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May 3, 2009 - 5:10 am

"Credit crunch has left $100bn hole in Federal Government budget"

http://www.news.com.au/heraldsun/story/0,21985,25421795-5005961,00.html

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May 3, 2009 - 4:02 am

Also watch taxes go through the roof so that KRUDD can pay for his mega vote buying fenzy….ohhh and the fatc they have a $100billion hole thatthey didnt budget for lol, geniuses…..and scary!!!! Our country is in for soooo much trouble. Gee Im glad we decided to vote some experianced professionals like Krudd and co in on the verge of the GFC…..some smart voters out there…

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May 3, 2009 - 3:38 am

I still cant beleive how much greed can blind people-I cant beleive peopel still think property is goign to keep going up when everything is pointing to the fact its going to come down??

Melbourne's median property prices are down 15%!!! Toorak is down 33%, Albert Park 26%, KEW 45%…. and this is with still very strong employment, record low interest rates and low unemployment. The bottom end is being held up by a home owners grant which is going.

So we have had huge reductions already on basically nothing, tell me….what effect do you think there will be when unemplyment doubles, interest rates and inflation go up, and sentiment hits rock bottom??? Crazzzzzy people out there…

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May 1, 2009 - 6:25 am

Sure will be interesting.

I think if you like taking calculated risks then the decission would still have to be on the 'hold off' side would it not? There are more negatives, actually I cant really think of any positive reason for property prices to increase. Even the bastion of immigration has been slashed, and with further unemployment will be slashed further.

I think we can count further government intervention out-they are going to be BROKE!! Wont be any money left for grants etc. They are even talking about FORCING all people under 21 to go to school rather than go on the dole (aint a bad idea) but to me is really designed to hide the unemplyment figure and reduce demand on social services..

Really this government has done such a bad job of handling this crisis, the full impact of their incompetance wont be realised for years to come, but watch this space…ohhh boy…..

Also the property market has been propped up by people 'scrambling' to get in before the grants finish. I agree though, there are competing forces, but IMHO the negatives are going to hand the positives their bottom on a platter Lets see in 24 months I guess

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May 1, 2009 - 4:55 am

Dan42 wrote:

I'm no expert, I just can't see it being as bad as everyone thinks. Last year, Steve Keen and his disciples were predicting a crash on Australian property. Median prices went down 3% on average last year in capital cities, and have risen in 1st qtr of 2009.

By the $40b I assume you mean the borrowings and stimulus payments. Well, people aren't spending it. GDP contracted 4th qtr 08 and will surely contract for 1st qtr 09 as well. Inflation has gone from 4.5% to 2.5% in a short time.

Why would there be a run on the AUD? Interest rates in the US, UK, Japan and most of Europe are lower then Australia. Those countries are also in a much worse position than Australia. GDP in the US has contracted by 6.1%, according to today's AFR.

Would I buy property now? Probably not, I'd want to see the effect of the reduction in the FHOG, and what happens on Budget night. I'm not one of these "property doubles every 7 years" guys, but I can't see a 20% reduction either. I guess I'm stuck in the middle somewhere.

Dan the $40billion hasent even hit the economy yet, the $900 stimulus payment was just a fraction of this total spend. Either way, if you are arguing a contracting GDP then with that obviously comes a increasing recession?

The run on the AUD-quite simple. With inflation comes a devalueing of the dollar, which in turn increases national debt. In order to create demand for the AUD the RBA will have to increase interest rates. Simple as that….I think….

Lets look at it from another angle-tell me what factors are going to prevent a fall in property prices? We have a global recession and clear cut reasons for inflation and increased interest rates plus the very high liklyhood of increased unemplyment etc all on the back of a massive property bubble that is far and above historical ratio of income to debt.

EVERYTHING is telling me things are going to get a whoooole lot worse…? Its actually good reading posts like this, because I find myself trawling through the paper looking to buy, and then I remember why not!!

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May 1, 2009 - 3:21 am

Dan-tell me, what effect do you think another $40 BILLION floating around the economy will have on inflation? The effects of this and the recession are still to hit…give it time, you will see….

Then add in increased taxes (well the government does have to pay for this massive loans somehow..) and a increase in interest rates (to stop a run on the AUD) and we will have a pretty bad situation me thinks……

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May 1, 2009 - 1:14 am

Always keep in mind who is conducting the research-'vested' interests will always have a slant, I still have a buyers agent hasseling me day and night to buy buy buy becasue its the best time in the last two years he has seen!!!! lol o.k, well what about the next two years buddy….

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April 22, 2009 - 8:35 am

Playa Chicken wrote:

it is now all about CASHFLOW, CASHFLOW, CASHFLOW.  And, there is TONS of it out there.

So, really, it's just a different strategy that needs to be applied to meet the requirements of the situation.

My 2 cents worth!
Vicky

Vicky-cashflow (and by this term I presume you are meaning positively geared properties) is a very short sighted goal-heck the banks are putting their rates UP even when the RBA are reducing theirs!! Wont take much to eat that up. No matter which way you look at it interest rates are going to go up, inflations IS going up and will go up a lot more and property that is already 7 times annual wage will have no room to grow anymore. The only way is down down down my sheep loving freind…

Reduce debt, square up your finances and get ready for the bargain of the century following the bubble of the century

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April 21, 2009 - 11:07 am

Linar wrote:

So why isn't every man and his dog a property millionaire?  You must move in different circles to me.  I think that going from one investment property to financial independence in 3 years is a pretty amazing feat.  I don't know too many people who have done it. 

Quite simply becasue not everyone went out and bought as many properties as they possibly could. Easy as that. Anyone who levergaed to the max, used equity blah blah blah would be millionaires now from the last ten years no matter where they bought.
 
Thats my point-sucess over the last year has been more a result of circumstance than any real skill. A fantastic result no doubt, and very much deserved by the sounds of it, but as for agents-well achieve those type of results over the next three years then I'll be impressed…

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April 21, 2009 - 2:54 am

Every man and his dog has been able to make money out of property over the last 10 years-hardley an amazing feat. When  they get it right they are 'worth every cent' and when they get it wrong 'they cant be right every time'? Kinda reminds me of used car yards-why on earth people got to a car yard and spend another $3k more than they would by buying privately is beyoned me??

re spare time-it doesnt exactly take a huge amount of timke looking at property reports and doing some research to get an idea of fair value for an area. I fyou have an interest in this then you should bne across it all, but if you have absolutely no interest and no inclanation to spend any time on it yourself then sure spend $20k on a agent I guess….

Linar, so you are crediting the agent for the 20 properties you bought yourself? Interesting. I suppose you could use the same logic for a magazine that tells you to buy in place 'x' which see gains in the future..?

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April 20, 2009 - 11:01 am

Pffft buyers agent, property advisors are shonks. Do it yourself and save the money…..

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April 19, 2009 - 10:31 pm

Thanks Linar-Victoria

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April 19, 2009 - 10:14 am

Scott, they are advisors/advocates, not sure of their license-from their site..

xxxxxx, with over 50 years combined experience and unrestricted access to the Melbourne property market, ensures you get all aspects of the planning, selection and negotiation process right. Through our complete independence and expertise, we protect our clients from high risk strategies and speculative investments.

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• Recommend and implement the most appropriate purchasing strategy

• Undertake research into the property’s record of capital growth and rental value

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Property is a very emotive subject and represents the largest single financial commitment many people will make. It has become synonymous with our achievements and aspirations. It also supports our lifestyle and enables us to attain financial security. When we advise on residential property – whether it’s a home or investment – we ensure you make rewarding property decisions based on sound, tried and true investment principles and expert market knowledge. Our clients benefit from: An intimate knowledge of the Melbourne property market Daily and preferential access to quality property (often including off-market transactions) Years of experience in professional, unemotional negotiation High quality service that fulfils your property needs completely and exactly An ongoing partnership with a company that truly has your best interests at heart If you are finding it difficult to access service providers such as financiers or solicitors, we are able to provide a referral. xxxxxxxxx  does not accept any remuneration or incentives for referrals to other service providers during the property search and negotiation process.

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April 18, 2009 - 6:28 am

I.P, they promised nothing as they couldnt garauntee anything (as with all finacial investment advice). Research-ZERO, absolutley nadda. I actually argued with him about this when signing, but he pushed me on the line -'we have been doing this for years, we know what we are doing' again belittling me. I should have ran on the spot BUT I gave him/them the benifit of my doubt as they are extremley well known in the game. Not affiliated with anyone that I know of.

Very dissapointing. I tell ya what. If there is a advocate out there that supplies the type of analysis that guys on this forum do then they would clean up. His basic reply when I asked 'what do i get for my $20k' was typical in his arrogance = 'well if you are sure you can buy a property without over bidding $20k by all means do it your self'……grrrrrrrrrrrrrrrr

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April 14, 2009 - 2:44 am

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….

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April 13, 2009 - 5:10 am

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…

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April 13, 2009 - 4:50 am

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.
S

Thanks 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…)

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April 13, 2009 - 12:09 am

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?

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April 13, 2009 - 12:01 am

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…

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April 2, 2009 - 6:27 pm

Bought in Kensington banks. Capital growth seems to be fine if you like at the stats, plus considering you need in excess of $400k to get a 2 bed town house now I gues cap gains would be around 10% per annum over the last two years. Doesnt matter if the area is 'full of town houses'-only so many places within 5 k's of the city that you can even buy a town house-no brainer IMHO…..