Should I be buying now?

You’ve pretty much summed it up whiteknightoz

• On a $300k loan, at 0.80%, repayments will reduce by $200 per month
• The banks will reclaim some of their lost margin (i.e. 0.20%) previously lost in higher funding costs and therefore restore confidence.
• Interest rates will fall further and the banks margins will continue to improve.
• Median house rents have increased (in Sydney and Brisbane) by over 30% since July 2005 and are forecast to increase by another 30%+ over the next few years.
• More cash flow negative investors will be become cash flow positive as loan repayments decrease and rents rise.
• International immigration is at 19 year highs putting further pressure on housing.
• Those unfortunate enough to be forced sellers (due to mortgage stress) are now renting and are placing further pressure on housing and forcing rents up. For example rents increased by over 17% in the South West of Sydney over the past 12 months due to this reason. Houses prices in the same region increased by a modest 2%, however still positive territory.
• BIS shrapnel forecast approx 20% growth in property prices over the next 3 years and I agree with them.
• Those buying well, adding value and are educated will do much better than these averages.

From someone that is buying properties below bank valuation and increasing the rent after improvements then benefiting from additional market rental increases, it is a great time to buy property.

Just remember oil was going to be $2.00 bucks a litre  now. OOPS its droped.
Interest rates will not drop. They will go up.   OOOPS there dropping

Everytime the gloomers predict something it changes and they have a excuse for the change. Boring

they will get it right eventually and i believe they will with lower house values but

50% drop average  NO
Depression   NO
Collapse the dollar currency NO
Head to the hills with your bag of seeds   NO

These are the rants of a delusional mind. There like ogres huddled around a campfire predicting doom.
Things will get rough and they will have there moment in the sun( Or dark depending on there mood)
Then things will get back to normal and they will jump on the next impending earth killer.  YAWN.

AUD dollar is collapsing as we speak. Are you blind ? the dollar went from near 1 USD to 70USD.
It will drop more now that the RBA lowered 1% interest. Please do your homework before you post something. That's a 30% drop in the AUD dollar. If that's not a crash then please, tell me what is.

Inflation ( not CPI ) in Australia is close to 15% now. That's rampant. Just check your food bills compared to last year. Please don't tell me you don't pay at LEAST 15% more, because you do.

Oil will be 2$ per litre. Especially with the 30 drop in AUD dollar and what's still to come. Fuel might be lower now, the only reason is that recession is hitting the world.

About the depression : Just hope you don't get there. Because recession is a 100% certainty. Ignoring this won't make it go away.

50% houseprice drop : Did I say it would drop 50% in less than 6 months ? Ofcourse not. In fact, I told you that the bottom would certainly not be earlier than January 2009, and with the recent actions by RBA and government, it will take longer because now it changed to a recession instead of an economic dip.
You will see, 50% houseprice drop will happen.

Dropping interestrates : Yes you are right, I predicted interest rates to go up and they SHOULD have gone up, but they went down. This is completely illogical and has caught most economists by surprise. The drops so far in interest have resulted in a 30% ( !!!!! ) drop in the AUD and it just shows that the RBA has no clue on what they are doing. They have a different agenda. Do you think the AUD dropping is a good thing ? Think again. The drop in the AUD is going to cause massive problems for Australia in the short / medium AND long term.

Mind you : Dropping interest rates is done for a reason. In 1990 ( you remember, than recession Australia had to have ) RBA dropped interest rates like this. It caused 20% unemployment and loads of trouble for Australia.

Please, don't speak about things you have no clue about. If you think you were right with the drops of interest rates, this is a very short term, PANIC ACTION by the RBA.

House prices will now, more than ever, and with 100% certainty , drop 50%.

There is no doubt. Recession is coming, commodities ( australia's main export product ) have already crashed on top of 30% loss of the AUD dollar. I'm just telling you like it is, nothing different.

By the way, I'll let you in on a secret on the real reason the RBA has dropped the interest rates.
Mortgage resets.

And guess what ? people won't 'save 200$ per month'. They will go from their locked in low interestrates of 6% to the 'new' interestrates of 8%. They will actually have to pay 400$ MORE than before. Thanks to the mortgage resets.

The RBA just wanted to make the blow a little less bad.
Instead of going from 6% to 9%, they will now go from 6% to 8%.
And the RBA has destroyed the only thing the Australians had ( their strong AUD )  by doing it.

Please read what I wrote up here twice before you reply.

The only thing that makes sense is panic – but considerring Australia is "better placed to weather the financial storm than the rest of the Western World" I am not sure what the RBA is worried about?

It seems similar to what was going on in America before the sub prime broke into all it's glory – which is scary, because America has no end to it's financial problems.

I was hoping the Australian RBA would be smarter, force inflation right down and decrease asset values in line with wages whilst simaltaneously increasing the dollar. They haven't. They may even, dare I say, create another mini spending boom – which will be bad long term.

I hope Australian's can be smarter than their lines of credit…

I aways knew you were in denial but now you're getting into the desperation stage as well. What's the matter , our Aussie homes are to unaffordable to you ? Our Aussie dollar just returned to were it belongs, at around 70c. Anything above that was never going to be sustainable, only a fool would think that it was. I told you so last June at the same time I told you we'll be up for a couple of rate cuts before X-mas and mid 5s by next June. Oh noo , there are going to be more rate rises you said. Then you went on about how the banks will NOT pass any of the rate cuts and how by September it will be all over because of the rates resetting. Now instead of admitting you were wrong you are going on about the fall of the AUD by 30%. Well guess what Scamp, that's actually good news for most Aussies. (except for the ones planning a world tour )

Well I don't know about devo but I have found a farmers market where I do most of my shopping and my bills are actually down by 1/3.

I'm sure that oil will be $4 one day , just not at the moment since oil has fallen MORE then 30% Anyway, with oil at $2/Lt canola becomes a viable alternative and the oil producing countries will have to use mineral oil for their fish and chips.

So its January 2009 now? What happened to September which was the month we were all going to see the market collapsing ? Doesn't quite work when the new rates are the same or lower the the old ones, doesn't it.

Your fault for not wishing it hard enough, next time you have to concentrate harder and hold your breath until it happens.

Yes, I agree. Stupid RBA doesn't have a clue about the state of the economy but not to worry, Scamp will come to their rescue from Holland. Thanks to Google and the boys at GHPC, most of whom also happen to live overseas, Scam P has the answers to restoring our economy and protecting our AUD.

And what are the problems, can you please name them ?

Excuse me Scamp, 20% unemployment ? Can you please do the same and don't speak about things you have no clue about. In 1990 you probably were somewhere in Holland attending a kindy garden so why pretend you know something about Australia of 1990 ?

Scamp, if you had a brain you'd be dangerous.
Our commodities are priced in USD, a lower AUD makes up for the fall in commodity prices and is good for exporters.

I hope you did not have to pay for that secret, if you did you better ask for your money back.
The reason they dropped it is to restart the economy, and the reason for a larger then expected drop is probably because they know the ECB will drop theirs at the next meet by at least 0.5%.

What if they were locked in at 7% or more ? Guess what, we'll have another cut before X-mas and yes the banks will pass that one in full.

Scamps predictions and outcomes:

USD to crash – USD has become a safe haven and has instead rallied
rates to rise – rates dropping through the floor
Aus property to fall 50% – down 5 – 10%
oil to hit $2 – oil was priced in USD and oil only went up cos USD was so weak
AUS MORTGAGE RESETS???!!!!

Scamp, you realise you are making a complete fool of yourself?

What happened Scamp, did you changed into AUD to early ?
Just asking because recently you seem more concerned with the 30% AUD fall then the lack of fall in house prices.

are you for real ?
The USD is doing well ? haha.. you clearly do not know why the USD is having a dead cat bounce my friend.
European/Asian banks are having their hedgefunds sell off their stuff. This is ( unfortunately for them ) done in USD, which have to be bought and this increases the price. The fundamentals of the USD are GONE.
USD is in for a freefall , and this will happen when people are done selling off stuff and buying USD's.

The AUD drop has everything to do with the RBA rate cuts. You say it yourself , here :
that is institutions borrowing in low interest JPY and investing in HIGH INTEREST AUD/NZD. These trades were unwinding because of ( and here it comes ) THE LOWER INTEREST AUD

Fantasic, at least you tried to get it right. I corrected you , now you know what caused the dropping AUD : The RBA rate cuts.

PS : as a sidenote : Soon 'someone' will blame the drop in AUD is caused by the drop in commodity prices.
This is *NOT TRUE*. Although they will try and use it as an excuse. Yes there used to be a relation between the two a long time ago, not this time though. Just keeping you up to date on the 'excuses list'.

I found this article insightful when it comes to the reasons behind the plunge of the AUD – just as I expected, it is not as simple as I (or we) thought

http://www.theaustralian.news.com.au/story/0,25197,24463330-5017978,00.html

Scamp,

are you even living in Australia? Were you living here in the 1992 recession we had to have. I was. Unemployment did not exceed 12% (you say 20%).

Interesting to see you call the fall of the Australian dollar by 30% the crash. I suppose it is if you are an importer or intend to travel and spend your wealth overseas or are an FX trader.

Most of us here stay put in Australia. We don't notice the rising  or falling AUD that much…since 2000  its been as low as 47c and as high as 98c. The volatile AUD doesn't seem to afffect our ability to do day to day activities too much.