lean, because i have properties that i want to go up in value, the same as people that don't have properties have a leaning to want them to go down in price & sometimes we may all have a tendency to listen only to what we want to hear.That's very astute and more or less true. So the only real question is, what does the majority in this country want? Higher or lower house prices?
harb wrote:You are forgetting the 2 basic reasons why this will never be the case : the increasing population which puts upward pressure on available land and the increase in building costs which will at least keep up with inflation.Immigration figures are curently overstated, irreguardless – as unemployment goes up immigration will go down. The real pressure will be on the government to convince investors of letting people without jobs into their rentals. The biggest current population increases are babies born to couples who have been putting it off for the last 10 years.
Westpacs rates are definately not going down –
http://www.news.com.au/business/money/story/0,25479,24147797-14327,00.html
harb wrote:This is exactly why most X & Y are such spineless individuals that wouldn't make it in the real world without their parents.And the boomers were different? Please. They may have gone to work younger and been given a slightly higher moral standard in thier upbringing but they were afforded more financial shelter and statistically all live closer to where the homes of their parents than either X or Y.
The parents of the boomers were the last hardworking Aussies. Don't try and sell the boomers themsleves as being anything close to that. I know many, many Australians over 50 and not a single one of them would come close to the honesty, integrity and overall fairness displayed by their parents. The one thing boomers parents forgot to teach them was not to be greedy, a lesson this whole country has to learn all over again…
Later Scamp.
Bring on that CRASH!
harb wrote:Only normal that BBs got in first since they were born first. How can property resources be finite when there are town out there dying because of the lack of young people ? As population expands the property closer to the "city center" will go up in price, no matter of who owns it . The obvious logical solution would be to start new cities, if the bloody ants can get it, bees can get it then why doesn't gen X & Y get it ? Is it stupidity or laziness ?The BBs didn't make the cities we have now, they just stole what generations before them had created. Why should X or Y be any different then what we have been shown by our forefathers?
And anyways, if X & Y left to make cities elsewhere what the hell would happen to all the cities where the Boomers have property? They would would have no renters but that would hardly matter as there wouldn't be any workers anyway.
harb wrote:Why is that ? If the bank dies owning me money I have a problem , if I die owning them money then they have the problem.
No, your children have a problem. And if you have no childgren because you are too ugly or miserable to find some-one stupid enough to reproduce with you, then society inherrits your problem. Either way, that attitude is totally self serving.harb wrote:What debt ? At the current rates they've probably made up the debt already and are now working on the record profits. Watch them announce a 10%+ increase in profits over the previous year.Have you ever seen this series of videos?
http://www.youtube.com/watch?v=vVkFb26u9g8
I know, it's the American system but the only difference between their banks and ours is that where they can only create debt that equals 9.99x the amount of holdings, Australian banks can create unlimitted debt.
If you can't be bothered watching all the videos, it basically clarifies that banks create debt based on the promise of the borrower to pay it back. That dept creates the percieved amount of money in the system. With most FHB mortgages this is the promise of future wages, with investors I guess it is the promise of capital growth in the investment (however thats occurs).
Australian mortgage debt has been created over recent years in accordance with rapid growth in property capital, which has far exceeded wages and other economic growth. Recently shares have gone backwards, unemployment has increased and property has either stagnated or decreased. Current projections probably show that more has been loaned than what can be paid back.
Banks still turn a profit, any interest rate will see to that (even 0.001%) because, in Australia, they are basically making interest on money that won't exist for around 30 years. Trouble is, alot of the bigger investors have 0-15 years left till retirement, so if housing capital doesn't atleast cover their loans, living and interest the banks will be running at a loss on them as customers.
harb wrote:And I want to Lotto every week but that doesn't mean its going to happen.
Blame the BBs if that makes you feel better but who's fault is it that we have too many people squeezed in too little space ? The quarter acre block where you could have a barbie in your own backyard days are gone. Now you're lucky if you have enough room in the backyard for a clothesline, and I don't mean a rotary type. Who's to blame for that ? Yes I know, it the BBs fault for not dying early anymore. Short of culling the population like the do with the roos your dream is just not going to happen.
There is plenty of land and small towns out there that could become cities, if only the BBs would move there first to do the hard work and get everything ready for the poor helpless X & Ys. If there is something you can blame BBs for its raising their offspring to expect everything handed down to them on a plate.See how selfish your dreams are compared to mine? I want something for the country – you want something for yourself…
Basically you are aware that property resources are finite and that BBs got to entre the market first. Pretend there are only 2 people in the market. Logically, any property more than 1 that a BB owns is 1 the other person can't. And if the BB and the other person own a house then there is 1 house more than what is needed. See how that works?
Honestly, the BB generation had an ease of life that has never existed before and never will again. As long as you settle your debts with the bank before you die Harb, then nothing else about you matters.
I agree that the BBs spoit their offspring too much, only slightly less then what they spoil themselves.
mackar wrote:surely though there is an advantage for analysts to be able to pick the timing of the downturns
as well as the upswings…or else if they can't they virtually become redundant as noone
will have confidence in their opinion in any market… & well… with analysts.. thats all they
have to sell really, …their reputation.
a bit like a burger shop having no burgers… after 1 or 2 visits you don't bother going there anymore.
-not a very good analogy I know, but you know what I mean!!mackar
They will be admitting a downturn soon (I recon) but they know the market has to milk each last drop from unwary investors first.
When the burger shop runs out of burgers, for the first couple of months they'll keep advertising and sell you just the shakes or fries. When the shakes and fries wear thin, they'll become a BBQ chicken shop. The good ones will even have a new trading name, logo and everything. Before you know it you'll be wonderring why you were ever worried about the lack of burgers to start with. Of course, the bad ones will fall by the way side.
Honestly, you seem a bit less headstrong than most investors. Just play really safe for the next couple of years, what have you got to lose?
Rest assurred, I am not into studying this for any reason other than I want the country to improve. I want the old Australia back where each working family could get pissed at a barbie in their own back yard. I'm sick of this fund the boomers retirement situation that we are stuck in and for myself never, ever want more than one house.
