I'm thinking September may be negative due to the 1 year sentiment from the previous crash.. late october things will get real bad imo
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I'm thinking September may be negative due to the 1 year sentiment from the previous crash.. late october things will get real bad imo
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How late in October are we talkin', Jimmy?
Does reality count as 'evidence'?
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Well Im hoping for a crash in about 18 months time, when I will have cleared all existing debt and have enough saved for a 20% deposit.
I only want a low-end shitty apartment.
The only way I could get in the market atm is due to the extra low interest rates, which are obviously going to skyrocket in a couple of years, compared to the past year. The prices are still way too high.
I hope all the bottom end of the market get shat on, Im counting on it, just to get myself a home.
Im not greedy or planning for retirement, I just dont want to do the 'renting on the dole for 6 months' thing again.
If I owned a simple place to live, I couldn't give a stuff if I lost my job again.
I only want a low-end shitty apartment.
The only way I could get in the market atm is due to the extra low interest rates, which are obviously going to skyrocket in a couple of years, compared to the past year. The prices are still way too high.
I hope all the bottom end of the market get shat on, Im counting on it, just to get myself a home.
Im not greedy or planning for retirement, I just dont want to do the 'renting on the dole for 6 months' thing again.
If I owned a simple place to live, I couldn't give a stuff if I lost my job again.
Are you working now?
Should still be able to get a decent loan with a 10% deposit as long as you have been working full time for 6 - 12 months
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Yes, but only started 2 months ago.
I want to pay off all debts with interest before saving for a home loan.
I also do not want a 'decent loan'.
I just want a cheap place to rest my head. I would be aiming to get a 200k loan and to pay it off in under 10 years.
A nice house is not something I want in life.
Well when you have paid off your debts, I would imagine this would take less then 18 months? though I have no idea, earn over $35,000pa and have a credit history that wouldnt put you "at risk" then a $200,000 loan would be very easy to obtain.
Paying it off in 10 years will be quite diffcult though
A $200,000 loan at 8% interest over 10 years is around $2500 a month
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Somebody needs to find James23's bunker and convince him to come out into the fresh air. We survived!
I'm going to go ahead and play devils advocate just because I'm not that up to speed on the whole economic thing.
Say I'm confident that the US will recover in the next 3 or 4 years, I'm currently faced with the prospect of buying a home in Perth at a media price of about 450k or a house in New York for the same median price. Presumably these figures wont change much, even as the US recovers, and if they do it'll be more likely to increase in Aus and decrease overseas.
Now, what would be stopping people from giving Australias expensive houses the arse and going somewhere else?
Inertia?
Prices overseas rising as the economies recover?
Not being able to get a visa or something like that? (This wouldn't apply in the UK anyway, correct?).
Currency exchange rates changing and the AUD going back being worth 70c, hence making OS homes too expensive?
A combination of all these things?
Can someone set me straight, I'm hopeless with economics
Say I'm confident that the US will recover in the next 3 or 4 years, I'm currently faced with the prospect of buying a home in Perth at a media price of about 450k or a house in New York for the same median price. Presumably these figures wont change much, even as the US recovers, and if they do it'll be more likely to increase in Aus and decrease overseas.
Now, what would be stopping people from giving Australias expensive houses the arse and going somewhere else?
Inertia?
Prices overseas rising as the economies recover?
Not being able to get a visa or something like that? (This wouldn't apply in the UK anyway, correct?).
Currency exchange rates changing and the AUD going back being worth 70c, hence making OS homes too expensive?
A combination of all these things?
Can someone set me straight, I'm hopeless with economics
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I'm going to go ahead and play devils advocate just because I'm not that up to speed on the whole economic thing.
Say I'm confident that the US will recover in the next 3 or 4 years, I'm currently faced with the prospect of buying a home in Perth at a media price of about 450k or a house in New York for the same median price. Presumably these figures wont change much, even as the US recovers, and if they do it'll be more likely to increase in Aus and decrease overseas.
Now, what would be stopping people from giving Australias expensive houses the arse and going somewhere else?
Inertia?
Prices overseas rising as the economies recover?
Not being able to get a visa or something like that? (This wouldn't apply in the UK anyway, correct?).
Currency exchange rates changing and the AUD going back being worth 70c, hence making OS homes too expensive?
A combination of all these things?
Can someone set me straight, I'm hopeless with economics
You can put me in the doomsayer category in relation to the US economy. I don't see them getting themselves out of the mess they are in any time soon.
But let's say you ignore my opinion.
There are laws which prevent foreigners from buying houses in Australia without first gaining the approval of the Foreign Investment Review Board (FIRB). Each country is likely to have its own similar arrangements.
Yes, if you invest in an asset which is denominated in a currency other than AUD, then you have just introduced a foreign exchange risk. Say you invest your $450K AUD in a US house costing you approx $400K USD (EX rate is about .90c rounded ATM). Let's say your investment doubles in value to $800K USD, but the USD depreciates badly against the AUD to the point where 1 AUD gets you 3 USD (extreme example, but useful for illustration purposes). Your investment is now worth about $270K AUD, representing a loss of 40% in AUD terms, despit your investments doubling in value in local currency.
Aside from the foreign investment hurdles, you may also face problems getting finance, unless you plan to pay cash. An Australian bank usually won't lend to an individual to invest in foreign housing, and a US bank likely won't lend to you unless you have a US social security number.
They are just a few of the reasons I can think of.
Okay, thanks for your reply.
Maybe the US was a bad example but how about the UK? Could we possibly see a mass exodus from Aus to England as a result of the home prices, or would the same kinds on things apply?
I'm not asking for myself, rather I'm trying to get an idea of whether it's possible that a large part of the Aus housing market might start looking overseas. Excluding legal aspects (which I obviously know nothing about) I think it's pretty plausible that we may start to see people looking to live in internationally known cities for the same price.
By the way, I gather you could short sell the AUD in order to hedge your currency risk, not that it would be a huge deal if you were moving overseas rather than investing.
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Don't know the specific rules about investing in housing in the UK, but my educated guess would be that you would need to jump a few hurdles before being allowed to buy, unless you hold a UK/EU passport. Maybe those hurdles could be overcome, maybe they can't. I don't know, but I'm sure it wouldn't be hard to find out through a little research.
I don't think we are going to see a mass exodus of people relocating out of Australia. Our economy is much better placed in terms of balance sheet, and the structure of our economy with regard to the UK/US and Continental Europe. Which is a good argument for prices to increase to a greater degree here than anywhere else. With zero currency risk. I do, however, think that we are unlikely to see a continuation of the property boom for the next 10 years like we did over the previous 10 years.
If you're point is about cheap housing, remember that many Europeans/Brits move to Australia due to the affordability of housing. It is usually much more expensive there than here. Sure you could buy in the countryside of the UK, or buy in a small city in the US, but you could do the same in Australia. If you want to live in New York, LA, London, Paris or Sydney, you are going to pay for the privilege. Many Europeans willingly accept their lot that renting for life is the only viable option. Australia has yet to embrace this concept, but it will have to in the long term.
As good as Perth has been for property recently, its viability as an investment appears to be at the mercy of the mining industry, although you probably know more about this than do I.
And yes, you could hedge your currency exposure, but it will cost you to do so, reducing the earnings potential of your investment. And you are correct that it wouldn't matter if you permanently relocated to the location of your property investment.
Thanks for your input, it's helped put that notion to bed.
Open slather as far as I am aware. I am fairly sure you can still purchase via an offshore company
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Yes you can.
On the point that the starter of this part of the discussion raises. which is "could the high cost of housing cause people to look elsewhere" the answer is of course "it depends" ....
I also note that, as usual, Australians view there options in terms of Australia v US or Western Europe .... which remains an issue in terms of our position in the world....
I can buy a house in somewhere like JB (in Malaysia) just across the bridge from Singapore for a fraction of the cost of a similar house in Perth. A small fraction. Same in Penang or even in KL and certainly much better "bang for buck" opportunities exist in Thailand....
Problems are (a) finance - which is not always easy; (b) foreign ownership laws (problematic in Thailand/ Vietnam and some others) and, the big one (c) proximity to family and freinds and work....
However for those who buy the family beach house 3 hours away for $600k+ and for those planning retirement when family are already spread out all over the country or the world, the prospect of a 4 bedroom house with a pool, backing onto a golf course which costs $300k and less in a place thats always warm and is close to airports in a world of low cost travel - may have some appeal.... similarly the apartment overlooking the ocean and so on....
But given most Australians seem to aspire to suburban drudgery in uninspiring locales then I suspect there isnt much chance of this being a huge growing trend ....
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I concur
I've been buying uk property for the last 6 months.
It's turning round a bit now though.
Mortgage stress is a joke.
My first mortgage cost 70% of my salary to service. Wife and new baby.
I supplemented it with a 'pools' round, and my wife did part time hairdressing when I could look after the youngster.
And we didn't think we were stressed. It was normal at the time.
I've been buying uk property for the last 6 months.
It's turning round a bit now though.
Mortgage stress is a joke.
My first mortgage cost 70% of my salary to service. Wife and new baby.
I supplemented it with a 'pools' round, and my wife did part time hairdressing when I could look after the youngster.
And we didn't think we were stressed. It was normal at the time.
http://money.ninemsn.com.au/article.aspx?id=989257
Now that the RBA takes house prices into account when considering inflation, stuff is going to be a little different.
I'm interested to see what house prices do to IR. I think it might end up getting pretty serious if you have lots of debt but I'm also confident that the RBA and Government wouldn't do anything to trigger a property price collapse.
Now that the RBA takes house prices into account when considering inflation, stuff is going to be a little different.
I'm interested to see what house prices do to IR. I think it might end up getting pretty serious if you have lots of debt but I'm also confident that the RBA and Government wouldn't do anything to trigger a property price collapse.
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Hehehehe. It is funny when keyboard know-alls trot out the regular Housing Crash Truth Movement lines, and then go into hiding when their predictions turn to shit.
But this stuff is genuine LOL comedy!
http://www.crikey.com.au/2010/09/15/housing-bubble-and-banks-time-for-disclosure-and-context/
http://www.crikey.com.au/2010/09/15/housing-bubble-and-banks-time-for-disclosure-and-context/
But this stuff is genuine LOL comedy!
http://www.crikey.com.au/2010/09/15/housing-bubble-and-banks-time-for-disclosure-and-context/
http://www.crikey.com.au/2010/09/15/housing-bubble-and-banks-time-for-disclosure-and-context/
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Supply and demand.
The common school of thought is that interest rates will rise steadily over the next three years. Standard variable rate may peak as high as 10% causing corrections to the property market.
Melbourne is over heated. Anyone buying there now (to invest) is an idiot. You may see corrections as big as 10%-20% depending on the property, the street, the area. Darwin is also over heated.
Adelaide, Perth, and Brisbane may see some growth on the back of mining, but rising IR will keep them in check.
Sydney as always is a two tier market. Right now it is undervalued. Rising IR will stop inferior areas dead, but some areas that have limited supply with high demand from home buyers (rather than investors) will rise. Worst case scenario is if it down't it will have a boom similar to the one we just had in melbourne when IR start to fall again in 3 or so years time.
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Hehehehe. It is funny when keyboard know-alls trot out the regular Housing Crash Truth Movement lines, and then go into hiding when their predictions turn to shit.
But this stuff is genuine LOL comedy!
http://www.crikey.com.au/2010/09/15/housing-bubble-and-banks-time-for-disclosure-and-context/
http://www.crikey.com.au/2010/09/15/housing-bubble-and-banks-time-for-disclosure-and-context/
This is pretty funny too
[YOUTUBE]tZaHNeNgrcI[/YOUTUBE]
I'm finding it even funnier you ignored the part in that link about CBA's dodgy presentation.
Read up about it if you want.
http://www.moneymorning.com.au/20100913/what-does-the-commonwealth-bank-have-to-hide.html
10% rates would do a truck load of damage, but portly Joye was talking about similar rate rises yesterday so I figure he's nearly got approval for his ASX house price index and will be making money off those going short.
There might not be any crash, but some people are really going to get their arse torn off by overpaying and finding rates rising on them.
Tasmania was in greater fool territory, or probably still is, people buying thinking they'd be able to offload to some other fool who'd pay more. I've tracked a few 350k to 500k houses that have sat for months with multiple discounts, which were bought in the past 2 1/2 years - more than a couple are now below previous purchase price. They're even further up the duff considering closing costs.
You've got a state with 31% of people on government benefits, barely 1% population growth. Wages of 39k vs house prices at 320k. And going by ABS stats, there's now a new dwelling for every 1.84 persons added to the population.
Can't comment elsewhere, but there's going to be some serious unwinding in Tas if interest rates keep going up.
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Hmmm. 'Money morning', hey?
Quick background check reveals that the editorial director is on Dan Denning, who - as it turns out - writes for Daily Reckoning.
Notice any pattern here, dmc?
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Given it's a share newsletter people sniff around for tips on, what would that be?
Fairfax and The Australian picked up the same story, albeit about 5 days later.
http://www.theaustralian.com.au/news/opinion/the-high-price-of-punting-on-property/story-e6frg6zo-1225961713650
I certainly wouldn't mind a correction.
I certainly wouldn't mind a correction.
Yeah, i have been watching the market with a lot of interest for a while now, though have no real experience with it.
It will be interesting to see what happens if houses even simply plateau with no sign of upward direction for a while. People like Bunsen on here like investing in interest-only loans, so what will happen when the capital gain isn't there?
If enough people bleed money for long enough and this effects credit, then I reckon we could see a dramatic fall in house prices, undersupply or no.
Its the availability of credit to people who wouldn’t otherwise have a chance that is creating demand IMO, not any undersupply.