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overall a big thumbs up for loss making property then. Surprising but there you have it
i would've put the second option as "in some areas - but not others" as there are markets within markets within states.
i've just bought two units on the outer fringe of the inner ring of a major city, both will be negatively geared by around $20/wk (after all costs) ... but should be positive with another 2 rent rises, and, heaven forbid if interest rates go down and/or values go up!
not a great loss maker in my opinion.
I remember the 90's well where property prices were flat or falling ......Where we are now feels very similar to me. Except yields were much higher then but so were interest rates.
On this point I do agree with you though!My opinion is the economy will have a great year in 2011 and the stock market will rise on the back of a continuing commodity boom.
My opinion is the economy will have a great year in 2011 and the stock market will rise on the back of a continuing commodity boom.
Accordingly the RBA will raise interest rates and keep the property market flat at best.
Accordingly the RBA will raise interest rates to try and stem inflation but the income effect from the booming economy will see the property market increase regardless of what the RBA does...
Cheers,
Michael
Accordingly the RBA will raise interest rates to try and stem inflation but the income effect from the booming economy will see the property market increase regardless of what the RBA does...
Tends not to happen though. If you look back through history there is no correlation between interest rate rises and house prices. In fact, prices tend to increase at the same time as interest rates are rising which makes sense as rates rise when the economy is strong and prices rise when the economy is strong.Although inflation leads to increases in incomes, this may be offset by:
- interest rate increases
- general living expense increases
What sort of answer is that? I could post: If you close your eyes and chant "its going to crash 40%" repeatedly, its a great time to be in cash. But that wouldn't make my case any more than your stupid little dittie makes yours.If you close your eyes and chant "you can never lose on property" repeatedly, its a great time to buy.
Don't quite understand this, most need to borrow & borrowers are afraid of further rate rises.Remember, interest rates only affect 1/3 of property in Australia. Total resi lending is about $1Tn of the $3.5Tn in total resi property. So, 2/3 of the property value in Australia is impervious to mortgage interest rate increases. That's not 2/3 of houses but 2/3 of value. Some individual properties will be 100% lend while others obviously zero. But the impact of interest rate increases only has an impact on 1/3 of our property by value. Another way of looking at it is that if we were all amalgamated into one super borrower then our LVR would be 30%...
Cheers,
Michael
Don't quite understand this, most need to borrow & borrowers are afraid of further rate rises.
It doesn't accurately represent how people are affected by rate rises so why bother using it?Remember, interest rates only affect 1/3 of property in Australia. Total resi lending is about $1Tn of the $3.5Tn in total resi property. So, 2/3 of the property value in Australia is impervious to mortgage interest rate increases. That's not 2/3 of houses but 2/3 of value. Some individual properties will be 100% lend while others obviously zero. But the impact of interest rate increases only has an impact on 1/3 of our property by value. Another way of looking at it is that if we were all amalgamated into one super borrower then our LVR would be 30%...
Hobo-jo, can you please explain this?Our housing is 200% more leveraged today than in the 90s.