The main point is that the vast majority of US home owners aren't on a variable rate & are therefore not affected by the ~0% US cash rate. They are mostly on 30yr fixed rates which have hardly changed. This is one of several huge differences between US & Oz.
House prices rise in 2010, unless you're Keen
- Thread starter twobobsworth
- Start date
"As prospective home buyers look for the best time to jump into the market, many of the nation’s top housing analysts have forecast modest residential price growth of about 5 or 6 per cent in 2010.
Some of Australia’s leading economists believe demand for homes will stay strong as investors and upgraders pick up the slack from first home buyers.
But a small group of doomsayers is convinced a combination of rising interest rates, the winding up of the first home owners grant boost and over-inflated prices could lay the foundations for a crash.
Most economists, industry heads and real estate agents see the sun continuing to shine on residential property next year."
Although the article clearly indicates that the majority of economists and those who ought to know believe the economy will continue to see steady growth in residential housing it appears that the majority of posters have sided with the minority of doom and gloomers. I'll keep with my glass half full attitude and go with the majority of economists this time.
Regards
Andrew
Some of Australia’s leading economists believe demand for homes will stay strong as investors and upgraders pick up the slack from first home buyers.
But a small group of doomsayers is convinced a combination of rising interest rates, the winding up of the first home owners grant boost and over-inflated prices could lay the foundations for a crash.
Most economists, industry heads and real estate agents see the sun continuing to shine on residential property next year."
Although the article clearly indicates that the majority of economists and those who ought to know believe the economy will continue to see steady growth in residential housing it appears that the majority of posters have sided with the minority of doom and gloomers. I'll keep with my glass half full attitude and go with the majority of economists this time.
Regards
Andrew
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Not at all the same thing I'm afraid.
If a person in the US fails to repay a nonrecourse loan, the lender has no recourse against him except to foreclose of the assets used to secure the loan. End of story, he can continue getting on with his life.
If a person defaults on a loan in Australia the lender takes our securing asset, sells it and if he does not get enough money to cover the loan, the lender or his insurer will come after us.
The only time the lender will not be able to chase us up is when we declare bunkrupsy. And a lot of people can't do that.
Here is a good resource to build up your knowledge.
http://www.fredappleton.com.au/
Unfortunately I think he could have still been right on in the first one, can't believe he caved so soon to be honest, I smell a rat. I still tend to go with Money Morning , Dent , The Bull and others. Rudds just postponed it and did just about the worst thing he could've enticing all the wrong people into even more debt, during financial meltdowns, what !
Time will tell I guess but just look at the charts , tis a mountain no way sustained and hasn't been before in history from what I can tell yet this one's triple the height and also 'towers' over the State's and Europe's , it just don't add up .
At first I thought Rudds interfering was a good idea but now I'm not so sure and feel more inclined that Turnbull was right and Rudds BS could have just guaranteed it.
Just one x 2 cents worth and hoping my back up strategies hold up if it comes to that, a little worried that I should be perhaps sitting on the fence for a few yrs instead right now.
Cheers
Time will tell I guess but just look at the charts , tis a mountain no way sustained and hasn't been before in history from what I can tell yet this one's triple the height and also 'towers' over the State's and Europe's , it just don't add up .
At first I thought Rudds interfering was a good idea but now I'm not so sure and feel more inclined that Turnbull was right and Rudds BS could have just guaranteed it.
Just one x 2 cents worth and hoping my back up strategies hold up if it comes to that, a little worried that I should be perhaps sitting on the fence for a few yrs instead right now.
Cheers
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This myth that in the US non-recourse loans (which are only the case in about half the states, I might add) allow people to walk away from properties with no consequences is really starting to give me the irrits.
The end result in both jurisdictions - as far as future credit opportunities are involved - are similar, if arguably worse in the US. A big default on your credit report in Australia (whether you go bankrupt or not) will seriously compromise your ability to get any credit. In the US, if you mangle your FICO score you destroy your ability to get credit and more. By way of examples, landlords can and do access the credit report of prospective tenants, prospective employers are entitled to ask for a copy, insurers often use it to set risk premiums, and it effects the upfront deposit required or whether you can get gas/electricity/telephony services.
In half the US, you can walk away from the house.
In all of the US, you can't walk away from your credit record.
Interesting article in one of Melbourne's papers today regarding debt levels.
http://www.heraldsun.com.au/money/credit-binge-sets-new-debt-record/story-e6frfh5f-1225813873280
"Economists fear 2010 could see a slowdown in Australia's anaemic economic growth, and possibly even a contraction into a dreaded "double-dip" slowdown as interest rate hikes push borrowers to the limit and slow retail spending"
http://www.heraldsun.com.au/money/credit-binge-sets-new-debt-record/story-e6frfh5f-1225813873280
"Economists fear 2010 could see a slowdown in Australia's anaemic economic growth, and possibly even a contraction into a dreaded "double-dip" slowdown as interest rate hikes push borrowers to the limit and slow retail spending"
I think the point is we as Australians have a lot more to loose if we walk away. This keeps pressure on the borrower to hold on and continue paying the debt until hopefully better times return.as far as the states go why wouldn't you walk away from a negative equity asset if they can't chase you. Not the same for us.
Exactly and here in lies my problem with the talk ups. It's not being negative it's just the real numbers and so imo it doesn't matter who's saying what or drumming up artificial business, the key at the end of the day is just in the numbers and the charts back those, they can't be good. I'm no economist, I'm not even very good at maths but much less has ruined the biggest boys on the block so.
As a matter of fact I have one property that will really give me some grief should things get ugly, so straight after Christmas I'm dressing it up as quickly as I can and shoving it out the door pronto, just in case . If things stay good no real harm done.
cheers
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Exactly, so don't get your hopes up people, property prices won't be coming down in a hurry. The only reason for increased loan defaults is higher interest rates but even those won't be going to 10% as they did a couple of years ago. Also, as interest rates go up your borrowing capacity drops so you might not qualify for a loan.
So to all the first home buyers out there who are hesitant to make a move (including my kids), here is my Xmas message.
Now that the federal gov FHB handout is gone, the best way to get your first property is by working hard and saving and then by working hard to keep it. State governments are still giving $7K, + stamp duty exemption till June 2010 so it's still more than we got when we first started.
Otherwise there is another option, you can keep on renting which is ok as well till you've saved a decent deposit but which is not a good long term strategy IMO
Wibbly Pig
Is this data for the whole of Australia and does it include all lenders?
btw, December is always a quiet month
Hi BV, I think it is data for the whole of Australia. I'm not sure whether it includes all lenders. You make a good point regarding December traditionally being a quieter month (along with January) which may account for the sharper drop off in the last month or so. Will be interesting to see the trend in a few months time. I have no doubt FHB and Upgraders will continue to taper off, but will be interesting to see if investors also continue to taper, especially with a rising interest rate environment (albeit off a very low base) and a still somewhat fragile economic recovery.
Considering investors are suppose to be ahead of the pack , then to rush in right now would be crazy so I'd be more surprised if they were buying than not.
Only reason I touch anything right now is that I only buy things I can add to in a big way anyway.
IMO sure keep building but cover the bases with heaps of addable equity or developing potential just encase. 50% min.
Cheers
Only reason I touch anything right now is that I only buy things I can add to in a big way anyway.
IMO sure keep building but cover the bases with heaps of addable equity or developing potential just encase. 50% min.
Cheers
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