Forums / Property Investing / Help Needed! / Best advice : Don’t invest into property : The australian market is CRASHING.

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  • Profile photo of ScampScamp
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    @scamp
    Join Date: 2008
    Post Count: 297

    What I say is true. There's enough idiots who pushed themselves into huge debts and financial abyss already : We don't need more idiots to make the problem worse. Can't you see that 9 times annual wages per house is not sustainable and that the bubble is already bursting ?

    Property is a NO GO until at least 2011. Invest in gold and an economics study if you want to become investors.The fact you had to come here to get help means you are not prepared enough, or not smart enough, probably both.

    It sounds like I'm a boogieman, I'm not, my advice is the most valuable advice you will get on these forums : stay OUT of property and save yourself a whole lot of financial trouble.

    Profile photo of Michael 888Michael 888
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    @michael-888
    Join Date: 2005
    Post Count: 260

    Whilst caution, due diligence and respect for one's own level of debt and servicability should be priorities in anyone's investing journey, you should not assume that every one here conforms to your opinion……..

    "The fact you had to come here to get help means you are not prepared enough, or not smart enough, probably both.—Scamp. "

    This is a forum of like minded people, plenty seasoned and some newbiews. Many come here to share, network and yes (heaven forbid) learn something.

    It is not my only (nor main source) of knowledge/education, but a welcome sharing community of like minded people.

    Welcome to the forum, but don't generalise that everyone here is naive and here because they are not smart enough.

    You know what happens when you ASS-U-ME.  

    Profile photo of blogsblogs
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    @blogs
    Join Date: 2005
    Post Count: 418

    Scramp-welcome.

    I tend to agree as my previous posts would attest. Just wayyyyyy to much debt and whilst it is fine and dandy while we are in the biggest boom ever, the coresponding recession (hazzrard to say depression) is just around the corner. As property 'investors' we should all heed such warnings and make informed, calculated purchases-not just buy for the sake of it. If property prices could drop by even a conservative 15% in two years then that is still $68k you have saved on an average house by waiting. Of course there will be opposing views and hence what is great about this forum-it allows all sides to be seen. So to say coming here indicates you are not smart enough is a bit silly. Some verrrrry smart posters here matey!!!

    Profile photo of Alistair PerryAlistair Perry
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    Join Date: 2004
    Post Count: 891
    Scamp wrote:

    Property is a NO GO until at least 2011. Invest in gold and an economics study if you want to become investors.The fact you had to come here to get help means you are not prepared enough, or not smart enough, probably both.

    Hi Scamp,

    That's a touch arrogant don't you think. There are some very smart, experienced and successful people who come on here, as well as people new to investment. Why don't you tell us a bit about yourself so we can make an informed choice as to what your opinions are worth.

    Regards
    Alistair

    Profile photo of ducksterduckster
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    @duckster
    Join Date: 2004
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    If you factor in a higher interest rate on what you can afford and a lower LVR you can weather the storm a lot better than the MUM and DAD purchaser who has taken out a mortgage that is 106% LVR and zero deposit and the repayments are at the maximum that they can afford at the previous lower interest rate. To make matters worse they purchase in new housing estates which means when they are forced to sell just as their neighbors who are in a similar situation are also selling thus bring down the resale price.

    I was told in a seminar that the first time MUM and DAD investor always get wiped out in the down turn and that it is a 8 year cycle that occurs over and over. (unfortunately it is been a lot longer this time round approx 12 years which means a lot more financial loss.)

    step 1. Low interest rate – investor involvement- high levels of borrowing – higher prices – low rental yields- less investment – then
    higher interest rates – higher rents – higher yields- lower prices – mum and dad investor gets wiped out – lower interest rates (goto step 1)

    60 minutes see http://sixtyminutes.ninemsn.com.au/article.aspx?id=560015

    Profile photo of gmh454gmh454
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    @gmh454
    Join Date: 2003
    Post Count: 537

    Scamp welcome, and personally not going to argue with your advice, you may very well have saved someones future,

    quite a few have been quietly prognosticating about the inevitable cycle for sometime, and we may now may up a sizeable chunck of the board,

    unlike the bank Johnies taking a big breath and starting to get excited again, because the US did not explode, I think we are a long way from the end.

    Again welcome, to the Bears side of the forum…..”go you Bears”

    Profile photo of Peter CzubryjPeter Czubryj
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    Join Date: 2006
    Post Count: 13

    When there is doom and gloom that's the best time to buy Property.

    Cheers

    Peter

    Profile photo of The DishThe Dish
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    @the-dish
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    Hi this is the first time I've contributed to this site so hear goes,  there's only doom and gloom here if you are over geared and need to sell, therefore taking the loss, but if you hold and continue to gain the return through locked in rates, then there is no real loss but only gain to be had. I don't see anytihing wrong with that 

    Profile photo of AnnyAnny
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    @anny
    Join Date: 2007
    Post Count: 14

    Fred

    Harsh comments, which are unwarranted.  Ive been visiting this site for about a year now and bought my first IP last year.  Yes, my experience and knowledge in investing is limited but the advice and reading what other people do or think has been invaluable to me. 

    Being geared right is the key and not overcommitting, unfortunately listening to the stories on TV or on the net people have got caught up in buying too much on credit.   My only debt is a low mortgage on my home and the IP, I drive a 1980 Sunny and use my credit card wisely, just another wise initiative I read about on this site.   I'm considering purchasing my 2nd IP but will only buy if the price is right.  Why wait a few years if there is still a good buy and a profit to be made.

    Anny

    Profile photo of ScampScamp
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    @scamp
    Join Date: 2008
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    My harsh comment was made to grasp people's attention. It did, and I'm sorry if I offended some people.
    I'm sure there's smart people around here, I'm a PI myself, I'm about to sell my 'boomed out' properties in Holland where a boom at this moment is unlikely ( prices haven't boomed enough to cause people to be in massive debt ).
    However , unemployment, high fuelprice and the prospect of a new war between USA and ( fill in random oil country like Brazil / Venezuela / Iran etc ) will not yeild more revenue on the short term.

    I'm on my way to Australia myself, hence my interest in Australian property, and was shocked that people see 8 times wages as 'normal' to lend a home. It's not : It's exhuberantly much, bordering on silly.
    I'm sure people on this forum are a lot smarter than that, but having viewed 20 overenthousiastic posts I didn't want to reply to all of them that making profit on anything ( let alone a crashing housing market ) is a risky and dangerous area.

    Don't stick all your money ( and your future ) in something that you haven't researched properly and is bound to crash soon : That's all I wanted to say. But saying it like that , it would have gone unnoticed. It's not allowed to go unnoticed anymore.

    As a tip : property is worth 4 times the person's average wages per year.
    So if you earn 50.000 dollars, your house should be worth 200.000.

    Seeing that average property prices are 400.000, and average wages are 50.000… It's more than evident that the market is 50% overvalued. Take this from a seasoned property investor.

    Another free tip : the real value of your house is what you can sell it for : Not what banks tell you.
    If a fool buys it for 500.000, then it does NOT mean it's 'worth' 500.000. It just means it's worth whatever the NEXT fool will give you for the house ( that might be 1.000.000 or 200.000 ). Seeing that fools are running low on money, you can bet that property prices aren't going up , but down.

    Like I said, get the average wages of people living in an area, multiply by 4, and you have the average houseprices. If the sums don't add up, at least you will know which way the prices will go.

    Profile photo of seankseank
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    Scamp wrote:
    My harsh comment was made to grasp people's attention. It did, and I'm sorry if I offended some people.
    I'm sure there's smart people around here, I'm a PI myself, I'm about to sell my 'boomed out' properties in Holland where a boom at this moment is unlikely ( prices haven't boomed enough to cause people to be in massive debt ).
    However , unemployment, high fuelprice and the prospect of a new war between USA and ( fill in random oil country like Brazil / Venezuela / Iran etc ) will not yeild more revenue on the short term.

    I'm on my way to Australia myself, hence my interest in Australian property, and was shocked that people see 8 times wages as 'normal' to lend a home. It's not : It's exhuberantly much, bordering on silly.
    I'm sure people on this forum are a lot smarter than that, but having viewed 20 overenthousiastic posts I didn't want to reply to all of them that making profit on anything ( let alone a crashing housing market ) is a risky and dangerous area.

    Don't stick all your money ( and your future ) in something that you haven't researched properly and is bound to crash soon : That's all I wanted to say. But saying it like that , it would have gone unnoticed. It's not allowed to go unnoticed anymore.

    As a tip : property is worth 4 times the person's average wages per year.
    So if you earn 50.000 dollars, your house should be worth 200.000.

    Seeing that average property prices are 400.000, and average wages are 50.000… It's more than evident that the market is 50% overvalued. Take this from a seasoned property investor.

    Another free tip : the real value of your house is what you can sell it for : Not what banks tell you.
    If a fool buys it for 500.000, then it does NOT mean it's 'worth' 500.000. It just means it's worth whatever the NEXT fool will give you for the house ( that might be 1.000.000 or 200.000 ). Seeing that fools are running low on money, you can bet that property prices aren't going up , but down.

    Like I said, get the average wages of people living in an area, multiply by 4, and you have the average houseprices. If the sums don't add up, at least you will know which way the prices will go.

    You don't live in Australia yet you make big comments like this? You also seem to be giving alot of advice, do you have any formal qualifications? Our real estate market is very different here from Holland or Usa, maybe you should do your own research? on our market before you make sure strong comments.

    Profile photo of blogsblogs
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    @blogs
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    "Another free tip : the real value of your house is what you can sell it for : Not what banks tell you.
    If a fool buys it for 500.000, then it does NOT mean it's 'worth' 500.000. It just means it's worth whatever the NEXT fool will give you for the house ( that might be 1.000.000 or 200.000 ). Seeing that fools are running low on money, you can bet that property prices aren't going up , but down. "

    Finally someone with some common sense!!! You would be AMAZED how many people fail to grasp this simple concept-YOU HOUSE IS ONLY WORTH WHAT THE MARKET WILL PAY!!!!!

    Profile photo of Alistair PerryAlistair Perry
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    Post Count: 891

    Hi Scamp,

    I suggest you learn a bit about the dynamics of the property market in Australia. It is completely diferent to Europe. You may be correct about property prices tanking over the next few years but your reasoning is flawed. If you do some research you will also find that the Australian property market does not trend in a uniform pattern, there are widely varying trends accross different markets. Some are driven purely by supply and demand and where there is a shortage of housing it is simply not a factor of how much someone is willing to pay it's more like what what the seller is willing to sell for.

    Regards
    Alistair

    Profile photo of gmh454gmh454
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    @gmh454
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    Scamp, there are specific dynamics here, but I worry when people here say “our market is different”.

    Without getting into the debate, we are totally out of whack with a “proper economic market”. Maybe we will stay that way, and we will write our own chapter in economic and social theory, or maybe we will shift back to the norm.

    Profile photo of ScampScamp
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    @scamp
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    Don't worry , I know a lot more than you think about the australian housing market. People are people.

    Yes , I know your goverment is corrupt and your housing minister has 14 investment properties

    Yes, I know you think (wish) there's a housing shortage, but in reality there are 800.000 empty dwellings. It just shows you haven't done research.

    Your market is just like any other market, it goes up , and it goes down. It went up twice as hard as it should possibly have gone without government help ( tax incentives etc ), it will fall twice as hard as anywhere else.

    Your market relies on money from outside coming in and buying the expensive houses. Poms are having a house crash as we speak, they won't buy the houses… who will ?

    Prices won't crash as long as people don't sell. Ofcourse, we could all together agree with eachother that we don't sell ANY houses for less than 1.000.000, however that doesn't work when people start 'cheating' their way down because of panic.

    The housing market in Australia is not a supply/demand market at all, it's a fear/greed market.

    In a boom ( upward cycle ) it goes like this :

    The fear of not being able to own a house, the fear of missing the boat and being outpriced for the rest of your life, the greed from sellers who want more more more, the greedy who were too eager to make profit too fast and too irresponsible.

    In a crash ( downward cycle ) it goes like this :

    Sellers fear not being able to pay off the interest rates, initially they fear not being able to sell, this turns into fear of losing money, this turns into fear of going bankrupt. The buyers on the other hand are greedy : They want MORE discount, lower prices, better locations and better quality houses.

    Which cycle do you think Australia is in now ?

    Profile photo of beamseekerbeamseeker
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    Mr. Scamp,
     Admiration for your cautious words.Your intention seems to be one of a helpfull nature not simply random rehtoric….i hope.
     Due to the reality of lenghthy and desperate Sat morning line ups and ever increasing prices for renting a property across the majority of city and selected country areas (ie: booming W.A. and NTH QLD Mining towns) in Australia presently. I am curious to know where did you research your fact; 'no current housing shortage with 80,000 empty dwellings', please?
    To reveal this would be a continuation of your intended helpful advice you are providing for us readers with your warnings.
    To be uniformed is not a crime ….but as they say 'knowledge is power'. Not for greed but  just to keep the food on the family table.

    Profile photo of beamseekerbeamseeker
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    Mr Scamp,
    I understand your sound advice to invest in the safe bet of gold.  A historically proven safe step in a downturning world economy…So, (as per China /India demand for Australias Coal ) isnt there obviously a lucrative (with a well timed exit strategy) property investment oppurtunity attached to this demand , proven by the current increases in Gold prices, in well researched Gold rich areas in Australia right now?
    Since the whole world may be looking at purchasing more Gold in this present climate.Thus arent the towns/surrounding areas of these mines with the increased demand for output gonna need more workers living there?
    Which = more demand for houses/infrastructure = higher rental yields = more investor demand = increased growth?
    Thus maybe its not all doom and gloom/runaway tactics in the current Australian property investment market .
    As you said…if you 'do your research'.

    Profile photo of gmh454gmh454
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    @gmh454
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    Scamp wrote:
    >Your market is just like any other market,

    should possibly have gone without government help ( tax incentives etc ),

    it a fear/greed market.

    Well done.

    Should leave this alone but I can’t.

    Yep this was a govt lead boom.

    After the building boom of late 90s when everyone tried to build before GST, we had the post GST building slump. To avoid the backlash from buidlers and the inevitable downturn to follow, they had the first home owner grant, not to help home buyers but to prop up profits of builders, this combined with the rise of the unregulated spruiker (I’m an accountant and by law cannot advise on investments, but for a while real estate agaents were setting up more super funds than we were) the deregulation of banks and the proliferation of fake and lo doc loans, etc together with the media (who use press relases by the REI as news…..hello it is spin not news) and yep we had a greed fear boom, that risks screwing the economy and changing the egalataian society for ever.

    We have just experienced the biggest wealth effect (imaginary not real) boom OZ has ever seen.

    Profile photo of Alistair PerryAlistair Perry
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    @aperry
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    Post Count: 891
    Scamp wrote:
    Don't worry , I know a lot more than you think about the australian housing market. People are people.
    Yes , I know your goverment is corrupt and your housing minister has 14 investment properties
    Yes, I know you think (wish) there's a housing shortage, but in reality there are 800.000 empty dwellings. It just shows you haven't done research.
    Your market is just like any other market, it goes up , and it goes down. It went up twice as hard as it should possibly have gone without government help ( tax incentives etc ), it will fall twice as hard as anywhere else.
    Your market relies on money from outside coming in and buying the expensive houses. Poms are having a house crash as we speak, they won't buy the houses… who will ?
    Prices won't crash as long as people don't sell. Ofcourse, we could all together agree with eachother that we don't sell ANY houses for less than 1.000.000, however that doesn't work when people start 'cheating' their way down because of panic.

    The housing market in Australia is not a supply/demand market at all, it's a fear/greed market.
    In a boom ( upward cycle ) it goes like this :
    The fear of not being able to own a house, the fear of missing the boat and being outpriced for the rest of your life, the greed from sellers who want more more more, the greedy who were too eager to make profit too fast and too irresponsible.

    In a crash ( downward cycle ) it goes like this :
    Sellers fear not being able to pay off the interest rates, initially they fear not being able to sell, this turns into fear of losing money, this turns into fear of going bankrupt. The buyers on the other hand are greedy : They want MORE discount, lower prices, better locations and better quality houses.

    Which cycle do you think Australia is in now ?

    Sorry mate but you just lost all credibility with this post, you are either not inteligent enough or have not done enough research to understand the Australian market.

    Profile photo of seankseank
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    @seank
    Join Date: 2006
    Post Count: 64
    Scamp wrote:
    Don't worry , I know a lot more than you think about the australian housing market. People are people.

    Yes , I know your goverment is corrupt and your housing minister has 14 investment properties

    Yes, I know you think (wish) there's a housing shortage, but in reality there are 800.000 empty dwellings. It just shows you haven't done research.

    Your market is just like any other market, it goes up , and it goes down. It went up twice as hard as it should possibly have gone without government help ( tax incentives etc ), it will fall twice as hard as anywhere else.

    Your market relies on money from outside coming in and buying the expensive houses. Poms are having a house crash as we speak, they won't buy the houses… who will ?

    Prices won't crash as long as people don't sell. Ofcourse, we could all together agree with eachother that we don't sell ANY houses for less than 1.000.000, however that doesn't work when people start 'cheating' their way down because of panic.

    The housing market in Australia is not a supply/demand market at all, it's a fear/greed market.

    In a boom ( upward cycle ) it goes like this :

    The fear of not being able to own a house, the fear of missing the boat and being outpriced for the rest of your life, the greed from sellers who want more more more, the greedy who were too eager to make profit too fast and too irresponsible.

    In a crash ( downward cycle ) it goes like this :

    Sellers fear not being able to pay off the interest rates, initially they fear not being able to sell, this turns into fear of losing money, this turns into fear of going bankrupt. The buyers on the other hand are greedy : They want MORE discount, lower prices, better locations and better quality houses.

    Which cycle do you think Australia is in now ?

    Confims you know absolutely nothing about the Australian market. I don't know your motives but I rekon people like you should be banned from these forums, for giving out such false advice.

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