All Topics / General Property / Property bust not here yet … worse to come

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  • Profile photo of realestateedu.com.aurealestateedu.com.au
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    Hellow DW,

    Yes it is all over the place.

    400 properties in the Eastern Suburbs of Sydney are about to hit the market from bank repossessions.

    Civil works costs in Sydney have been increased by $30,000.00 per allotment on new sub-divisions.

    Bottom is more expensive to develop and the poor people once again are the ones to feel the pain.

    Inflation + devaluation of the dollar, electricity up 30%, postage stamps now 60 cents, living expenses up, feeding a family plus school fees, what about child care who can afford that now that ABC stuffed up “Gillard” couldn’t fix that either.

    USA and EU can’t print enough cash to fix the problem, gold and silver set to rise sharply.

    I’m trying to put the financial jigsaw together hhmmmm how to make the pieces fit?

    I focus on cash flow whether the market is up or down I don’t want my passive income to be affected, or my clients.

    Regards

    Philip Sigglekow
    LREA author

    Profile photo of DWolfeDWolfe
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    I think you are bang on Philip.

    The only people who feel it are the poor. I rent in an area where there are 20k new residents coming according to growth figures. The residents are up in arms about higher story buildings and more people. The developers are being called fat cats etc and the current residents do not want more houses. The median house price is $1mil. These are the same residents who will blame anyone for unaffordable houses. No new developments means that house and unit prices go up. More charges to developers mean that many low end projects get scrapped as many small developers can not develop for free.

    The govt will not spend any money on new infrastructure so they and large developers sit on huge tracts of land that cannot be developed in the near future. This means infill is the only option. Round and round and round.

    There is a lot of time wasting and money wasting going on at the top and no one is accountable for anything. If more people acted rather than talking the world would be a better place. Here endith the rant.

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of simplesimple
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    Dwolfe, I agree that market is not black and white and money to be made in some pockets by those who in the know. Just trying to stay on the topick of this thread.

    BTW, anyone seen W4L around those days? Long time no comments, probably busy with some projects…

    Profile photo of DWolfeDWolfe
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    Hey simple,

    Sorry not trying to get on your back, had a bad hair day.

    Nah, last post W4L was awhile ago, maybe she's working overtime…

    A few people have dropped off, maybe taking the advantage? :)

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of gmh454gmh454
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    Interesting to catch up, I have been sitting out waiting for all the government intervention to wash through..

    I am an accountant as some may remember. I don't do many individuals as we are mainly a business practice. However most of the individuals are a similar age to me, I'm 56. Some a little older some a little younger.

    The thing I am seeing this year, is that for those (most of them) who bought a property in the last 10 years, they are all bleeding. Now I know that is because they are not clever little cashflow + types, I guess they went to the wrong seminar, – the neg gearing one.

    But I sit here watching them either borrow more to keep up the negative payments or draw down on their super to feed these things. Mostly units, returns 1-2 % nett, (one actually is close to a neg gearing loss before the interest !!!!) .

    Almost all under $80,000 ann income, some now retired have no taxable income at all, and larger and larger losses carried forward (okay will help with the cap gain – though that does not appear to be a problem for most)

    Luckily none of them ever wasted $20 for a phone call and asked my opion first, but I wonder how long they can afford to bleed.

    Profile photo of devo76devo76
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    All my properties bought in the last 10 years including PPOR. Im doing fine.
    Total out of pocket expenses across all including costs is under $300 pw.

    I have friends who bought their first place recently. Also doing fine.
    Work mates doing fine
    Neigbours doing fine.

    Sorry i dont see the blood. Im sure its there but it is not the majority of cases thats for sure.

    As i touched on in another post. One of my mates was going to give investing a miss but decided to buy a little over a year ago when everyone said run for the hills. Today he is sitting on a good chunk of equity and a neutrally geared property.
    no blood there either.

    Profile photo of 50mill50mill
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    From my wider reading, but dont quote me, i have learnt that ALL governments in the developed world have and use US currency to trade with and store in their govt vaults – physically or digitally or whatever.

    When the US dollar weakens further it not only affects the US but every govt that holds US currency.

    So if the US currency weakens it means it is not as valuable therefore it cant buy as much.

    If other govt's cant buy as much with their own stash of US currency then they will exchange it for another.

    If the US currency loses value faster than expected other countries will try and exchange/spend/use their US currency quickly so as not to lose spending power.

    If US currency drops its value quickly a whole lot of nations may dump it fast.

    If there is a worldwide dumping of the US dollar it could cause some major shockwaves.

    In order to stabalise the world certain US banks have been keeping the price of Gold down – apparently. 

    This makes it seem as if the US economy is strong and travelling along nicely.

    If there is a major stockmkt crash in the US or somethin similar it could unsettle their economy.

    If every country dumps US dollars how would it affect real estate and prop invsting in Australia?

     

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    http://www.news.com.au/money/property/house-prices-dip-and-will-fall-further/story-e6frfmd0-1225932622360

    Seems like FHOG stemulus effect started to wear off. We need few more IR hikes and Austalian RE will follow USA trend.
    Interesting that AU lags 3-4 years behing US…

    Profile photo of DWolfeDWolfe
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    What a gem of an article,

    The best part was this……….

    'But he was philosophical about not selling his home for as much as he had hoped.

    "I still have ended up with a lot of money, I just haven't ended up with as much money as I thought," he said.'

    !

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of ErikHErikH
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    Just another example of poor quality journalism when it comes to property news. Headline states prices dip and will fall further. The dip is 0.2% in August which I doubt very much is statistically significant. The next paragraph then goes on to state that the RP-Date Rismark hedonic index shows 8% growth year to date …

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    simple wrote:
    http://www.news.com.au/money/property/house-prices-dip-and-will-fall-further/story-e6frfmd0-1225932622360

    Seems like FHOG stemulus effect started to wear off. We need few more IR hikes and Austalian RE will follow USA trend.
    Interesting that AU lags 3-4 years behing US…

    What does the  "FHOG stemulus"  has to do with almost $3M apartment having to drop $750k before selling ?  Surely there can't be that many  FHBs who can afford apartments selling at 5x median home price and the ones that do would not be put off by the loss of a lousy $7k  in "FHOG stemulus".   
    And as far as the overall 0.2% fall in the median prices go I think the picture said it all and is the reason behind the fall .

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    gmh454 wrote:

    The thing I am seeing this year, is that for those (most of them) who bought a property in the last 10 years, they are all bleeding. Now I know that is because they are not clever little cashflow + types, I guess they went to the wrong seminar, – the neg gearing one.

    You sure its 10 years ? Even Sydney and Melbourne buyers are way in front if they bought 10 years ago.  If you look at Adelaide, Brisbane Darwin Hobart and Perth buyers they are around 300% up on 10 years ago and rents are about that much up as well. Take Perth as an example (because it has been lagging behind the other capital cities) where properties selling for 150K 10 years ago are now selling for well over 3 times that and renting for $450+ per week. How can you say they are bleeding when he interest repayments are around 200pw  LESS then they receive in rent ?  I'm not an accountant like you but even I can see that someone in this position would be positive geared. 

    Profile photo of DWolfeDWolfe
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    Hi friends,

    If "collectors" (they are not investors) have invested in a strategy that has not worked for them then that is their business.

    I wouldn't ring an auto electrician if my brakes on my car went so I could see why as a business accountant people probably would not think of gmh454 as the first port of call for individual taxation advice.

    There wasn't a mention of how many of these individuals there were who had adopted this strategy. 2 or 3 or 20 or 30 or 200 or 300. Even so out of the whole country that would be a very small portion of people buying into property.

    I would think that many of the people who haven't made money from property probably either don't own any or are unwilling to sell to realise any capital gain that they may make.

    Just my opinions. I don't see any blood, I don't even see a black eye out of the property market (maybe Gold coast that has a smacked bottom) Call me when the market is flooded with fire sales. We ARE not America, no matter how much our pollies try to make us behave like them or crawl up their behind.

    I'm repeating myself here,

    we have no jingle mail,
    we have no 50 year mortgages where you will die before it is paid back,
    we have underlying demand as no one likes living under a bridge or in a cardboard box,
    we have a welfare system that includes weekly cash payments and rent assistance for private rental,

    look I could go on, and on, and on about why there are inherent differences between Australia and many other countries but hey…

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of simplesimple
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    DWolfe, your points are valid, but on the other hand we have gravity of reality that general public cannot stand futher price rises in RE. Wage to House Price ration is way out, it must return to 'normal' trend at some point…
    1995 when I came to OZ, min wage in our industry was $10, now it's $20. Houses went from $145K to $500K on the same street!!! Somthing is out of controll there…

    Profile photo of harbharb
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    simple wrote:
    on the other hand we have gravity of reality that general public cannot stand futher price rises in RE.

    Don't want to be picky simple but how did you work that out ? 

    Quote:
    Wage to House Price ration is way out, it must return to 'normal' trend at some point…

    Maybe what you call "normal" was actually "lower then normal" 
    Looking at the rest of the world wages to house price ratio Australian cities don't look expensive at all, in fact none of them are into double digit ratios. Looking at wiki  http://en.wikipedia.org/wiki/Australian_property_bubble I found this interesting table http://www.numbeo.com/property-investment/rankings.jsp  which list the income the price ratios in major world cities.   Take Sydney Aus.  with a ratio of  6.7  and compare it with something more extreme like Minsk Belarus with a ratio of 40 and Sydney looks like bargain of the century.  If not for a few US cities where they went silly building cardboard abodes on cow paddocks which caused a massive price crash in certain locations we would have some of the lowest price/income properties on Earth.
     

    Quote:
    1995 when I came to OZ, min wage in our industry was $10, now it's $20.

    Minimum wage is something earned by young people just starting in the industry, why kind of loser would still be on minimum wages after 15 years in the industry ? And if  by that you meant it as in comparing the minimum wages a young person just starting out and wanting to buy a property was earning back then compared to someone in a similar position is earning now then your following comment is comparing apples with oranges.

     

    Quote:
    Houses went from $145K to $500K on the same street!!!

    With population numbers increasing by 5 million people between 1995 and 2010 surely you didn't expect prices "on the same street" to grow in line with earnings.  The extra 5 million people competing for a residence near the CBD has pushed prices on "the same street " above the inflation rate and pushed he city outskirts further out.  If your hypothetical young person now is prepared to buy the same size house on the the outskirts of the city  the same as his hypothetical 15 years senior did earlier he should be able to find something in the $290k range with little difficulty. 

    Quote:
    Somthing is out of controll there…

    You are correct, there is something out of control here and it is the younger people of today who have higher expectations then previous generations . An today most expect instant gratification, buying everything on credit, ,  to be able to afford their first home in the same area their parents live but preferably in a much larger, modern  and better equipped home and they expect to work less hours so they can spend more time with the family and partying with friends.  Nothing wrong with that of course and people starting a family in past decades all had the same aspirations and most of the people buying homes previously have complained about the high price of homes  when compared with the ones paid by their parents. The young people today may think they are special and hard done by life but they are not unique, every generation before them has been singing the same song throughout the history and only those prepared to put in the hard work have succeeded while most of the ones waiting for the opportunity to come to them have failed miserably.

    Profile photo of DWolfeDWolfe
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    Harb,

    You have nailed it on this and the other threads you have posted on.

    The stark reality is that people are not abandoning their homes in droves, people have steady employment and there is incentive to buy and own property.

    This thread ( and several others) I think has looped the same ground about 5 times now and still the property crash has not happened. Hope all the whingers have sucked it up and bought a property by now, because the next gain will make peoples hair stand on end.

    Then hopefully we can come and put an end to this thread.

    D

    DWolfe | www.homestagers.com.au
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    We see same situation totally different obviously based on our education and experience. So we shall keep this thread 'life' and  see how it will develop.  I have no need to prove anyone right or wrong, just checking if my view of finance is still valid by trying to foresee future.

    As I side note, we got 50 people  full time working in our manufacturing facility on award wage in Brisbane. I see them struggle much more with there's personal finance now than 15 years ago.  We always paid award.

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    simple wrote:
    We see same situation totally different obviously based on our education and experience. So we shall keep this thread 'life' and  see how it will develop.

    I agree, it is a an excellent thread and by keeping it life it shows the folly of listening to doom and gloom merchants.  I still remember 1986 when some of these D&G merchants were telling me to stock up on baked beans, fuel and water because the  HC (Halley's comet ) was going to destroy life on Earth as we knew it.  Then came the 90s recession followed by Y2K,  then the GFC  hit us and now that I have just about  eaten up all my baked beans stockpiles its time to restock again because according to the Mayan calendar the end of the world is coming. Just as well I say, after 24 years I'm sick to death of eating my way through stockpiles of nearly  expired baked beans.    LOL 

    Quote:
    As I side note, we got 50 people  full time working in our manufacturing facility on award wage in Brisbane. I see them struggle much more with there's personal finance now than 15 years ago.  We always paid award.

    Not the same 50 people you had working there 15 years ago I hope. :P
    If they are then they probably deserve to struggle for being too stupid to try and improve their earning capacities. Don' know the employment situation in Brisbane but her in Perth with award wages  if you do get someone to turn up at all  it will be some brain dead zombie who can't tie up his own shoelaces, some alcoholic or  junkie in need of a fix  who will take a couple of days off after every pay day.  If you do get anyone worth keeping they are probably new arrivals in this country and will leave you as soon as they have a bit of local experience and find how to look for a better paid job. These days even unskilled workers expect to gross $1000 pw  once they've done a bit of overtime and if they can't make that much in a workplace they will go somewhere else where they can.  If they don't  and don't demand a pay rise then you have to wonder what is wrong with them. LOL

    Profile photo of DWolfeDWolfe
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    Harb, I am still laughing!

    Yeah 2012 we are all going to bite it, personally I'd rather bite it knowing I achieved my own goals and had fun making money and spreading it around. ;P

    Simple I wonder if the people you are speaking of struggle with their finances as money management is not something that is inherent, it is learned. Maybe no one has educated them to take care of their money and personal finance. Maybe the Aussie school system is to blame since no one is taught about money and finance at any year level.

    And the big maybe is …………………………………….. maybe there is just more stuff to waste money on. Don't need plasmas, and nice cars and fake tan and beer and ciggies. Don't need takeaway every night and lunch bought every day. Don't need the brand name clothes when the kmart jeans work just the same. But………………….. these are things that people desire and will accrue debt trying to accumulate. I wonder if they struggle because they are trying to have it all and yesterday.

    I think is most people knew how to budget life would not be a struggle, it would probably be pretty easy. But it might be a bit tough on them having to go with out the loads of crap they want to buy…..

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of 50mill50mill
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    Yeah, thats true Dwolfe,
     
    Im no expert at budgetting my own money, darn, tyring to plan what i spend and where is such a mission.
     
    I guess a financially ignorant population can be much easier manipulated by the 'powers that be'?!

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