Im personally very worried about the bubble they are doing EVERYTHING to keep inflated. Gee even the banks giving unemployed people 12 months without repayments-what does this tell you?? It tells me the banks are scared outa their minds that the property market is on a kinifes edge and a influx of mortagee sales could send it spiralling.
Now the real scary part-we are still in very good times-unemployment is still very low, interest rates are rediculously low and the recession is still to hit our shores. So if this is the position we are in now, what is going to happen when it and inflation really hits???
Unless of course you think all this printing and spending money wont have massive infaltionary effects lol…
SHales wrote:Don't worry, TonyB, we haven't waited for ever and already have a few properties under our belt. Our trouble at the moment is lots of equity, not enough income to service a negatively geared property loan.Shales-no offense but if you dont have enough income to service your negatively geared debts at record low interests rates then how/what are you planning on doing if interest rates had/do go back to 'normal' levels?
blogs wrote:Im personally very worried about the bubble they are doing EVERYTHING to keep inflated. Gee even the banks giving unemployed people 12 months without repayments-what does this tell you?? It tells me the banks are scared outa their minds that the property market is on a kinifes edge and a influx of mortagee sales could send it spiralling.Now the real scary part-we are still in very good times-unemployment is still very low, interest rates are rediculously low and the recession is still to hit our shores. So if this is the position we are in now, what is going to happen when it and inflation really hits???
Unless of course you think all this printing and spending money wont have massive infaltionary effects lol…
Blogs very nicely put. Re. the bubble the government seems to be doing just that. It may be better if they let it come down slowly instead of it bursting and leaving the @#$% on the walls. I did hear about the banks and the 12 month thing. Yes, I agree, they know what the out come will be if they don't do it. As I said the smoke is clearing and it seems we can get a better idea of what s going to happen. Any thoughts on the 30June with the Boost for the FHOG. It seems to have been a bit of a spruking tactic by the government to put a bit more air in to the bubble. Maybe they will drop it off to keep young & not so young people from getting in debit. Your right about interest rates they wont stay down for ever, but I can see them back to 10 or 8% in the next 5 years.
Inflation, Inflation, Inflation. Just go to the supermarket and compare to 8 month ago. Even the cheap Chinese import goods are up by 10-15%. So we are getting less for our money and no more pay from our job (if you still have one). You are making me think twice about buying next week.
So Blogs, you always have good posts with factual info. What do you see the down side of buying now? I don't need to borrow much, very little. So the low rate from a repayment side does not worry me. I would like to build new as a PPOR. I can get the 29k FHOG, lucky. I feel inflation is my enemy, building cost may go up, but if demand is down builders may cut their margins to keep working and reduce there prices to remain competitive. Whats your thoughts?
Cheers
T……………blogs wrote:SHales wrote:Don't worry, TonyB, we haven't waited for ever and already have a few properties under our belt. Our trouble at the moment is lots of equity, not enough income to service a negatively geared property loan.Shales-no offense but if you dont have enough income to service your negatively geared debts at record low interests rates then how/what are you planning on doing if interest rates had/do go back to 'normal' levels?
Hi Blogs,
We are able to service our current debts at whatever the interest rate got to before it started to fall without a problem. My plan is not to take on any negatively geared debts, and to ensure that when we buy again, the whole thing is positively geared, and likely to remain so when interest rates return to, as you say, more "normal" levels. This is one of the reasons we haven't bought yet. So we remain in this position, of having lots of equity, but not being able to borrow more due to serviceability issues. And it's not just about servicing the loan, it's also about meeting the other costs of holding the properties. We are just getting to a stage where the cashflow budget needs to include maintenance etc costs, because it is just going to cost too much to pull it out of our own pocket all the time (ie out of our personal spending money).
Hope I explained myself well enough.
SWhy would you even think about looking for another property when it sounds like servicing what you already have is borderline. Just because a property might be positively geared now, doesn't mean it will be in 1 year or 2 or 3.
Prices have to come down, because they are a rip off now. There are some interesting properties, but not good enough yet.
SHales wrote:Hi Blogs,
We are able to service our current debts at whatever the interest rate got to before it started to fall without a problem. My plan is not to take on any negatively geared debts, and to ensure that when we buy again, the whole thing is positively geared, and likely to remain so when interest rates return to, as you say, more "normal" levels. This is one of the reasons we haven't bought yet. So we remain in this position, of having lots of equity, but not being able to borrow more due to serviceability issues. And it's not just about servicing the loan, it's also about meeting the other costs of holding the properties. We are just getting to a stage where the cashflow budget needs to include maintenance etc costs, because it is just going to cost too much to pull it out of our own pocket all the time (ie out of our personal spending money).
Hope I explained myself well enough.
SThanks Shales, like I said no offense intended, just curious as to your thought process etc. I think there are going to be a lot of people caught with their pants down should either interests rates rise (they will have to..) or unemployment will increase (will without doubt…)
Tony B wrote:So Blogs, you always have good posts with factual info. What do you see the down side of buying now? I don't need to borrow much, very little. So the low rate from a repayment side does not worry me. I would like to build new as a PPOR. I can get the 29k FHOG, lucky. I feel inflation is my enemy, building cost may go up, but if demand is down builders may cut their margins to keep working and reduce there prices to remain competitive. Whats your thoughts?Cheers
T……………Hi Tony,
I think that basically no matter which we look at it there is a lot more bad to come before good. Think about it this way-all the stimulus efforts are putting an over supply of money into our economy, this has two effects a) inflation and b) a need for the RBA to increase interest rates in order to stop a run on the AUD (which without a increase in interest rates would devalue the dollar and further increase our debt).
Soooo basically, if people are having trouble keeping up with mortgage payments etc now then they will have buckleys in the next 12-24 months time. All this points to an increasing supply of property and dwindling sentiment. As for inflationary impacts on building prices, well I dont know-how much of a new building is materials and how much is labour? Might be time the tradies stoped driving around $85k maloo and Hilux utes and earning $150k a year and got back to reality? (ducks for cover…) I know quite a few chippies and they are now forced to drive up to 80k's each way to go to site, something they would have laughed at just 12 months ago….
I guess as with everything who really knows, but I personally wouldnt exactly be in a rush. The ball is firmly and squarly in the buyers court for the time being IMHO….
Side note-something that I have discussed at length with friends and family. How many out there are absolutley dependent on both spouses/partners to be employed, and employed at their current wage bracket? Its amazing how many people are currently servicing $700k plus mortgages with no margin for error……? House of cards comes to mind. Sorry to be a scare monger -just personal feeling…
blogs wrote:SHales wrote:Hi Blogs,
We are able to service our current debts at whatever the interest rate got to before it started to fall without a problem. My plan is not to take on any negatively geared debts, and to ensure that when we buy again, the whole thing is positively geared, and likely to remain so when interest rates return to, as you say, more "normal" levels. This is one of the reasons we haven't bought yet. So we remain in this position, of having lots of equity, but not being able to borrow more due to serviceability issues. And it's not just about servicing the loan, it's also about meeting the other costs of holding the properties. We are just getting to a stage where the cashflow budget needs to include maintenance etc costs, because it is just going to cost too much to pull it out of our own pocket all the time (ie out of our personal spending money).
Hope I explained myself well enough.
SThanks Shales, like I said no offense intended, just curious as to your thought process etc. I think there are going to be a lot of people caught with their pants down should either interests rates rise (they will have to..) or unemployment will increase (will without doubt…)
No offense taken. I agree, there will be alot of people caught out. I'm trying to be clever and make sure I'm one of the people positioned to take advantage of that. We'll see how I go, eh?
SThere is no way that I would buy now. I'm just waiting for the FHB grant to finish or change in July and start at looking at bargains as unemployment creeps up. Rents in Brisbane are still holding up with 2 of my recent purchases rented at above my expectations.
My finances are in order so ready to swoop as soon as prices start to "tank" down.
Yes
You don't need to be a rocket scientist to see we are in for a rough ride. Even Rudd will tell ya that. A lot of the people with there pants at their knees may have to keep them there for some time to come, hey lol. A lot of that came from being to greedy. And believing to much Bull @#$% from real estate agent & developers. I know I'm not being a smart cookie buying now, but Ive found an area I like its a big block and priced right. With some hard bargaining and not returning there calls for a week. I wont be spending to much on the house as I see they sit for ages in this area. As its my PPOR what the hell, up, down or around I need a life style property not an investment. Ive cashed in some other investments so the return on this capital will be low in any invest in the current market. If I don't over capitalize and I build it smart, I still could get a small profit in the future. The FHOG + BOOST has been a big carrot for many. I wont be affected by interest rates or unemployment.I also believe people will not sell their home for much less than they paid for it. Ive see a few places taken off the market lately. I asked the vendors why, they said we wanted 330k was offered only 280 max it cost us 280 to build, so they said they will change their lifestyle and stay put rather than loose money on the house. This would coincide with the banks 12 month thing, they don't want to sell people up and the government will continue to help the debit ridden families with 5 bedroom homes & 4x4s keep them. I agree with you on the builder $150k per year. Now work is drying up, you can neg. the price. Once as you said they would show you the door if ya said "what about a discount." Like ya said the ball back in our end of the court.
Its one of our favourity topics this isnt it …………..
T….
We're definitely in a rough ride at the moment but I still think Australia is much better positioned than most of the western world. So the devastating housing chrisis in the US and massive price dive in the UK will not happen here. I would expect a very moderate decline in house prices by the end of the year. Possibly between 5-10% overall decline by the first quarter next year.
At the moment sellers are still demanding the same prices as when the property market was at its peak. one house I was interested in in West Footscray got passed in at Auction in October last year for $400k since the vendors wanted $410k. I think at that time last year people didn't really realise how deep in the sh#t this economy is and how long it would actually play out. That house is still on the market today, still demanding the same price. I'm sure everyone here knows many many properties with vendors that are being just as stubborn.
I think it is going to be interesting to see what happens when we have 1, 2 or 3 quarters of negative house growth. If there's a 10% drop in prices the $400k property will suddenly be worth $360k. Is the vendor still going to be demanding $410k or be kicking themselves that they didn't sell when the property market was more healthy and not have had to waste an entire year selling a house.
If there is atleast 2 consecutive quarters with significant price drops I think some vendors will decide to quickly cut their losses short and sell their house before prices decline any further. It is going to be a very very long time (10+ years) before we see the kind of sharp rises in property prices that everyone (especially vendors) seem to have taken for granted.
skuz-I agree, the vendors are being stubborn because they can still afford to hang on. Wait till the forced selling ramps up-baragins, or should I say property at realistic prices will be a plenty!! Inflation will be up, interest rates will be up, and wages will be sideways if not down.
I wonder what the inflationary effects will be world wide of tipping all this money into a big debt hole….
When house prices rise the heard follows. Thus when house prices start falling the heard will follow, it will go down just like they went up.
As per most investors, I am watching but not buying, it's going to take longer than I thought but it will happen. Don't buy till you are going to make money on the deal.
You will need to put in some cash or catatoral since LVR are dropping. The LVR drops in itself will create less demand for houses since people will not be able to borrow large amounts of money.
The government extended the grant! Anyone know exactly what amounts that means for Victoria for both buying old and or newly constructed. If the changes announced last month by the Premier and this new boost announcement in last nights budget building new in regional Victoria adds up to $35,500?
Because the boost would be included in this table:
http://www.sro.vic.gov.au/sro/SROWebSite.nsf/rebates_fhog_overview.htmI was telling anyone i seen and talked about property in the street for the last six months that it will be extended. Interesting that 100% of the people i talked to said it was going to end June 30th/2009 including emails i received from well regarded commentators in the industry.
"It's not over till the fat lady sings."
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