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.
ummester wrote: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.
Let me see if I got this right, Ursus americanus is going back to the GPHC cave to hibernate for the next 2 years while waiting for that 30% fall across the board ? I'm sure this forum will still be around and sorry to say this but so will the losers on the other one. After waiting for that 50% drop since prices where a 1/4 of the current ones I'm sure they'll still be around forever and a day, still waiting for that big fall and still posting on this forum to CONvince us that we are wrong and they are right. Maybe now that we've agreed that a fall is not due for at least 2 years and we can't be bothered arguing about silly Socialist Theories for the New Millennium we can go back to the basics of Property Investing ?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 and as such they could hardly be forced to sell below the perceived market value even if rates were to go much higher (which they aren't). The size of land has already been reduced from the "large " 1/4 acre block of a few years ago to the current "huge " 500sqm blocks so there is no scope for any noticeable reduction in price there. Also considering the large number of people waiting & willing to get into the property market a few fire sales will hardly put a dent in that waiting list. Since reducing the block size is virtually out of the question the only other way of reducing the property costs is to build upwards or for that fabled 30% drop to occur it would mean reducing the costs of building a new home by more then 30%. Short of importing building materials ( which we already do to a large extent) and bringing in foreign workers to work for at least 30% lower wages how exactly do you expect a new house to cost 30% less ?Quote:As in 'we would love to pass on the cuts' suckers… but we won't.No its as in "If we don't do then someone else will, and then there were only 3 pillars left."
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.
ummester wrote:Why are you botherring to debate with me so much anyway Harb?No bother at all, interested in how a bear see things.
Quote:Get to it – never know when age will fully catch up with youHopefully not before the official retirement age and unless the goalposts change I've still got 20 years to go before that happens.
Well the fixed rates have started dropping:
5 Year Fixed seems to be were the biggest drops are at this stage:
ANZ – 9.49% down to 8.99%
CBA – 9.40% down to 9.15%
NAB – 9.29% down to 9.09%
Westpac – 9.39% down to 9.09%Is it worth fixing loan for 5 years at the moment??
The RBA has to lower interest for a number of reasons. Economic growth can not occur efficiently if rates are kept higher just to battle inflation. If the RBA leaves rates as they are or even raises them and demand slows considerably then stagflation might occur. This has already started to happen though as business confidence is at its lowest levels in seven years.
The RBA isn’t stupid and they are aware that Australias economy cant rely solely on the mining boom. It has to create activity in all business sectors, so the most effective way of doing this is to lower rates as much as possible without blowing out inflation again (2011-2014). This will eventually happen when world demand slows, the dollar falls and thus inflation falling.
Eventually banks will follow suit and lower rates as they will be competing with each other and non-institutional lenders. This is part of a normal economic cycle I think.
The biggest challenge Australia faces is the price of oil. If it reaches 200 a barrel in a couple of years(very likely thanks to Chinesse and Indian demand)inflation might hit double digits.
IMO only…I find it strange that the Government would be asking that banks, which are for-profit organizations, lower its interest rates charged to their customers. Should we landlords lower rent because interest rates come down? Of course not (at least I think so), unless we have to.
People are borrowing money from institutions whose sole interest is to maximize shareholder value……and it should certainly be kept that way. Banks will always be looking after themselves and their "owners", ensuring that they make as much money from their customers (us) as they can and are allowed to under the regulated system. Of course, the rates they charge will be based on what they can get away with (demand), taking into account various defaults they expect to experience, loss of market share (if any), etc.
The Government should focus more on creating a business landscape that allows for more competition. There is a lot still to be done on this as I believe the smaller lenders are now being squeezed out of the market and the big banks are getting bigger and bigger without enough competitive pressure. I don't have a problem withbanks getting bigger, but I do have a problem when they get bigger through monopolizing the market and that's what I think the current business environment allows them to do just that.
I don't own bank stocks and I have a big mortgage. Of course I want rates to come down so I can keep money in my pocket, but I also believe in the ideology of capitalism, the concepts of supply / demand, competition and ultimately "choice". I wish Rudd would just get on with it and focus more on how to ensure smaller lenders/banks survive and can grow to compete with the big 4.
JRr wrote:I don't have a problem withbanks getting bigger, but I do have a problem when they get bigger through monopolizing the market and that's what I think the current business environment allows them to do just that.Like this
http://www.bloomberg.com/apps/news?pid=20601081&sid=aFskJLzyueg4&refer=australia
I will not be surprised if, by the end of the downturn/correction/recession/depression that we are moving into, there are only 2 mortgage lenders left in this country. One for the Queen and one for the West:)
Trouble with capitalism is that unless you get to be the biggest fish in the pond, the bigger you do get the greater the risk you run of being eaten.
Ummester, please don't take this the wrong way, because it's a serious question…
Why do you post here?
Property investment, heck investment full stop, is a CAPITALIST pasttime. We (with perhaps the exception of (seemingly) yourself and Scamp) are here because we wish to partake in the capitalist, money making venture of property investment.
I'm interested in knowing what benefit a scoialist like yourself could possibly gain from such a forum, other than a place to push your commy socialist ideals?
mugli – I'm not offended by the question at all and consider it fair and valid.
1. From the replies investors give, I can get a beat on how they are feeling about the market at the moment.
2. I believe this forum is browsed (if not always posted on) by Australian's who aren't investors and/or capatilists and they probably enjoy reading the alternate viewpoints. Point in case, it was Scamp's thread that brought me here – not for the doom and gloom viewpoint but for the way investors were reponding to it.
3. Even minority voices (or posts) can change group ideals.
4. Property Investing (as is this forums namesake) encompasses more than the financial. It is very much a social investment, much more so than banking, shares etc.
5. I enjoy it.
6. I am learning form it.
7. Even investing in a single house for purely socialistic purpose is still investing.
I am 21 and currenlty looking for my first home
I for one enjoy reading ummesters posts. Gives me a different perspective on things
Keep it up!
I have to defend socialists here – socialists are not communists (Jesus was/is a socialist).
I believe you can be a capitaist and a socialist at the same time – it's basically enterprise without greed, doing business with the greater good in mind, the win-win solution. Unmester isn't attacking capitalists (I hope), he's attacking greed.
I'm a capitalist and a socialist, meaning I make money in a socially responsible manner and use the money I earn (some of it) to help those in need. So capitalism isn't a bad thing, neither is socialism, and mixing the 2 creates a win-win.
As far as interest rates go, the banks have just lowered their fixed rates, which is an odds on bet that the variable will be coming down soon also…
mpertile – I agree, you can be a socialistic capitalist. You can produce something useful for society and resonably expect to be paid well for it. You are also correct when you state I am attacking greed and not capitalism.
I have no idea what any of the investors on this board are like outside of it, and by the same token, they have no idea what I am like and what kind of information I am privy to.
What I have seen in this country over the past 10 years (especially with property) is social concience give way to greed. It hurts me that the pursuit of material wealth has made Australia so apathetic to the financially impaired – I don't want my boys to grow up in a world full of either hopeless or heartless bastards. I am no bleeding heart, trust me on that. I have no sympathy for those who don't help themselves or those that expect a free ride. I just want to see the 'fair go' return and not in the pretentious way our goverment (both options) bandy it around.
howardcm – you know what my advice would be. Keep looking, obviously, but don't rush in. Watch the interest rates and the advertised values – I don't think anything is going up any time soon. But take into account a lot of advice here (yes, I do read more threads than what I post in) and these investors do know how to sniff out bargains and the legal side of the property market. Trust REAs less:)
ummester wrote: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..
Hello old friend,
Your 2 years are up and the forum is still running but your 30 % went in the other direction. Want to make play double or nothing, say 2 more years and 60% falls ?Ha ha ha!
Look's like you called it a wee bit early Ummester. Bloody FHBG has caught you out…Hey Mick12345, which website is that graph coming from??
Hi Amsaini15,
The answer is bound to create some controversy among the property bulls:
Steve Keen's http://www.debtdeflation.com/blogsand also talkfinance.net
Let me see if I got this right, Ursus americanus is going back to the GPHC cave to hibernate for the next 2 years while waiting for that 30% fall across the board ? I'm sure this forum will still be around and sorry to say this but so will the losers on the other one. After waiting for that 50% drop since prices where a 1/4 of the current ones I'm sure they'll still be around forever and a day, still waiting for that big fall and still posting on this forum to CONvince us that we are wrong and they are right. Maybe now that we've agreed that a fall is not due for at least 2 years and we can't be bothered arguing about silly Socialist Theories for the New Millennium we can go back to the basics of Property Investing ?
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