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.
ummester wrote: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.Let's all thank ummester for his sense of national duty…
Something's value is what someone is willing to pay for it – what they perceive it to be worth. What is stopping you from putting in bids of what you "perceive" to be a fair price for a property, then walking away when the vendors perception turns out to be above that? What would you lose?
Hi Ummester,
sounds a little like you believe the market is overpriced… by a lot & you are waiting for the prices to come
down to where you believe you are comfortable, before you jump in & purchase. The current owners
will of course then "lose" money & once you own & live in your new home eventually you make money when the property jumps up to its future value… (whatever that might be)…this could also be perceived as merely speculating in the market couldn't it??
…you see deep down we are all capitalists… aren't we??My first post so be kind all your doomsayers!
I myself am about to buy a couple of rentals. I don’t think there will be a bust at all. I’ve been reading a lot in the last 2 weeks in property investor magazines and watching industry experts on TV, notably “Your money, Your call” on Foxtel and doing a fair bit of research, mainly in my local area (Newcastle /Port Stephens). The general consensus is that interest rates will start to come down Nov/Dec 2008 or early 2009. The NSW, particularly the Sydney market has been stagnate or seen a price reduction and this has started to reduce the prices back to a more reasonable level (I know I’ll get shot down in flames for that one). I even spoke to a specialist property accountant (from a very reputable well known firm) last week who said in their research the NSW market is at the bottom of the cycle.
I don’t subscribe to the thought that property values will decrease by maybe 40%. I know the local RE agent quite well and to get a rental in our small area, they have a waiting list with about 15 families. As there are two RE agents in our small suburb, I can assume the other agent has a similar list or maybe just the same people on their list. We live in a small village? 30 minutes north of Newcastle which achieved a 10 year average growth of 11% per year. Last financial year some Newcastle suburbs had a -10% growth, ours was I think from memory -2.3%. Newcastle has recently had a <1% rental vacancy, there has even been “auctions” for rental properties with people bidding for how much they are willing to pay for rent and not in your most salubrious areas either.
So using an example, if my own home was a rental and was devalued by 40%, (currently worth $360 K) it would then be worth $216K. I know a lot of people who would go out and buy their own home tomorrow if that were the case, therefore pushing prices back up again.Maybe things are going back to what they were before the BBs generation where more people rented and didn’t even consider buying. My husbands grandparents rented the same 2 up 2 down terrace in Liverpool UK for 50 years and never considered buying it, mores the pity.
My own parents first house they bought was a one bedroom fixer upper which they bought whilst having a small baby. My mother takes great delight in telling me how they didn’t even have a fridge for 3 years, they just used an esky cooler. They only had one old car and never ate out so they could get a foot on the property ladder. There were a lot of their generation who lived with their parents for a few years after they got married to save for a deposit (I don’t think I could do that).
I agree that things are maybe a bit difficult for gen Y to get into property but maybe some who complain have got their priorities wrong, new cars, holidays, excessive consumer spending. I have nieces who are in their late teens/early twenties who want it all now. They’d rather blow all their money and rent a “nice” house in the happening suburb in town than do the hard yards now to secure their financial future. There’s a lot to be said for delayed gratification.
Anyway, I only take advice from people who are current property investors, who have done their research and are respected in the industry, in fact I’m going to a seminar soon by Michael Yardney about where he thinks the markets are heading. Personally I think any one with the capacity to buy an investment property(s) now and not considering it will be kicking themselves in a few years time. Do your research, educate yourself, make an informed decision and don’t listen to anyone who isn’t a property investor.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.
ummester wrote: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.
Gates and Norman are only two examples as I said. But yes, the middle class can contribute as well – and do in various ways to help out the less fortunate.
That's one of the nice things about having the position to be able to help.
So, you think that no-one should aspire to get rich, to help society, to get ahead and improve the world? Why? Would you prefer it that we all sit around and give up and leave it to K.Rudd and his idiot mates to take care of us?
And, everyone can achieve capitalistic ideals. The problem is, people are inherently lazy, and want the path of least resistance. Only 5% of humans do what it takes to get to the top – in any life endeavour.
If you are against capitalism per se, then you are wasting your time and ours by being here, as the very practice of acquiring wealth through property is one of those capitalism practices. We are all here to get rich through property investing. What are you here for – just to have an academic argument I'm tipping. How about sharing with us some secrets about how to get rich through property investing for once>
That's fine that you refuse to buy a property that you think is too expensive. Don't buy one. Believe it or not, that is how the property market already works, and has done for centuries.
So, don't buy. Maybe the prices will correct soon and you will be happy, and then you can buy.
But don't slag off our choice to buy property if we can afford it. If I can't afford it, I don't buy. When I can afford it; I buy. Simple.
If it's too overpriced then that's my problem; not yours.
ummester wrote: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.
That's a funny thing to say. Does it bother you that someone is making a profit out of you ?
Quote: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,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.
[/quote]
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.[/quote]
Sure can , buy the forms from newsagents or you can drop into a settlement/conveyancing office and ask them for some forms.
Also if you do have to get a mortgage don't go over 80% or you'll have to pay for lenders insurance.bespoke wrote:My first post so be kind all your doomsayers!I myself am about to buy a couple of rentals. I don’t think there will be a bust at all. I’ve been reading a lot in the last 2 weeks in property investor magazines and watching industry experts on TV, notably “Your money, Your call” .Good first post bespoke currently watching your money your call very interesting data on Gatton, good luck with your purchases.
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
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.
ummester wrote:L.A AussieI 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.
Everyone of your mindset keeps blaming investors for all these high prices.
The reality is, investors make up 30% of the total resi housing market. Our influence on price is minimal at best, and investors are trying to talk the prices down – not up.
If you want to blame someone, blame;
1. the FHB's for a start; they get $14k free money from Lapdance Kev.
2. owner/occupiers who make up 70% of the market. They buy on emotion, and are more likely to pay full asking price for the property – or more.
3. the financial institutions for providing all the marginal loan products that enable people with shaky financials to get loans. If everyone had to come up with the traditional 20% or more deposit, there would be way less activity in the market.Property for most of the population is about buying their own little castle. There is enormous emotion attached to it, therefore they will pay a premium for it.
Most o/o's will buy the most house they can afford. When was the last time you saw a 40 year old doctor on $500k move into a 2 x 1 10 square house out in Doveton? No; he's gunna buy a $3 mill knock down in Kew because he can afford it.
If you want to save over-leveraged buyers from disaster, add some advice that will actually help them, rather than keep saying we're in a bad position, the world is gunna end etc.
That's contextual, where's the content?
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 think you have to look deeper than the upfront cost of living somewhere… as a home is an "investment"… (including your PPOR which is also CGT free).
every house I have owned has returned far far greater than the actual day to day cost of ownership, especially when the tenant is paying a fair portion of cost of ownership & the tax man helps me out too at end of fin. year.
I think the maths you're describing in my mind would mean $20,000 per annum down the toilet for the renter…never to be seen again!!
In my opinion thats not great fiscal planning if you can afford to buy a home.I suppose it depends on what you want out of life & everyone is different… thankfully.
Answers in red below.
ummester wrote: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. Oh you think? Ask every single person you know in your life if they own an investment property. I'll bet it is less than 1%. This is certainly the case in my circle of acquaintances, friends and relatives.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.There are loads of houses in the bottom of the price range that are affordable to everyone. The problem is, most FHB's don't want them. They want the 4 x 2 house with double remote garage and pool as their first digs. They think all the baby boomers started off in the u-beaut house, whereas they started off in the 3 x 1, 10 square w'board, no curtains, carpet or furniture, no garden, no car, no carport, out on the edge of civilisation. Show me a FHB who's willing to live like that these days. Oh, and take away their mobile phone while you're at it. pffft.
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. The average Mom and Pop investor cannot hold vacant land as an investment. There is no income or tax advantages from it. They are mainly going to buy it to build a dream hoe on if they buy it all. Most of the development land is owned by the big developers, who will do as you suggest.
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. And what condition is the house? Crap, I'll bet. The Land is advertised for that much; but hasn't sold for that much – right? It's the same where I live. Knock-overs all around the place. From a financial perspective, this is good for both o/o's and investors, as you are getting virtually the house for free on your land. I can get an income while I wait for my DA to go through. There are also properties in the same area for more than double this price – the house is top end and brand new.
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. Your point being? No need to do the maths. I wouldn't buy an investment like that. The only people buying investments with those numbers are dumb investors, or on a high income – often both. They buy them because they can afford to hold them, and are hoping for a big cap gain. It is quite possible to buy sub-$200k properties with 7% yields right now, AND with considerable "on-paper" depreciation deductions. You will find that these investment properties will be of the minority as most people can't afford the neg cashflow.
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 – there is no bottom of the price range where I work – nothing under 300K… yet.
The circle of people I know from work over 50% of the boomers have more than 1 property and the X's either rent or have 1 house.
If I could get to work from Western Sydney, i'd be more than happy to start looking for something to buy tthere but that is 300km away. I am more than happy with an older 3×1 that requires some work, (so long as it has a reasonable back yard) but, like I said, they are still overpriced in the state where i work.
Just in –
But many older Australians with strong superannuation returns are also borrowing more and expanding their investments, helping to block younger borrowers from entering the property market.
"Surprisingly, despite the marked distribution in wealth to the baby boomers, their collective appetite for leveraged finance remains undiminished, with those in the 45-59 age group holding over a third of the nation's debt.
The largest share of financial assets in the Australian economy is held by those aged 45-59 years, with 41.8 per cent; followed by those aged over 60 years, with 32.5 per cent.
http://www.news.com.au/business/story/0,27753,24184573-31037,00.html
It's no surprise to me. The Boomers just can't admit the affect they are having. But things are crashing down around them in terms of super, the share market and property – I guess there is some natural organising force towards justice.
ummester wrote:
Just in –But many older Australians with strong superannuation returns are also borrowing more and expanding their investments, helping to block younger borrowers from entering the property market.
"Surprisingly, despite the marked distribution in wealth to the baby boomers, their collective appetite for leveraged finance remains undiminished, with those in the 45-59 age group holding over a third of the nation's debt.
And you begrudge them because they are buying now rather then wait until you do, or is it because they have the balls to do it ? At least they are not hanging around the Centrelink Office for handouts. Why not wait a few years, lets say 2011, and see what your "natural organising force" will do to their finance before gloating about things crashing down around them. We'll see who was right then, if you're still around this forum that is.
You do remind me of Aesop's fable about the fox and the grapes.How philosophical of you Harb – with the sour grapes anology:) No doubt I will find the first home I buy a dissapointment – imagine how dissapointed I'd be with the purchase at current prices.
2011 – you're on. I recon the curve will have reached the bottom by then. If I loose, I'll buy you a beer, if you loose, I'll buy one of your houses:)
ummester wrote:No doubt I will find the first home I buy a dissapointment – imagine how dissapointed I'd be with the purchase at current prices.Probably not as disappointed as you'll be by 2011. For your sake I just hope you didn't listen to Scampman and Co. and "invested" your house money in gold and silver, over the last couple of days your 3×1 just turned into a 2br flat .
And Scamp, or whatever you call yourself these days, sorry about your "safe" investment. You can see why the safest investment its still brick & mortar.
Quote:2011 – you're on. I recon the curve will have reached the bottom by then. If I loose, I'll buy you a beer, if you loose, I'll buy one of your houses:)Happy to take your beer but the houses are NOT for sale. Could rent you one of them but, ….if you promise to be a good tenant, pay your rent in time & look after the property like it was your own.
No gold or silver for me. If they haven't gone down 30% by 2011, I won't buy one – so I won't be disapointed – I'll just be down a beer:)
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