Australia housing bubble

[FTE217]

Living the dream I suspect Syn haha

[asagaai]

Originally Posted by Itsme

Well, you are being a mug to yourself if you have not already done so, the last 6 months I've been making good money with bank interest.

This.

I put quite a bit of money into gold bullion, flogged it as Russia invaded Ukraine and made some $$$.

Left the money in my bank-a large one- earning nothing. About 7 months ago pulled my finger out and found some banks with good interest for SMSFs, and ripped the money out of "my bank" and straddled it over a couple of banks.

Been making some ok money in interest as Itsme said. Do your research - need to minimise the devaluing degradation of money sitting under the mattress- unless of course you are defrauding the system by not disclosing assets to get the aged pension when you would not otherwise qualify.....

[T3rminator]

All mugs. Should have bought some Nigerian government bonds and collected 15%.

[Syndrome]

Bring on another rate rise tomorrow!

[zilo]

Originally Posted by Itsme

Well, you are being a mug to yourself if you have not already done so, the last 6 months I've been making good money with bank interest.

oh yeah?
Bought 6 kilos of yellow stuff at 77800 a kilo...2 years ago.
Checked the price lately?

[zilo]

Please almighty god give us at least a 50 basis point increase tomorrow...

So we can be like the rest of the planet.

[b0son]

Originally Posted by zilo

oh yeah?
Bought 6 kilos of yellow stuff at 77800 a kilo...2 years ago.
Checked the price lately?

No, because I dont buy gold, let alone by the kilo. It's too much of a pain getting change when I shop with it.

[Citroënbender]

Minister O’Neill has gone a bit quiet on the report about revamping immigration policy, that was due late February. This is relevant in the sense that indisputably some aspects of migration category were driving up property prices in capital cities.

[Charliewool]

Originally Posted by zilo

oh yeah?
Bought 6 kilos of yellow stuff at 77800 a kilo...2 years ago.
Checked the price lately?

Hope you’ve checked purity?? (Of course No-one could fool Zilo though!)
https://www.news.com.au/entertainmen...6b68ea8ac9?amp

[Itsme]

Originally Posted by zilo

oh yeah?
Bought 6 kilos of yellow stuff at 77800 a kilo...2 years ago.
Checked the price lately?

Gold has its risks like everything else and something tells me you have a fanciful mind telling porkies with that amount of gold.

[T3rminator]

$60k profit in 2 years is not to be scoffed at.

Although, with the $500k outlay, could have leveraged and picked up a multi million dollar home is a desirable area and be collecting more than 60k today I reckon.

[blueoval]

https://7news.com.au/business/financ...onth-c-9960390

Australian mortgage holders have been hit with fresh financial pain following the Reserve Bank of Australia’s tenth consecutive cash rate hike.

[Yellow_Festiva]

They really need to start looking at other ways to control spending.

I wonder how much of the actual adult population has a mortgage?

[Polyal]

Originally Posted by Yellow_Festiva

They really need to start looking at other ways to control spending.

I wonder how much of the actual adult population has a mortgage?

How else do you do it, efficiently?

[T3rminator]

Originally Posted by Yellow_Festiva

They really need to start looking at other ways to control spending.

I wonder how much of the actual adult population has a mortgage?

I'm going to guess most boomers will have had their mortgages paid off, or close to being paid off. Capital was cheap. Any left holding on as investments will just pass the expenses onto renters.

Heard a suggestion to increase GST temporarily, that way it will hit actual spenders. Not sure what side effects that would have. On the plus side, the extra money taxed would stay within the public system.

[Peter B - CV8]

Originally Posted by Polyal

How else do you do it, efficiently?

GST??? Shares the pain fairly evenly amongst the community.

[anobserver]

Originally Posted by Yellow_Festiva

They really need to start looking at other ways to control spending.

I wonder how much of the actual adult population has a mortgage?

Cant recall the exact figures. Owners, buyers and renters used to be roughly split into thirds But the owned outright crowd has been shrinking over time.

The artificially low interest rates tempted one and all to trade up, because it was 'affordable'. So more people than ever in each age group held debt for longer, right up to and into retirement in some cases.

[anobserver]

Originally Posted by Peter B - CV8

GST??? Shares the pain fairly evenly amongst the community.

Unless you're young, poor, or on a fixed income.

[anobserver]

Originally Posted by Itsme

Well, you are being a mug to yourself if you have not already done so, the last 6 months I've been making good money with bank interest.

And how much over CPI would that be.....?

[blueoval]

Originally Posted by T3rminator

I'm going to guess most boomers will have had their mortgages paid off, or close to being paid off. Capital was cheap. Any left holding on as investments will just pass the expenses onto renters.

Heard a suggestion to increase GST temporarily, that way it will hit actual spenders. Not sure what side effects that would have. On the plus side, the extra money taxed would stay within the public system.

If and a big IF, they do this, I doubt it will be temporary. Those in power will find it difficult to reduce such increase easily. A move like that will clean out any hangers on with small businesses and kill off the middle class (which I reckon is their aim).

[T3rminator]

Originally Posted by blueoval

If and a big IF, they do this, I doubt it will be temporary. Those in power will find it difficult to reduce such increase easily. A move like that will clean out any hangers on with small businesses and kill off the middle class (which I reckon is their aim).

True. But rate rises will kill off a lot of small independents anyhow. Its not just the mortgage holders who have their spending power taken away, its the renters as well. Average Joe who used to pay a bit of premium for his steak at his local butcher will now switch to the big supermarkets to get the cheaper deal. Mums and dads will start to order bits and pieces from Aliexpress rather than hopping out to the local store.

Possibly a way to get around the temptation to keep the tax to would be to call it something different, like an "inflationary tax". That way its visible, and as inflation hits its target, that tax gets removed.

[prydey]

Originally Posted by T3rminator

Possibly a way to get around the temptation to keep the tax to would be to call it something different, like an "inflationary tax". That way its visible, and as inflation hits its target, that tax gets removed.

You must be new here

[blueoval]

Originally Posted by T3rminator

True. But rate rises will kill off a lot of small independents anyhow. Its not just the mortgage holders who have their spending power taken away, its the renters as well. Average Joe who used to pay a bit of premium for his steak at his local butcher will now switch to the big supermarkets to get the cheaper deal. Mums and dads will start to order bits and pieces from Aliexpress rather than hopping out to the local store.

Possibly a way to get around the temptation to keep the tax to would be to call it something different, like an "inflationary tax". That way its visible, and as inflation hits its target, that tax gets removed.

I really don't reckon they will remove any tax if they implement such a thing, especially if it's proven effective. I like how you think though. In a perfect world with selfless people in power who actually want to do what's in the best interest of the people, it could work. However, I am as skeptical as they come when it comes to power hungry politicians and implementing "temporary taxes". It's not in their nature of letting go of a tax that actually is a good money spinner for them.

As for it effecting other mum and dad types out there, of course it will, it will affect all. This will eventually change the entire dynamic of middle and lower class people's spending habits to a point that there will no longer be a middle class but a class of citizens no longer making independent decisions, but solely dependent on the government income and infrastructure to it's fullest extent.

I'll be in the corner with my tin foil hat on now.

[Citroënbender]

I’m honestly not sure who will triumph in this battle. There’s seemingly still a lot of both “It doesn’t apply to me” and “I’ll have to start watching my expenditure soon” mantras being recited.

[anobserver]

Originally Posted by T3rminator

I'm going to guess most boomers will have had their mortgages paid off, or close to being paid off. Capital was cheap. Any left holding on as investments will just pass the expenses onto renters.
.

Not the original source, but quotes the data i recall from 2017.

https://www.themandarin.com.au/11001...ions-are-huge/

Data looked at age ranges from 1990 to 2015. It found -

"For homeowners aged 55 to 64 years, the proportion owing money on mortgages has tripled from 14% to 47%.

Among homeowners aged 45 to 54 years, it has doubled from 36 to 77%."

It gets worse:

"Meanwhile, the average mortgage debt-to-income ratio among those with mortgages has pretty much doubled across every home-owning age group.

In the 45-54 age group, the mortgage debt-to-income ratio has blown out from 82% to 169%.

For those aged 55-64, it has blown out from 72% to 132%."

And this was five or six years ago. Cant imagine it's miraculously changed since then.

[anobserver]

Originally Posted by Citroënbender

I’m honestly not sure who will triumph in this battle. There’s seemingly still a lot of both “It doesn’t apply to me” and “I’ll have to start watching my expenditure soon” mantras being recited.

I hear that too. But I reckon we all lose. The effects of mass credit creation and the deregulation of the banks from 1986 that enable their big profits have barely begun to ripple through into consciousness.

So long as we could borrow to sustain lifestyles, noone gave two hoots about it. And we bought and sold houses to each other, and the govt saw it was good, because it generated big stamp duty revenues.

[blueoval]

Originally Posted by anobserver

Not the original source, but quotes the data i recall from 2017.

https://www.themandarin.com.au/11001...ions-are-huge/

Data looked at age ranges from 1990 to 2015. It found -

"For homeowners aged 55 to 64 years, the proportion owing money on mortgages has tripled from 14% to 47%.

Among homeowners aged 45 to 54 years, it has doubled from 36 to 77%."

It gets worse:

"Meanwhile, the average mortgage debt-to-income ratio among those with mortgages has pretty much doubled across every home-owning age group.

In the 45-54 age group, the mortgage debt-to-income ratio has blown out from 82% to 169%.

For those aged 55-64, it has blown out from 72% to 132%."

And this was five or six years ago. Cant imagine it's miraculously changed since then.

They are frightening statistics for 2023 let alone 2017. One can imagine how much worse it actually is. Scary scary times

[blueoval]

Originally Posted by Citroënbender

I’m honestly not sure who will triumph in this battle. There’s seemingly still a lot of both “It doesn’t apply to me” and “I’ll have to start watching my expenditure soon” mantras being recited.

Short term winners will be those who are debt free and those with substantial surplus funds in the bank. That is my prediction. I will leave it there.

[GO FURTHER]

Originally Posted by Polyal

How else do you do it, efficiently?

Instead of the RBA raising interest rates, the government could increase or lower the rate of compulsory superannuation contributions on a month-to-month basis.

So if at the moment the Superannuation Guarantee rate is 10.5%, next month it could be 0.25% higher or 10.75%, and so on.

There is no reason why we couldn't use compulsory super contributions to meet short-term macroeconomic stabilisation objectives, as an alternative tool.

When economic policy requires tightening, the requirement to contribute to superannuation could be increased.

This would mean, consumers would have less to spend in their take-home pay in high inflationary times and would help curb spending.

The big advantage though would be that the money taken out would still be yours, and earning interest, which you get back when you retire, versus increased mortgage rates which is just a "financial rent" paid to the big banks you will never see again.

The big banks getting richer... Or more for the average Joe in retirement, which might be better?

You may say, "Well, not everyone gets compulsory super deducted from their wages, so that won't work"...But by the same token, not everyone has a mortgage either.

There is no alternative Inflationary tool (just like increasing interest rates) that fits all or affects everyone equally.

The above idea was floated in Australia some decades ago by economists as an alternative to raising official interest rates.

[T3rminator]

Statement from RBA. A bit confused with the bolded bit.......are they effectively saying they don't know if these 10 rates increase will have an impact on inflation, so they are just going to keep raising them anyway?

BTW, I think million dollar a year man will be giving a press conference tomorrow to explain the decision. Would be interested to hear what % of inflation is NOT demand driven.

https://www.rba.gov.au/media-release.../mr-23-07.html

At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 3.60 per cent. It also increased the interest rate on Exchange Settlement balances by 25 basis points to 3.50 per cent.

Global inflation remains very high. In headline terms it is moderating, although services price inflation remains elevated in many economies. It will be some time before inflation is back to target rates. The outlook for the global economy remains subdued, with below average growth expected this year and next.

The monthly CPI indicator suggests that inflation has peaked in Australia. Goods price inflation is expected to moderate over the months ahead due to both global developments and softer demand in Australia. Services price inflation remains high, with strong demand for some services over the summer. Rents are increasing at the fastest rate in some years, with vacancy rates low in many parts of the country. The central forecast is for inflation to decline this year and next, to be around 3 per cent in mid-2025. Medium-term inflation expectations remain well anchored, and it is important that this remains the case.

Growth in the Australian economy has slowed, with GDP increasing by 0.5 per cent in the December quarter and 2.7 per cent over the year. Growth over the next couple of years is expected to be below trend. Household consumption growth has slowed due to the tighter financial conditions and the outlook for housing construction has softened. In contrast, the outlook for business investment remains positive, with many businesses operating at a very high level of capacity utilisation.

The labour market remains very tight, although conditions have eased a little. The unemployment rate remains at close to a 50-year low. Employment fell in January, but this partly reflects changing seasonal patterns in labour hiring. Many firms continue to experience difficulty hiring workers, although some report a recent easing in labour shortages. As economic growth slows, unemployment is expected to increase.

Wages growth is continuing to pick up in response to the tight labour market and higher inflation. At the aggregate level, wages growth is still consistent with the inflation target and recent data suggest a lower risk of a cycle in which prices and wages chase one another. The Board, however, remains alert to the risk of a prices-wages spiral, given the limited spare capacity in the economy and the historically low rate of unemployment. Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms.

The Board recognises that monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments. There is uncertainty around the timing and extent of the slowdown in household spending. Some households have substantial savings buffers, but others are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living. Household balance sheets are also being affected by the decline in housing prices. Another source of uncertainty is how the global economy responds to the large and rapid increase in interest rates around the world. These uncertainties mean that there are a range of potential scenarios for the Australian economy.

The Board’s priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. The Board is seeking to return inflation to the 2–3 per cent target range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one.

The Board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary. In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.