Hi Guy’s
this is my first post here as well, I was one of the unlucky ones that ;ost my property in the 80’s I lost the lot, Now I have another I bought 7 years ago, This is how I see it: The Reserve bank needed tp pick up the economy and the building and housing departments, They dropped the rates to what I think is an acceptable level aroung the 6-7%, Sure alot of wealthy investors bought up heaps of property, But also so did the average Joe Blogs as well, In my business i heard alot of people saying now we can buy a house if we don’t do this and don’t go out and cut down on this ECT ECT, That told me a lot a basic first home buyers and alot of others would just make ends meet, SO the reserve bank got thier goal, they boosted the housing sector and the economy, Now after they acheived there result they are not happy about it, surely no one can tell me the RBA didn’t know what they would create when they dropped the rates surely? Now after they achieved what they set out to do they want to increase the rates again to slow things down… Well I say this sure the rate hike will slow up things especially for new investors, But they will also cripple Joe Blogs and the average family, Which I think are the majority anyway. In turn it will create less cash flow, that will affect small business which is the guts of Australia, In turn a down turn in small business will create loss of jobs and create more unemployment, SO the answer is simple, they should structure a buy in fee for second property buyers, say charge them a fee of 15,000.00 to obtain a licence to purchase a second property, instead of a rate rise, That will put a freeze on the market instantly and the people already in debt will have half a chance to survive as well as the Australian economy. Mind you the figure of 15k is just a rabbit pulled out of a hat I’m sure this could be structured correctly……
My 2 cents..I’m not so sure why you feel “investors” should be penalised for setting up their own retirement fund ?? Or do you expect everyone to live on the joke that they call the old age pension ??
I don’t have any faith in superannuation, they’ve lost plenty of my hard earned dollars in the last couple of years. For that reason i’ve decided to no longer contribute to my super fund – all that goes in is what my employer tips in… And by the time the Government think i should retire (15 years after i think i should !!) all i will get is an indexed pension out of my own super fund anyway… Bugger that !!
Providing a future income stream is my goal, why should i have to pay a premium for it ?? [?]
Cheers,
Paul…“I want to be rich, and stupidly happy – so far i’ve only managed to achieve the stupid part…”
I have to agree with fatboy, the IPs are our future, and like fatboy we also stopped salary sacrifice, we rather put this amount into our (unfortunately) negatively geared IP. I certainly don’t want to be penalised for thinking of my own future, and also the GOVT should thank us on their bare knees for we provide housing and otherwise they’d have to provide more housing, something they’re sooooooooo good at (not).
“I want to be rich, and stupidly happy – so far i’ve only managed to achieve the stupid part…”
[/quote]I like the quote, very meaningful and cute. But I think there is every reason to be happy. You don’t have to be stupid to be happy…[
]Thanks – i’m not sure where that came from, just something i thought of one night… [
]It’s kind of tongue in cheek (as is my style) but it gets the message across – nevr take ourselves too seriously… [
]Cheers,
Paul…“I want to be rich, and stupidly happy – so far i’ve only managed to achieve the stupid part…”
“If your stupid – How do you know when your happy”
Fatboy- agree with you on the Super issue, the funds loose money hand over fist lately then charge you fees for the pleasure. i know retirees who’ve had to get back into the workforce part- time.
Look after yourself- no one else will
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Thankyou for the responses, no I don’t think investors should be penalised at all I don’t think anyone should be penalised at all, The rate hike affects everyone, Investors as well as the people already in the market as well as all small business people which currently make this country run, However if anyone is to be penalised if it means saving all of the above then 1 is better than all…
Interesting statistic if i can remember right, but if im wrong some one please correct me.
People who are age 65 today. In a group of 100.
1 – Is Wealthy
4 – Financially Free
5 – Are still working to support themselves
61 – Are on Government assistance. Living on $200 a week
29 – Are Dead by this age.well i can guess were most of us want to be.
cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”Hi sis,
i am guessing you must be in you’re early
20’s. Mate i wish i had you’re knowledge when i was you’re age. you are on the right track.
good luck to you, not that you need it.robo
The RBA did nothing wrong.
The property market had been hot since 1999 in a Pre GST rush. When GST finished, the rush died, and the Builders did a Big winge. JH did not want anyone saying “GST sent me broke ” and so we had the first home owners grant.
It was not the low rates that created the bubble but the grant. Other markets have been hot since the Dow Jones corrected in 2000 (they started to move in 2001 ) but we had a two year start.
I can either buy a unit in the inner west of Sydney for $760,000 or buy a similar unit in Manhattan and have change to spare !!!!
Scarey huh !!
Left alone the market would have worked itself out. JH might have lost an election but…
I’m not so sure why you feel “investors” should be penalised for setting up their own retirement fund ?? Or do you expect everyone to live on the joke that they call the old age pension ??The major problem is that it heavily favours those with equity (ie. older people generally) who havce benifited heavily from the capital growth in the last few years.
For little/no money down, they buy a property and pass on much of the costs to the tennant whilst benefiting from tax breaks. Meanwhile, first-time buyers with no equity get trapped in the rental cycle because house prices rise to unrealistic levels and they don’t want to risk a $300k+ debt.
I’m not saying the RBA are to blame for any of the current problems… IMO, lenders provide very easy credit (which is their prerogative) for so-called investors, some of which buy up multiple properties, which has caused an obvious dwindling of supply.
You do the math. If someone buys a house whilst owning another, that’s one less for someone else. With 12% of taxpayers declaring rental income, that’s a pretty large amount of properties unavailable for purchase to prospective owner-occupiers.
i think what sektor meant was by having to but a licence that would slow down the market without the need for rate increases.
everyone said why should investors be have to suffer but they would suffer anyway if rates went up?
i dont think sectors idea is so bad but in reality it would only be a short term once off fix as after we had paid for a licence we be back into it.
The major problem is that it heavily favours those with equity (ie. older people generally) who have benifited heavily from the capital growth in the last few yearsNot a bad point – but what about those who struggle to buy now and reap the benefits of equity in the future ??
The way i look at it, property works in cycles, this one no different to any other… Those who missed out in the latest “boom” will make up for it during the next one, whether that’s in 3 yrs or 10…
Cheers,
Paul…“I want to be rich, and stupidly happy – so far i’ve only managed to achieve the stupid part…”
Thanks Falcon
You are the only person in here that got the point,You are right the rate hikes affect everyone including Investors. My whole point was to find a way to Not affect the Masses. And it seems to me that no-one really cares about our country. It’s all about me myself and I. “How will I suffer” ETC. The point here is we need to keep Australia running, and not have a repeat of the 80’s where so many people went broke, and small businesses collapsed leaving so many unemployed not to mention all the bad debts when company’s and sole traders declared bankruptcy!
To go through all this again seems like a high price to pay when the answer could be quite simple. And lets face it higher rates means less cash to spend and the immediately has an affect on small business, And I don’t know if anyone realizes it but it’s the small business of Australia that is the guts of our country.Hello
Its just my opinion but when you buy a house be it investment or ppor you have to budget in for reasonable rate rises as it is ineviable that they will eventually go up. Myself and my wife budgeted so that if the rates rise we can still comfortably affort an increase to 10% before we have to sacrifice our standard of living, and thats on a $300,000 loan and we are in our mid twentys. But on the otherside of the coin I do know alot of people who have borrowed large amounts of money to buy an expensive house that they can barely afford now let alone when rates continue to rise. People should factor all the possabilities in when buying a house, If you havent learnt from the mistakes of what happened in the eighties then you are bound to repeat them. Now I dont want to sound like a w*nker but in the sad cases if people cant afford their houses when rates rise again, this introduces a new range of cheep mortgagee house for investors or other people entering the house market for the first time and are prepared.
Catch you round
Scott
“Together we combine our strenghts and eliminate our weakness”
sektor
You assume that the RBA raised rates to slow the property market and not the rest of the economy. Please consider the possibility that it wants to do the opposite. I think that if you consider all the facts then this can be seen. As the RBA governor said this week the real estate market was already turning before the rate rise so there was no need to do it for that reason. However raising rates was a perfectly reasonable thing to do if you look at the rest of the economy. This includes factors like
1 the improving global economy
2 the very strong domestic economy (I realise that there was a drop in ec growth earlier this year but this was due to several freak occurances that on their own wouldnt do much but together had a big effect on the export sector. These included SARS, terrorism and the drought. The rest of the economy was largely uneffected and things have returned to normal. Thats why unemployment is still so low. More recent data has shown that the economy is actually still roaring.)
3 possible inflation and wages growth pressure due to the strong economy and a very tight labour market.
4 consumer credit growth(not just in housing)
You may consider that it is too early to expect the global economy to recover or inflation to take off but the early signs are saying so. And if they are saying so then such an expansionary stance by the RBA is absolutely unnecessary. If everything says that the economy is improving then you dont leave rates at 30 year lows you bring them up to neutral and enjoy the ride. If the RBA says 5.5-6% is neutral then it is perfectly reasonable for them to move them up to 5.25%
Cheers
DavidP.S
I am not ruling out the possibility that the RBA considered the housing market when making its decisions. This has caused alot of disbutes as people have said that it is not the RBA’s job to control the housing market,just inflation, and it should butt out. I think those people should reread their high school economics text books as in high school you learn that the RBA has three basic roles. One is “to ensure the wellbeing and prosperity of the people of Australia” (cant remember the other two, sorry). I interpret that to mean preventing recessions by allowing sustainable growth. Economic history buffs would know that just about the best way to start a recession is to allow the property market or other asset markets to crash. (Please trust me on this one. I live in Japan at the moment and it is now in it’s TWELTH YEAR of recession because of a crash in property and other assets). Therefore it is very much the RBA’s role to cool the market now rather than allow a crash in the future. Also who else would control it? The gov’t is never going to shatter “investor’s” hopes by cooling the market in an election year. Thats why the RBA is independant. It can make rational economic decisions without having to be populist.I agree with some forumites about the RBA to increase interest rate for the sake of the whole economy. Everyone knows interest rate is at historic low and it will go back up one day (they can’t blame others) and interest rate can’t be kept low all the time in a boom time.
Breakfree
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