Forum Replies Created
- ErikH wrote:Ormeau – I'm with crashy, your post is out of place and actually pretty low on facts and sound reasoning. One of the biggest empires of all times, the Roman Empire, did not fall apart due to depletion of local resources, but their decline was much more related to a decline in morals and increasing greed and corruption. I found "Empire of Debt" an interesting read in that it made the prediction a few years ago that the US was an Empire like the Roman Empire but that it's fiscal model was fundamentally flawed (Empire of Debt) and hence would self destruct and that it would al start with a collapse in housing. The authors also explored the similarities between the Roman Empire and the US in terms of the decline of morals. Interesting even though the book was 2-3 times as long as it needed to be…
ErikH, I agree with your thoughts on Ormeau – this topic is too specific for his comments. I also agree with comparrison of modern US and Rome before it fell. And I wonder, is Australia a smaller version of that, or atleast connected enough to the US to fall a little with it?
harb wrote:You can't be forced to subsidize your tenant, not even by a tribunal. If negative gearing is gone the tenant will have to make up for it. Based on a 350K loan and median house prices then a 4x rental increase is probably very close to a fair increase in rent. Which is exactly why negative gearing is here to stay.No, but only the police have the legal right to evict a tenant and that is only after a warrant is issued by the tribunal. In tougher times, more tenants may exploit thier legal rights and refuse to leave upon unfair rent increases without a tribunal hearing. As a general rule, tribunals rule in favour of the party that stands to suffer the greatest financial stress.
Of course, for a property without a tenant in it you can set the rent at whatever you want and hope you get it.
But in the end it is a mute point because if negative gearing was abolished the tenancy laws would probably be changed.
I think the solution is not to abolish negative gearing but to limit it for residential investment only. This would affect the purchase of residential property purely for capital gain and keep serious investors in the commercial market.
Residential property, by it's nature, is a social and financial investment.
devo76 wrote:I think most people agree that the growth many have enjoyed will not continue. Now its about building buffers ,sitting tight and if you are in the position to buy and want to. Then bargain hard.Many points argued at the moment are neither here nor there. Yes things will slow or go backwards. But if you are prepared then who cares. its about Long term people. Yes i genuinely feel for people who borrowed heavily at the peak. Sure maybe they shouldnt have but not all Australians are investing masters. They just wanted a roof over there head and timing was against them. There will be losers over the next year or so but there will also be winners.Try and be the later.No disputing your points here… long term (15 yrs or more) always pays off with property, of this I think most of us have no doubt.
The question's are; How big is the bubble? How low will the crash dip? When will be the right time to buy again?
Obviously, all of these things are connected and one will influence the other. Personally, I do not think stability can be reached again until property is in the range of 4 times the average (single income) wage. Socially, more than financially, the people of this country need that balance.
devo76 wrote:I will have to tell all the people in my local area looking for good accomodation that its all in there head. Im sure they will have some choice words to say back
I think that anyone looking to either buy or rent right now is still going to get shafted. If they can't wait or live with a relative or friend to ride it out they will have to suck it up.
Just tell them to make sure they only sign short term leases and give themselves the option of changing landlords if rental prices drop in 6 months or so.
blogs wrote:Bwahahaahahaha this would have to win 'Internet Tough Guy' of the month competition by far!!!! Real professinal chump-what are you in grade six at school? lol how about I meet you behind the shelter shed and we'll work this out like men. Bwhahahahaahah and you expect people to pay for your advice bwhahahahahaa Im wiping away the tears!!!!!
You made me smile:)
What is this, IMDB? I thought it was a place for serious discussion about property prices. Gotta wonder why so many investors are getting so defensive?
Qlds007 wrote:C but it not about the numbers.What's it about then?
yarpos wrote:1. you can use paid for services to get this information, but you may get some idea of sale prices via http://www.domain.com.au/public/apm/saleshistory/default.aspx?mode=research2. conventional wisdom was that roughly 1/3 is owned, 1/3 under finance and 1/3 being rented. I havent however seen a credible source of data to verify this.
3. I assume you mean borrowed more than 100% of value at time of purchase. Cant help you there, and dont know where you would get aggregate data.
1. Thanks for that – though I get no results found for most suburbs around me. There is definately stuff listed. I guess it means nothing is selling? Also, there must be a government body that keeps track of the actual settlement prices and it must be obtainable from them? How can one trust the REAs are listing true prices? Anyone know?
2. Wonder how close that rule of thirds is to the reality? Anyone know this one?
3. I don't know exact financial terms but I mean how many investors owe the bank more than they actually own in the residential market. What is the ratio of borrowed to owned amongst residential property investors? I guess, using answer 2, it would approximate to twice as many are being paid for as what are paid off and now remortgaged?
I am trying to gague how big the property problem is. Will it just burn buyers who have enterred the market in the last 5 years or does it have the potential to burn investors aswell?
harb wrote:Hahaha! Dream on Scamp, without the tax benefits a lot of investors would just kick the renters in the street or put up the rents 4 fold. The rent money alone is not worth the hassle of a tenant, I'd rather keep the place vacant for a few years/decades until I need the money.Put up the rent 4x at the bottom of the market and cashed up renters will just move into better property. Poor renters wont have the money and you may force them onto the streets. This is fine I guess if you own all of your rentals, they will just gather dust and cobwebs as they remain vacant over time, but the rentals that are still being financed need someone in them without negative gearing.
Besides all of this, there exist tenancy advice boards in every state that will protect the rights of tenants if called upon. Have you ever had a tenant take you to the tribunal? You can't change the rent or kick them out till the tribunal has ben held and then they generally rule in favour of the tenant.
yarpos wrote:we are we all living ? under a corrugated iron sheet in a creek bed somewhere?I think there are many residential propertys purchased for capital investment only and now that capital isn't climbing so fast these are starting to hit the market – thus showing an increase in available property.
Many young renters that are used to living by themselves are starting to share to save cash.
Families that have to foreclose are moving back in with parents that own thier property.
There are many places people are going but over all living conditions are changing.
What is most interesting about this thread is that, over the past two months, the doom and gloomers have been more prophetic than the defensive property investors. I tend to agree with the basic analysis; current property prices are unsustainable – across the board.
As a culture we have been too driven by greed and it is coming around to bite us. We will all suffer and the amount of suffering will be directly proportional to the debt. The extent of the Australian situation was fueled, though probably not exclusively, by the capital chasing attitude of the Boomers and the inflationary nature of the 1st home buyers grant.
What worries me, that no one seems to have considered, are the social consequences of all of this. Just say we crash as bad as America in the 30's – which I believe is possible – what situation does this leave us in?
So the Boomer's investments become worthless on average and they crowd into understaffed retirement homes to await smelly deaths? What of the families cast onto the streets? Rent may go down but they will still have massive bank debt and interest rates will sour even higher… is it possible that they reach over 20%?
As a country we have cut back on social services consistently over the past 10-15 years and morally devaluated those jobs even more. We have no cops and those we do are too afraid of civil rights to act (likewise nurses, teachers etc). The levels of moral discipline in society are far less now than they were in the 30's, so my question is this.
When this badly stacked deck of cards falls, what is there to stop the desperate from taking advantage of the weak? What is there to stop theft from becoming commonplace, robbery from becoming a necessity and human life from loosing its value? We joke about our dollar becoming as worthless as the Zimbabwe dollar but can any of us truly comprehend what it is like to live there?
Oh and a some financial questions – does anyone have any actual stats on:
1) average clearance prices of residential property over the past month or two?
2) the percentage of residential property owned in this country vs that still under finance?
3) the percenage of property investors that have borrowed more than they own?
