Australia housing bubble

[b0son]

You're assuming you can even get a loan in a falling market.

Originally Posted by Iggle Piggle

Obviously a crash would hurt those downsizing, but if the crash is pretty much relative/proportional across all segments then it would be a good time to upgrade/upsize, yeah?

As long as you don't lose your job in the economic crash that comes afterwards and can therefore keep paying your mortgage repayments.

Me.. I think Australia needs the housing crash and the resulting economy crash so that it can all start again, maybe do it right next time and nip greed in the bud before it gets to this point again.

[BENT_8]

Originally Posted by Iggle Piggle

Going to show my ignorance here...if prices crash would that be a good time to upgrade to a better home? I get that a crash would suck for investors, but would it really be bad for owner/occupiers that just want somewhere to live and aren't living it up on equity?

Say I owe $100k on my home that is currently worth $400k, and I want to upgrade to a house currently worth $600k. If I do that upgrade now I end up with a mortgage of $300k.

If **** hits the fan and prices drop by 50%, I only get $200k for my current house (instead of $400k) but then I only have to pay $300k for the 'better' house (instead of $600k). So I end up with the better house with a mortgage of $200k instead of $300k. I get I won't have as much equity, but if I am just after somewhere to live and pay down then that doesn't matter.

Obviously a crash would hurt those downsizing, but if the crash is pretty much relative/proportional across all segments then it would be a good time to upgrade/upsize, yeah?

Ironic that you should suggest this, I was talking to a friend at a BBQ on the weekend and he was telling me that he's just secured his 3rd investment property.
I asked him if he was worried about prices falling and he said quite the contrary, house values always go up.
I said that's a shame, he said why, I said because if they halved you could have 6...
Then I just left him contemplating it and moved chairs

[nuthin' fancy]

Originally Posted by DoreSlamR

More the massive drop in prices.

Some people got burned hard...but then prices were massively inflated anyway

https://reiwa.com.au/wa/port-hedland/6721/

$1.25 million down to $355k in 4 years 😲

Only just saw this ^^^

About 10 years ago I had clients working in Port Hedland earning $400k between them. They wanted to buy an ordinary house for $1.1m to stop paying $600 per week in the caravan park.

I said, "Buy a nice mobile home for $100k, buy 4 $250k houses for rental in Gippsland where you come from. When you want to leave Pt Hedland it will be because you are sick of it and/or you will be earning less. Don't bank your future on a single location operating outside the norm".

They're back, they're set for retirement. The only problem is that kids moved into the rental and aren't that diligent with rent payments.

Wish the advice I gave myself was as good!

[BENT_8]

Australia wasn't allowed to have its GFC because too many fingers in the pie at Government level, instead they blew our surplus on $900 plasma TV's for everyone and now the country is stuffed.
As ive said before, stupid Aussies screwed their country for capital gains and tax evasion, quality citizens.

[mr smith]

The danger is even stagnant house prices will see the economy collapse. How much is driven by redraw and the feel good factor from house prices? My gut feeling tells me it will end bad but when is anyone's guess.

Originally Posted by BENT_8

Australia wasn't allowed to have its GFC because too many fingers in the pie at Government level, instead they blew our surplus on $900 plasma TV's for everyone and now the country is stuffed.
As ive said before, stupid Aussies screwed their country for capital gains and tax evasion, quality citizens.

We didn't even have a surplus, we were already $57 billion in deficit and that "stimulus package" landed us an extra $10 billion deficit.

The $900 was given out to people to spend at hopefully-australian-owned-businesses to make it LOOK like our economy was plugging through when really it was about to collapse in the GFC too.

http://www.news.com.au/finance/econo...efe64c56fffc19

[nuthin' fancy]

Just remember this from site T&Cs:

In short, the following things are not permitted:

1. Posts about or containing references to: religion, race, politics, sensitive or controversial subjects except at the discretion of the admin team.

Oh, my bad, I guess I drifted off 'cause housing and politics are so intertwined but I'll keep it in mind.

[Fed]

I feel sorry for the kids they have no chance.

[GASWAGON]

RBA going to raise rates in December and possibly again during 2018.

So that would be 2 x .25 basis points.

Cheap money/credit is finished thank god!

[BENT_8]

Originally Posted by leesa

We didn't even have a surplus, we were already $57 billion in deficit and that "stimulus package" landed us an extra $10 billion deficit.

The $900 was given out to people to spend at hopefully-australian-owned-businesses to make it LOOK like our economy was plugging through when really it was about to collapse in the GFC too.

http://www.news.com.au/finance/econo...efe64c56fffc19

Actually that is incorrect, we had a Government debt level of $58b but at handover to Rudd the actual surplus was $17b.
When Abbott was elected post Gillard the surplus had become a $19b deficit with debts of around $160b.

@ nothin fancy, that rule is to prevent argument over one or the other, im not criticising either but simply highlighting how we avoided a recession.

[nuthin' fancy]

Originally Posted by BENT_8

Actually that is incorrect, we had a Government debt level of $58b but at handover to Rudd the actual surplus was $17b.
When Abbott was elected post Gillard the surplus had become a $19b deficit with debts of around $160b.

@ nothin fancy, that rule is to prevent argument over one or the other, im not criticising either but simply highlighting how we avoided a recession.

Stick to the topic of Australia's housing bubble and there's nothing to worry about.

Liberal blames Labor, Labor blames Liberal. Barnaby Joyce and Bob Katter are voted in by people whose vote counts equal to mine. It is a zero sum game that doesn't deserve much space on a car forum.

[Franco Cozzo]

The economy is halal in Victoria at the moment anyway, this whole year has been fairly quiet, people are hardly spending the almighty spondoolies.

Spondoolies tied up in other areas, living costs taking away from discretionary spending.

[FTE217]

Originally Posted by leesa

To be fair... I did say that they were chasing the easy buck at any cost... even if it means stiffing every generation who is born after yours.
When "chasing the easy buck" results in what we have today, I personally think that you have to be almost morally bankrupt to willingly do that to others whether those "others" are perfect strangers, your kids or your kids' kids.

I don't think that is done everywhere else in the world. Actually, maybe except for China where they repeatedly chase the easy buck by doing things like selling melamine-tainted baby formula to falsely prop up protein content in lab tests. That one caused deaths of children and the people behind it were executed.

The housing industry obviously isn't quite as serious as that but what has happened here has still had quite an effect on the lives of the younger generations and will change the future of our Country. Expensive housing results in people waiting longer to leave home and start renting (if they ever do), it results in people holding off having kids until they're older... which results in increased numbers of abnormalities like downs syndrome which has knock-on effects for the rest of the country in terms of $$ care required for that child's life.

As for the government not being able to do anything, they absolutely could have done something the moment they saw it happening. Instead they sat back and marveled at the dollars that it was bringing in and how it made our country seem rich on paper. Look at how many politicians own investment houses. They have been grooming the system because their own bloody snouts are in the trough! Why would they want to change it when they themselves are profiting from it?!

The next logical step was for other countries to notice how our housing market was going up and so overseas investors started buying our houses to offshore their money in a more stable market than their own country, the government AGAIN didn't step in. They just gobbled that **** up and let it happen. Why would they want to stop it?

That just compounded the problem because those overseas investors weren't actually interested in renting out those houses, they just bought it to park their funds in a more financially-stable country. So the removal of those houses as rentable properties caused even less supply of houses in our country with already such a high demand that we couldn't satisfy.

Did the government step in THEN? **** no! Allowing overseas investors to buy - but not rent out - houses had a knock-on effect of driving up the prices of homes even more because the supply kept being reduced. With so many pollies having a vested interest in their own personal property portfolio, why would they get involved and stop it? It's quite the opposite - it made them happy as a pig in mud because it increased the value and equity in their own properties.


http://www.abc.net.au/news/2017-04-2...etails/8453782

David Gillespie has EIGHTEEN investment properties. That's eighteen families forced to rent houses at inflated prices. Barry O'sullivan has 33.

http://www.abc.net.au/news/2017-04-2...estors/8454978



Talk about the fox guarding the henhouse. In my view it's just as bad as insider trading and should be illegal for politicians to profit from the systems that they've shaped.

http://www.smh.com.au/federal-politi...20-gvp2g5.html

When this article was printed it began with the sentence "When Fairfax Media asked MPs to talk about their investment properties, an email went out telling them not to cooperate". That particular line has since been removed and every copy of the article that I can find has been scrubbed of it. It's now only visible in old copies of google cache.

The government won't fix this. They have too much of a vested interest in it themselves.

I'm just responding to your part quoting my post.
In bold, do you really think so ? I can't agree I'm afraid.
and do you really see it that way regards to the portion of Mum n Dad investors that have worked hard to get in that position are intentionally are dinking their kids kids of kids etcetc....seriously that is a dark way to look at people in general imo.

Originally Posted by FTE217

I'm just responding to your part quoting my post.
In bold, do you really think so ? I can't agree I'm afraid.
and do you really see it that way regards to the portion of Mum n Dad investors that have worked hard to get in that position are intentionally are dinking their kids kids of kids etcetc....seriously that is a dark way to look at people in general imo.

Yes, I do. Well, I wouldn't say 'intentionally' but I think they know the knock-on effects and are deciding to do it anyway for their own gain.

There is no sense of community, generosity, selflessness, justice, courtesy or generally doing the right thing by other people anymore and I do firmly believe that.
If most people think they can get away with something, I think they'll give it a shot.

edit: In my 20s I did a fair bit of volunteering my time to various orgs and clubs and after all of it the message that I took home is that.. as a general rule.. people are not worth helping anymore. Most people are full of take take take and won't give back to anybody.

Originally Posted by BENT_8

@ nothin fancy, that rule is to prevent argument over one or the other, im not criticising either but simply highlighting how we avoided a recession.

Shush bent you're going to make him mad.

[Iggle Piggle]

Originally Posted by leesa

There is no sense of community, generosity, selflessness, justice, courtesy or generally doing the right thing by other people anymore and I do firmly believe that.

I agree, too many poeple with an attitude like this:

Originally Posted by leesa

...the message that I took home is that.. as a general rule.. people are not worth helping anymore. Most people are full of take take take and won't give back to anybody.

Surely you see the irony in stating investors need to think of others and future generations, and then in the next breath stating people are not worth helping anymore?

Originally Posted by Iggle Piggle

I agree, too many poeple with an attitude like this:

Surely you see the irony in stating investors need to think of others and future generations, and then in the next breath stating people are not worth helping anymore?

Yes I do see the irony but I'm not sure why you're surprised? You don't think it's a natural reaction? What's the saying? If you can't beat 'em, join 'em? Who would want to keep helping people when you see how those very same people treat others? Holding on to those views is just a way to get yourself taken advantage of when noone else has those views.

As for the "investors" who insist on investing in finite resources, I've already accepted that it seems to be every man for himself.

Anyway, this thread is getting even further off topic ...

[Bossxr8]

Originally Posted by CoolBFWagon

RBA going to raise rates in December and possibly again during 2018.

So that would be 2 x .25 basis points.

Cheap money/credit is finished thank god!

Only if their economic targets are met, which they aren't cause they are way too optimistic. We haven't got close to their growth targets yet. Hence they keep the rate rises on hold.

IMO the economy is not strong enough for us to get a rate rise, at least not this year. I would actually be surprised if it happened next year. Too many underemployed, and wage growth has not increased at all so many people's wages are stagnant or decreasing when you factor in inflation, power costs etc.

[BENT_8]

Originally Posted by nuthin' fancy

Stick to the topic of Australia's housing bubble and there's nothing to worry about.

Liberal blames Labor, Labor blames Liberal. Barnaby Joyce and Bob Katter are voted in by people whose vote counts equal to mine. It is a zero sum game that doesn't deserve much space on a car forum.

Sorry mate, I just figured the state of the economy at various stages and the supposed housing bubble were kind of related and the rule you posted doesn't mention off topic conversation.
I thought the warning was with regards to the political aspect as opposed to just being off topic.
Mind you, and don't take this as an attack, but don't you think its a bit hypocritical to post rules on politics when your sig says 'vote yes'

Just sayin'

[XB GS 351 Coupe]

This thread is a funny read, love how people not willing to put in the hard yards complain about sour grapes.

We all have the same opportunities, yet some chose to go on overseas holidays, or **** it against the wall at the local pub, or are too lazy to put in the long hours.

When I was in my 20's and early 30's I was working 70-80 hrs a week every week, I bought investment properties, drove a 25 year old car into the ground and pumped money into two mortgages owning my first property outright in my late 20's early 30's.

Now in my late 40's I reap the rewards, only having to work 2-3 days a week, and spending my days going fishing, taking one of my cars for a drive. It annoys me no end when people tell me how 'lucky' I am to have three show cars, drive a nice 4x4 and live in a large house on acreage with a huge shed.

When I tell them that this has been my plan that I worked towards for 20 years they almost appear offended. People I worked with are still renting, and wondering where they went wrong.

As for making it hard for the next generation, I could not care about the generation of lazy people, my kids already have a great work ethic and they will be inheriting enough money and property to probably be able to just having to work part time most of their life, so I have looked after my own next generation.

[XB GS 351 Coupe]

Re the mystical property bubble or housing bubble, there is no such thing, property has been increasing in value steadily for decade after decade it's a predictable increase in value that has been repeated for 50-60 years now.

My parents paid 65K for their house, I paid 165K for my first house. That was a lot of money back then, just like 50oK is a lot of money now.

The problem is the new generation, want the McMansion straight off the bat, they are not willing to buy the cheap two or three bedroom house in a crappy area and live without AC for the first ten years, they want it all, as well as the latest iPhone, the latest car, the annual holiday etc etc.

Something has to give.

[b0son]

The cost of houses as a proportion of income has risen from 2-3x average annual wage to 7-10x. A 10-20% deposit takes 3-5x LONGER to save, with prices rising all the while. But hey, lets not let facts get in the way...

[.:4:.]

Originally Posted by XB GS 351 Coupe

The problem is the new generation, want the McMansion straight off the bat, they are not willing to buy the cheap two or three bedroom house in a crappy area and live without AC for the first ten years, they want it all, as well as the latest iPhone, the latest car, the annual holiday etc etc.

Something has to give.

Thats a very true statement. I see it all the time with the guys I work with in their early to mid 20s who go in with 2 or 3 mates and still struggle to rent a unit in trendy suburbs but think they'll be able to buy in a year or two. Like you said. When I was 25 I bought my house and its further out from the city then I have ever lived, not terrible really though I work in the city. Not in a bad area but it's not trendy or affluent. I've lived in worse areas and how the other side live before. But I had a family and you have to start somewhere. 5 years later and the mortgage strain has eased to a degree, and I don't have time for people who complain about rent rises.

[Giant Cranium]

Originally Posted by XB GS 351 Coupe

Re the mystical property bubble or housing bubble, there is no such thing, property has been increasing in value steadily for decade after decade it's a predictable increase in value that has been repeated for 50-60 years now.



My parents paid 65K for their house, I paid 165K for my first house. That was a lot of money back then, just like 50oK is a lot of money now.



The problem is the new generation, want the McMansion straight off the bat, they are not willing to buy the cheap two or three bedroom house in a crappy area and live without AC for the first ten years, they want it all, as well as the latest iPhone, the latest car, the annual holiday etc etc.



Something has to give.

Steady?! I bought my appartment in abbotsford NSW for 565 in 2012. Now you have to have 1.1 mill to even get me listening. Double in 5 years isn't steady.

When dad bought in 1985 his house in Sydney was double what he is earning. Now to buy in Sydney it's about 10x.

[.:4:.]

Originally Posted by Giant Cranium

Steady?! I bought my appartment in abbotsford NSW for 565 in 2012. Now you have to have 1.1 mill to even get me listening. Double in 5 years isn't steady.

When dad bought in 1985 his house in Sydney was double what he is earning. Now to buy in Sydney it's about 10x.

The old stats were the market doubles every 10 years, but you are right. In the past 5 sydney prices have doubled. I see prices for crappy places in my area asking more then double what I paid in 2012. On a side note Abbotsford is nice man. 565 even for a unit sounds like a steal back then. From 08 to mid 2010 I lived in breakfast point at mums and units, not even water front had 7 digit asking prices. Mum has a water front pent house. I wish...

If you stopped shoving avocados in your cakehole you'd be able to afford the extra several hundred thousand dollars.

[Iggle Piggle]

Does vary from city to city and state though - Sydney sounds pretty mental, with Melbourne not too far behind.

Guy I work with moved here to Adelaide 3 years ago from NSW. He earns less here for the same work, and some things do cost a bit more (electricity etc), but reckons he has a better quality of life as he can afford a much nicer house in a nice area not far from CBD...earns less yet can afford nicer house and have more disposable income and about 2 extra hours back in his day as his commute is easily one hour less each way. Obvious trade off is he is not getting anywhere near the same rate of capital growth, but he reckons the lack of mortgage/financial stress and added time with family is well worth it, and if he really wanted he could be investing more of his extra disposable income (instead they take more or "better" family holidays, he is building a track car, and they sink more into paying down the mortgage quicker for security).

Guess it is similar to buy in the suburb you can afford, but he is buying in the city he can afford.

Does also help that she is from here and her family are all located here.

[.:4:.]

Originally Posted by Iggle Piggle

Does vary from city to city and state though - Sydney sounds pretty mental, with Melbourne not too far behind.

Guy I work with moved here to Adelaide 3 years ago from NSW. He earns less here for the same work, and some things do cost a bit more (electricity etc), but reckons he has a better quality of life as he can afford a much nicer house in a nice area not far from CBD...earns less yet can afford nicer house and have more disposable income and about 2 extra hours back in his day as his commute is easily one hour less each way. Obvious trade off is he is not getting anywhere near the same rate of capital growth, but he reckons the lack of mortgage/financial stress and added time with family is well worth it, and if he really wanted he could be investing more of his extra disposable income (instead they take more or "better" family holidays, he is building a track car, and they sink more into paying down the mortgage quicker for security).

Guess it is similar to buy in the suburb you can afford, but he is buying in the city he can afford.

Does also help that she is from here and her family are all located here.

Thats very true but people like myself and I'm assuming there are others like to stay semi local to family. That's when you have to do what you have to do to achieve it.