Fiscal trogolytes and property values

[Bill.L]

Hi all,

Why all the fascination with a metal?? The world is off the gold standard and there is no reason to return to it anymore than copper, silver, diamonds or barrels of oil. For that matter, paper or numbers on a computer screen are just as good, which is where we are currently at.

Currencies collapsing would be inflationary. Owning properties with debt and fixing interest rates when low would be the smartest thing to do in such a situation. If we continue to have asset deflation, without rent deflation, then + cashflow properties are money for jam. Again a positive for property.

NR, your arguments are positive for property whichever scenario plays out, baring financial armageddon, in which case it would not matter what you did, we would all be history anyway.

bye

 

[nonrecourse]

You know what. For as long as i can remember the majority of the Australian car enthusiasts have been split two ways. HOLDEN and FORD.At any event they are out there showing there colours of red or blue even showing a bit of hatred for the other at times.

But if you go the there forums you generally see the Ford lovers stick to Ford and Holden lovers stick to Holden. Even the so called red neck car hoons of Australia have the decency to stick to where there loyalties or beliefs lie.

Yet here you are time after time with the same stuff over and over.Post it where it is wanted not here.Yes we do want to hear about all sides of investing both good and bad but give it a break. Even the rednecks dont go this far.


NOTE TO THE MODERATORS

Maybe it would be worth opening a thread dedicated to the risks of investing so the children have somewhere safe to play

Devo
There is an ignore facility on this site that allows you not to see my posts. I suggest you use it.

 

[Aaron Sice]

Hi Chilli;
Because like some people governments like to spend more than they earn. When one credit card is maxed they move onto the next line of credit.
Good example is the current federal government. Lets see how long it takes them to squander the future fund.

i worry as well.

the trouble is - our public funding system doesn't reward fiscal reponsibility.

a govt contract won't be renewed for the same amount year after year, unless it can be proved they need it.

so, it's spent to guarantee equal or higher funding next year.

spent on stupid things like re-kerbing, weed spraying footpaths etc all on the busiest roads possible to hire lollipop crews to redirect traffic with big signs and huge labour content to effectively waste money.

only public servants are getting average 90% LVR loans now - because the funding is still flowing.

 

[Aaron Sice]

You know what. For as long as i can remember the majority of the Australian car enthusiasts have been split two ways. HOLDEN and FORD.At any event they are out there showing there colours of red or blue even showing a bit of hatred for the other at times.

But if you go the there forums you generally see the Ford lovers stick to Ford and Holden lovers stick to Holden. Even the so called red neck car hoons of Australia have the decency to stick to where there loyalties or beliefs lie.

Yet here you are time after time with the same stuff over and over.Post it where it is wanted not here.Yes we do want to hear about all sides of investing both good and bad but give it a break. Even the rednecks dont go this far.


NOTE TO THE MODERATORS

Maybe it would be worth opening a thread dedicated to the risks of investing so the children have somewhere safe to play

maybe we could Liechtenstein's results of their recent internal shake up jut to add some more useless info to the fire.

 

[nonrecourse]

Here is something else that points to property prices correcting up to 50%

http://business.theage.com.au/business/dont-mention-the-debt-20090219-8c6e.html?page=-1

In other words a lot of the current account debt gets back to inflated property values that are funded by borrowings overseas

Just Inflating house prices

Beavan believes that if all that debt were stripped away, irrespective of land shortages, property prices would be half to two-thirds of what they are today. ''If homebuyers don't have money on loan from the banks, then they could not afford to pay the higher housing price - so the price would have to fall or the market would stagnate''.

''Why did we not index the rate of debt growth (15% per annum compounding for the last 12 years straight) to that of the country's economic growth (less than 3% when the debt is stripped out)? Surely a lending system predicated on genuine national economic growth would be a far more practical solution?''

If governments had constrained debt growth, bank profits could not have kept growing at 15% a year. Or executive salaries at 30% for that matter. (Not to mention state stamp duty revenues.)
another source on the possiblity of residential house prices tumbling 50%

 

[keithj]

Here is something else that points to property prices correcting up to 50%

You just never give up do you NR.... you've clearly represented yourself as not having a single original thought in your head, and have to resort to quoting nursery rhymes & D&Gers........ yes the last couple of paras of that article gives quotes from a certain Mr Keen...... 'nuff said.

Beavan believes that if all that debt were stripped away, irrespective of land shortages, property prices would be half to two-thirds of what they are today.

That's a pretty dumb thing to quote..... it's roughly equivalent to saying 'if all that oxygen in the atmosphere was stripped away then we'd all die......' possibly accurate, but not a likely scenario.

 

[yorke]

Hmmm if the sky is falling I guess we should all be ditching our houses and living in caves?

Wouldn't that cause a pent up demand in caves and make them unaffordable to the average "trogolyte" ?

 

[ffc1883_1996]

No. The average "trogolyte" could still afford a cave but it would be a little further away from the CBD or the beach than their parents'.

 

[Aaron Sice]

Here is something else that points to property prices correcting up to 50%

http://business.theage.com.au/business/dont-mention-the-debt-20090219-8c6e.html?page=-1

In other words a lot of the current account debt gets back to inflated property values that are funded by borrowings overseas

Just Inflating house prices

Beavan believes that if all that debt were stripped away, irrespective of land shortages, property prices would be half to two-thirds of what they are today. ''If homebuyers don't have money on loan from the banks, then they could not afford to pay the higher housing price - so the price would have to fall or the market would stagnate''.

''Why did we not index the rate of debt growth (15% per annum compounding for the last 12 years straight) to that of the country's economic growth (less than 3% when the debt is stripped out)? Surely a lending system predicated on genuine national economic growth would be a far more practical solution?''

If governments had constrained debt growth, bank profits could not have kept growing at 15% a year. Or executive salaries at 30% for that matter. (Not to mention state stamp duty revenues.)
another source on the possiblity of residential house prices tumbling 50%

just because someone has a more practical solution to a situation, doesn't mean that anyone wil take any notice of it, or that the said effects are guaranteed to happen.

also notes in there that property pcies could fall by 33% TO 50% - not 50% alone.

also says the market could stagnate OR fall.

gee - covering all bases aren't we?

 

[topcropper]

gee - covering all bases aren't we?

Have to admit though, that article,....

http://business.theage.com.au/busine...e.html?page=-1

.........is a bit frightening. It highlights something I've mentioned a few times. Australia's current account deficite is going to blow skywards in the next few years.

We were importing more than we exported almost right through the commodity bubble, now what happens after our export income is slashed?

See ya's.

 

[wylie]

No. The average "trogolyte" could still afford a cave but it would be a little further away from the CBD or the beach than their parents'.

That's funny right there

 

[steveadl]

''If homebuyers don't have money on loan from the banks, then they could not afford to pay the higher housing price - so the price would have to fall or the market would stagnate''.

That would have to be one of the dumbest statements I've ever heard.

Yes and if car buyers couldn't get car loans, there would only be half as many cars in the world today.

What's his point??! Debt exists. Need to find better articles NR!

Add: In fact if "homebuyers didn't have money on loan from banks", then VERY few people in any country anywhere would actually own property, short of saving 100% of the cost of a house before finally buying one. Geez, this guy's a real genius!

 

[sparky23]

Wouldn't that cause a pent up demand in caves and make them unaffordable to the average "trogolyte" ?

Well then I guess us smart cookies in the know best start buying up immediately then we can rent them out to the neanderthals!

I think they know who they are!

 

[yorke]

No. The average "trogolyte" could still afford a cave but it would be a little further away from the CBD or the beach than their parents'.

Good point, according to the ABS figures there is a plentiful supply of affordable caves along the Nullarbor.

 

[keithj]

Have to admit though, that article,....

http://business.theage.com.au/busine...e.html?page=-1

.........is a bit frightening.

There are thousands are scary scenarios out there that could come about.

Here's one I read this morning... Nations on the brink.

markets now appear to be factoring in the possibility that certain national governments in Europe may simply default on their debt.

And these aren't tin-pot states, they're talking about Spain, Ireland, Greece, Portugal and Italy.

The likelihood of any of the doomsday scenarios occurring has probably increased from 0.0001% 2 yrs ago to 0.01% today - a hundredfold increase... but still not a v. likely scenario.

We were importing more than we exported almost right through the commodity bubble, now what happens after our export income is slashed?

According to RBA Govenor Stevens today

Terms of trade (value of exports over imports): rose by 65% over five years but estimated to fall by up to 20% during the next year. That, however, would still leave them at a historically high level.

 

[Aaron Sice]

Good point, according to the ABS figures there is a plentiful supply of affordable caves along the Nullarbor.

i'm sure there's a wiki link citing credible sales evidence too...

 

[BoatBoy]

i'm sure there's a wiki link citing credible sales evidence too...

If not, just make one up and add it to wiki yourself

Easily done, history gets changed regularly in there.

http://en.wikipedia.org/wiki/Tips_on_contributing_to_Wikipedia

You do not have to log in even to edit articles on Wikipedia. Just about anyone can edit almost any article at any given time, even without logging in. However, creating an account is quick and free and provides several benefits, as listed at Wikipedia:Why create an account?.

Dave

 

[yorke]

Just Inflating house prices

Beavan believes that if all that debt were stripped away, irrespective of land shortages, property prices would be half to two-thirds of what they are today. ''If homebuyers don't have money on loan from the banks, then they could not afford to pay the higher housing price - so the price would have to fall or the market would stagnate''.

If home buyers don't have money on loan from the banks they couldn't afford to build new homes so they would have to rent, which would put more pressure on rents, which would push up the yield, which would push up existing home prices, which would make them really unaffordable to the average person. If you think that house prices are currently unaffordable and sharing your parents house is bad imagine if your parents could only afford a 1 br flat and you having to share that with them because rents would be unaffordable. That's the scenario you would have if the banks didn't lend to home buyers.
Unless you have an oversupply of properties and a declining population, or believe in Tooth Fairies like Bevan does.

 

[Token Funder]

What's his point??! Debt exists. Need to find better articles NR!

I think you're missing the point. The point is whether the growth in housing debt that has enabled historical house price growth will continue at similar levels and at comparable terms in the future.

There will be debt.

It's just a question of will there be enough.

 

[see_change]

No. The average "trogolyte" could still afford a cave but it would be a little further away from the CBD or the beach than their parents'.

I've got a better idea .

I could Build my own cave !!!!

I could get some land . Now I'd just have to get building permission from the local council. Hopefully all the guidlines / restrictions that apply to houses don't apply to cave.

Maybe I don't need permission . Plenty of people used to live in caves without planning permission.

mmmmm , just though of the perfect place .

Caves beach hear I come

Long live troglodytes . NR , thanks for the idea.

Cliff