All Topics / 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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    vicgirl wrote:
    Now about the fixed rate mortgages, will they all mature at the same time in September? LOL…

    Yep. The joys of people fixing their interest at the lowest possible rate for 5 years.
    They all fixed it in the low tide, for 5 years : 5 years ago.
    Not all in september ofcourse.. only about 900.000 in september. The rest up and until June 2009.

    Profile photo of blogsblogs
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    vicgirl wrote:
    But you and Scamp are saying we are yet to follow in the footsteps of the US where interest rates have come down…then you're also saying ours will keep going up…excuse me for ending up confused about the logic behind your comments.

    What Im saying is the states are in all sorts of trouble due to wayyyy to much debt, and even with low interest rates people have had to sell their houses at massive losses. Now look at Australia-massive debt, period of never before seen spiraling property prices, inflation getting out of control, fuel prices hitting record highs, the cost of living is just going up up up….put two and two together-seriously for you (and possibly your families sake) stop being greedy and take a breath. Where do you think people are going to get the money just to cover the increasing costs of living let alone support a increase in property prices that are already way over valued by not only our standards but world standards? People hate to face reality, and then when reality bites they all go to point the finger at someone else (usually the government) rather than have a good hard look at themselves….

    Again another article in the paper on the weekend stating already properties at the top end of town are selling for $100k less than they were just 12 months ago-and we arnt even in 'financiall hardship' yet, just wait till the pain really starts to bite

    Aint seen nothin yet…..

    But thats the beauty of this forum-hopefully we can all work to increase all our positions while the sheep are led to the slaughter…

    Profile photo of Peak OilPeak Oil
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    Its not the Australian market you must deal with, its global and its all to do with a proven theory call "Peak Oil". Check out a small thread I started back in Sept, I posted when oil was just about to hit $90 Per barrel.

    https://www.propertyinvesting.com/forums/community/opinionated/4322125

    Do some research guys, i don't think you realise what is about to happen.

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    Its amazing people still think property prices are going to keep just going up!!!!! Petrol is at $1.60ish, interest rates are on the way up again, inflation outside target thresholds, yet for some crazy reason they figure a money tree is gunna grow and give the market even MORE money to spend on already overley inflated property prices!! I just dont get it….

    Profile photo of Alistair PerryAlistair Perry
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    It's been settled, all economists should be fired on the spot. Scamp and Blogs are the only people worth listening to! 

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    APerry wrote:
    It's been settled, all economists should be fired on the spot. Scamp and Blogs are the only people worth listening to! 

    C'mon APerry  think about it rationally for just one second-our property boom was fuelled by record low interest rates and a commodity boom, now the effects of which have started to dissapate. Remove these two factors and what is going to fuel the growth over the next 5 years? O.K so we should be able to agree that we wont see growth over the next 7 years like we have seen over the last seven.

    So now lets think about factors that could allow the growth, or fuel it. Disposable cash-nope, people are struggling more and more each day. Wage growth, nope-the more inflatonary pressure the higher the interest rates. WHAT DO WE KNOW IS HAPPENING, WELL PETROL IS GOING THROUGH THE ROOF AND WONT BE COMING BACK DOWN-DONT KNOW ABOUT YOU BUT PETROL FOR many people is a major portion of their weekley expenses. Through into the mix a large portion of 5 year fixers coming of their cheapo interest rates and having to start paying near 10% and again we have another wammy.

    I know its much easier for people to convince themselves its allllll going tobe o.k, but how about posting somethign to convince me property is guuna continue to boom?

    Profile photo of Alistair PerryAlistair Perry
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    blogs wrote:
    APerry wrote:
    It's been settled, all economists should be fired on the spot. Scamp and Blogs are the only people worth listening to! 

    C'mon APerry  think about it rationally for just one second-our property boom was fuelled by record low interest rates and a commodity boom, now the effects of which have started to dissapate. Remove these two factors and what is going to fuel the growth over the next 5 years? O.K so we should be able to agree that we wont see growth over the next 7 years like we have seen over the last seven.

    So now lets think about factors that could allow the growth, or fuel it. Disposable cash-nope, people are struggling more and more each day. Wage growth, nope-the more inflatonary pressure the higher the interest rates. WHAT DO WE KNOW IS HAPPENING, WELL PETROL IS GOING THROUGH THE ROOF AND WONT BE COMING BACK DOWN-DONT KNOW ABOUT YOU BUT PETROL FOR many people is a major portion of their weekley expenses. Through into the mix a large portion of 5 year fixers coming of their cheapo interest rates and having to start paying near 10% and again we have another wammy.

    I know its much easier for people to convince themselves its allllll going tobe o.k, but how about posting somethign to convince me property is guuna continue to boom?

    Ok, we'll look at your arguments one by one:

    1. Interest rates: Long term money market rates have been falling, so it is a general consensus that we are at least near the peak of the interest rate cycle. The effect of interest rates on proiperty prices is overstated in any case, only just over half the dwellings in Australia are mortgaged so there are a lot of people who are not afected at all by changes in rates.

    2. Commodities Boom: The RBA expect the current high demand for commodities to continue for "some decades" so I doubt there will be any significant change in the affect this is currently having on the economy.

    3. Wage Growth: Low unemployment and continued economic growth will mean that wages continue to grow.

    4. Disposable Income: See wage growth.

    5. High petrol prices: This will continue to affect outer suburbs but have next to no affect on affluent suburbs, ditto for interest rates (which will likely fall in any case).

    There is a shortage of rental accomodation, this will mean that rents keep rising and will support high property prices as will high building costs. 
     
    I have no interest in changing yourt mind on anything, I couldn't care less what you think, but please don't say that anything to do with macro economics is clear or simple, professional economists get most of their predictions wrong. There may well be a property crash, though I doubt it, but even if there is your reasoning is flawed.

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    APerry wrote:

    Ok, we'll look at your arguments one by one:

    1. Interest rates: Long term money market rates have been falling, so it is a general consensus that we are at least near the peak of the interest rate cycle. The effect of interest rates on proiperty prices is overstated in any case, only just over half the dwellings in Australia are mortgaged so there are a lot of people who are not afected at all by changes in rates.

    You seem to forget the RBA's primary tool for controling inflation is interest rates-get inflation under control then you can start to think about lowering the rates. The RBA have already come out and said that they should have put them up at the last meeting. Cant comment on your statement that only half of the dwellings are affected mortgaged-got link proof or heresay? That asside you would have to be a real fool to think that interest rates dont have a major effect of property values

    APerry wrote:
    2. Commodities Boom: The RBA expect the current high demand for commodities to continue for "some decades" so I doubt there will be any significant change in the affect this is currently having on the economy.

    So seeing in your previous statement you said interest rates have little effect on property prices I presume you must think the boom has been entirely due to the commodities boom? That asside the 'boom' has already fed the economy-it cant keep feeding it exponentially…….understand?

    APerry wrote:

    3. Wage Growth: Low unemployment and continued economic growth will mean that wages continue to grow.

    Wage growth is inflationary….but I spose you think wages will double regardless huh? Im sure you are all to familiar with the wage growth versus debt ratios?

    APerry wrote:
    4. Disposable Income: See wage growth.

      lol so then what are we worrying about-hell put petrol up to $2, double the price of houses because we will all just get wage increases!!! Just like how our wages have doubled since property prices have doubled huh?? oops ahhh maybe not…..?

    APerry wrote:
    5. High petrol prices: This will continue to affect outer suburbs but have next to no affect on affluent suburbs, ditto for interest rates (which will likely fall in any case).

     
      Try thinking outside the little square just for a teeny weeny second. Not everyone who lives in the 'burbs' works in the city, just as not everyone who lives in the city works in the burbs. But what they ALL do is consume products that CONSUME oil right from their inception, transport, packaging, delivery and consumption which will increase the price of ALL goods for EVERYONE regardless of where you live. Now I dont really need to spell out how this could effect available cash to pay a mortgage off do I?

    APerry wrote:
    There is a shortage of rental accomodation, this will mean that rents keep rising and will support high property prices as will high building costs. 

     I keep hearing this, but I am still waiting for someone to explain to me if demand is sooooooo outsripping supply then why arnt all these rentals cash flow positive???? Surely becasue demand is sooooooo large that the owners should be able to charge at least a rent that will cover their repayments??
     

    APerry wrote:
    I have no interest in changing yourt mind on anything, I couldn't care less what you think, but please don't say that anything to do with macro economics is clear or simple, professional economists get most of their predictions wrong. There may well be a property crash, though I doubt it, but even if there is your reasoning is flawed.

    You are free to think whatever you like. I will sleep confortably knowing that I can substantiate my beliefs on something other than 'hope'. Human nature is a strange thing-they have no trouble believing that prices will increase at extraodinary or unrealistic rates, but cant fathom to think they may fall. Strange dont you think? Do you think every person who has ever lost money whether it be through property in the states, the stock market or business ever thought things may go anyway but up? Nope of course not, they would have made informed judgment based decisions. And my informed decision is telling me the market is goign to be in trouble….

    Profile photo of seankseank
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    Scamp wrote:
    APerry wrote:
    "Australia doesn't have a shortage : it's got a massive oversupply."

    Absolute and utter garbage!

    http://www.smh.com.au/news/national/sydneys-vacant-buildings/2008/05/25/1211653847174.html?page=3

    there you go. 120.000 empty houses in sydney alone. That's only the known ones.

    Scamp have been spending too much time in those Holland cafes? Did you read the article properly?

    This relates to Public trustee houses, which can't be rented out and have nothing to do with the rental shortage.

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    seank wrote:

    Scamp have been spending too much time in those Holland cafes? Did you read the article properly?

    This relates to Public trustee houses, which can't be rented out and have nothing to do with the rental shortage.

    Ahhh Seank sure you read the article yourself? It isnt JUST about public trustee houses, it is also about properties that are vacant for other reasons. That asside you would also realise the article is saying "Every year about 1200 vacant houses fall into the hands of the Public Trustee" but due to red tape they cant get onto the market instantly. Also that "The number of unoccupied residential dwellings in Sydney counted by census workers in 2006 was 122,211, with the highest number found in the inner city" -not all of these were due to Trustee issues as you incorrectly pointed out. Read the article again in full maybe…

    Profile photo of Alistair PerryAlistair Perry
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    Mate, the only view I have of what is coming in terms of interest rate movements is from the money markets and professional opinions. Swap rates are lower the further out you go, this suggests that interest rates are expected to fall over the medium term. This backed up by the predictions of just about every economist i have heard speak on the subject, the consensus is that their may be one more rise but then rates will plateau and eventually fall. With regard to the percentage of dwellings that are morgaged go to http://www.abs.gov.au and do your own search. You can probably find the same statistics on the RBA web site.

    I don't understand your second point at all. Commodities will continue to fuel the economy, that is a given.

    Wages will continue to grow, they can outstrip inflation if we improve productivity. I suspect this will be the case. You don't seem to understand that income is not the only thing that allows someone to purchase a house, a lot of people have money already and asset growth (not just property prices) also assists people to afford housing. 

    A large percentage of people live near where they work or have access to public transport. Agreed, this does not include everyone, it certainly has a greater affect on people in the mortgage belts and will affect prices there, it already has. But to say this will directly affect prices in areas such as Brighton or Camberwell, or any other afluent suburbs in any city is a bit far fetched.

    Rental yields is another matter all together. If the market was purely driven by investors then you would expect that rental yields would be pretty close or in excess of interest rates, as is generally the case with commercial property. Residential proiperty prices are not driven by yield, rather the other way around, hence rents are rising rapidly to catch up with prices.

    As previously stated, your conclusion may end up being correct, though I strongly doubt it, but your arguments are both weak and confused. You can lol all you want but it doesn't make your arguments any stronger. I'm not going to continue this any longer as it only gives credence to some of the absolutely ridiculous arguments that both you and scamp seem to think are obvious truths. I've made my points, I hope some forum members have got something out of this discussion.

    Regards
    Alistair

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    blogs wrote:
    seank wrote:

    Scamp have been spending too much time in those Holland cafes? Did you read the article properly?

    This relates to Public trustee houses, which can't be rented out and have nothing to do with the rental shortage.

    Ahhh Seank sure you read the article yourself? It isnt JUST about public trustee houses, it is also about properties that are vacant for other reasons. That asside you would also realise the article is saying "Every year about 1200 vacant houses fall into the hands of the Public Trustee" but due to red tape they cant get onto the market instantly. Also that "The number of unoccupied residential dwellings in Sydney counted by census workers in 2006 was 122,211, with the highest number found in the inner city" -not all of these were due to Trustee issues as you incorrectly pointed out. Read the article again in full maybe…

    I think you have missed the original arguement point which was -there is a shortage of RENTAL  and SELLABLE properties which is driving up demand., and rentals. Scamp replied with the above article, which indicates YES there are vacant houses for various reasons, however  they can't be rented or sold,  so in reality these numbers mean nothing in relation to supply……
    If you found the proper data on rental vancanies  I'm sure it would paint a different picture….

    Profile photo of units4meunits4me
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    APerry wrote:

    Wages will continue to grow, they can outstrip inflation if we improve productivity. I suspect this will be the case.

    Wall to wall, and now federal labour  govts.

    Do you honestly believe that in this union friendly environment and with scrapping of workplace reform etc, that productivity will improve????????

    Say good bye to the low unemployment levels we've been used to.

    Profile photo of devo76devo76
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    I like this post. People are simply putting foward there thoughts on where we are heading none of which is new thinking. Some are arguing the doom and gloom. Others are arguing the sunny skies outlook. I guess you could say we are arguing over the time. Some believe its getting close to 6 O,clock on the property cycle while others think we are closer to 12.  Clearly slower times are ahead. To what extent is where most differ. I believe while we are heading for a rough patch. we are in a good position to ride it out. We will have casualties but the bad times will pass also.This is the ongoing cycle that most believe in so much. Its true as many say that the cycle may not continue next time round but people being people will make sure it does happen again. look at Frankston. Prices there have gone through the roof largly due to investers actions who believe in property as a wealth creation. Why would this change when so many also believe that a slump will end and good times will return. Things will eventually even out via price corrections and wage and rent growth. How long or extreme this is no one knows. But if you were smart and bought well selected properties  and gave yourself a good buffer with a view to long term growth. You will be OK.
    Just have a open mind to all the possible outcomes good and bad and have plans for both.

    Profile photo of Peak OilPeak Oil
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    Blah blah blah, and still no reply to Peak Oil…… you are so close to the truth but still live in denial. You are the Sheeple. Good luck poor fools.

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    The actual reason for me posting this post on this forum was to warn people about the possibility that houseprices could go down. The only way to have people read this post was to have a 'spruiker-like' title, exactly the same way the RE agents and property investors usually spruik. Ofcourse the market will crash, we all know it. What everyone also knows is that smart people , smart investors will ride it out and in the long run make money.
    The problem ( and again, that's the reason I wrote this ) is that there are so many people who cannot properly invest or do maths correctly, that it endangers both the economy and the tax-payer's money. Did you know that 30% of the australian households are in financial trouble because of their mortgage ?
    Just think about it… 1 out of 3 people in your street cannot pay their mortgage… they pay mortgage with credit cards , or non-existant (fake) equity on their property or IP.
    And that's what I want to warn people about : don't stress yourself into a situation in which you cannot possibly pay back money with.

    *EVERY DAY , 130 families file BANKRUPTCY in SYDNEY alone !!*
    *30% of the australian families are in FINANCIAL TROUBLE*

    How more obvious can I be. Just see reality, don't gamble now if you're not *ABSOLUTELY* sure you know what you're doing and that you can take the hit if things start going bad.

    Don't become 1 of those 400 daily bankrupt families…

    Profile photo of Peak OilPeak Oil
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    Scamp wrote:
    The actual reason for me posting this post on this forum was to warn people about the possibility that houseprices could go down. The only way to have people read this post was to have a 'spruiker-like' title, exactly the same way the RE agents and property investors usually spruik. Ofcourse the market will crash, we all know it. What everyone also knows is that smart people , smart investors will ride it out and in the long run make money.
    The problem ( and again, that's the reason I wrote this ) is that there are so many people who cannot properly invest or do maths correctly, that it endangers both the economy and the tax-payer's money. Did you know that 30% of the australian households are in financial trouble because of their mortgage ?
    Just think about it… 1 out of 3 people in your street cannot pay their mortgage… they pay mortgage with credit cards , or non-existant (fake) equity on their property or IP.
    And that's what I want to warn people about : don't stress yourself into a situation in which you cannot possibly pay back money with.

    *EVERY DAY , 130 families file BANKRUPTCY in SYDNEY alone !!*
    *30% of the australian families are in FINANCIAL TROUBLE*

    How more obvious can I be. Just see reality, don't gamble now if you're not *ABSOLUTELY* sure you know what you're doing and that you can take the hit if things start going bad.

    Don't become 1 of those 400 daily bankrupt families…

    WOW, your a fool. I hope for the sake of the Australian public that you are not a financial planner………

    Profile photo of devo76devo76
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    ormeau wrote:
    Blah blah blah, and still no reply to Peak Oil…… you are so close to the truth but still live in denial. You are the Sheeple. Good luck poor fools.

    I dont think anyone is in denial in regards to oil and its longevity. Its just that most dont believe the world will come to a screaching holt in the near future. You appear to be one of those people living in fear of what lay ahead. Not caution,fear. Just as war and famine etc etc dominated the polls for whats going to kill us in the past.But dont let me stop you. Start chucking statistics up now as im sure you will. Maybe its time to start building a bunker and stock it with fuel. Mad Max becomes a reality. God help us all.

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    ormeau wrote:
    WOW, your a fool. I hope for the sake of the Australian public that you are not a financial planner………

    Gee you really got him there-god knows how he could ever rubute such a witty and intelligent remark as that. The way you have justified and backed up your claim has without left scamp no option but to admit defeat and go home with his tail between his legs..

    lol you are the fool. Keep the comments coming, Ive been saving them to show my kids in years to come just how blindly ignorant people can be when overcome by greed and fear.

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    devo76 wrote:
    I dont think anyone is in denial in regards to oil and its longevity. Its just that most dont believe the world will come to a screaching holt in the near future. You appear to be one of those people living in fear of what lay ahead. Not caution,fear. Just as war and famine etc etc dominated the polls for whats going to kill us in the past.But dont let me stop you. Start chucking statistics up now as im sure you will. Maybe its time to start building a bunker and stock it with fuel. Mad Max becomes a reality. God help us all.

    I dont think ormeau is saying the world is coming to an end. My interpretation is that all you bly sky dreamers seem to blindly believe property prices will continue to sky rocket, and heaven forbid ANYONE who says property prices will fall. Yet none of you want to even consider the effect peak oil will have on the economy??? Sure it may not send us spiralling into a depresssion blah blah blah BUT is sure as hell could quite easily put us into a situation where property values will not only stagnate but will also fall.

    Why do you find it so hard to believe that people with massive mortgages (and there are lots these days-how many can afford cash for a typical $650-$700k house?) will be able to cover spiralling costs ontop of their already stretched budget??

    Try to keep it simple-house are ALREADY at record levels of unafordability, yet even when faced with spiralling inflation, fuel and food costs you think people will STILL be able to find even MORE money to support rising property prices?? It stagers beleif….where

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