maybe that's what it was - as i 19 year old i didn't really take much interest but thought it was called something like "stamp duty (something)". those were the days when one spent their entire lunchtime standing in the bank queue waiting to put a cheque into the mortgage account.
Huge article from Steve Keen on why prices are going to crash
- Thread starter Peter 14.7
- Start date
maybe that's what it was - as i 19 year old i didn't really take much interest but thought it was called something like "stamp duty (something)". those were the days when one spent their entire lunchtime standing in the bank queue waiting to put a cheque into the mortgage account.
Huge Keen article about the coming housing crash and the best you guys can do is pick apart the date he used for the introduction of the FHBG? 
While I make a joke of it, the sentiment really is changing on SS, for the better IMO, I don't think dumping all property is a good idea, but do think a correction is coming. It got a bit sickening coming onto the forums and seeing advise to leverage every asset you have down to the lint in your pocket to get into the market, that's about as dangerous a move as you're gunna get in this market, time to be paying down debt, dropping the low yield properties from the portfolio and general tightening up in my opinion.
We may not see a correction the size of Keen's expectations, but I don't think the next few years are going to be good ones for Australian property.
While I make a joke of it, the sentiment really is changing on SS, for the better IMO, I don't think dumping all property is a good idea, but do think a correction is coming. It got a bit sickening coming onto the forums and seeing advise to leverage every asset you have down to the lint in your pocket to get into the market, that's about as dangerous a move as you're gunna get in this market, time to be paying down debt, dropping the low yield properties from the portfolio and general tightening up in my opinion.
We may not see a correction the size of Keen's expectations, but I don't think the next few years are going to be good ones for Australian property.
The article would have benefited from some judicious trimming. It could be summarised as:
- High house prices are a consequence of high levels of personal debt.
- There is a strong correlation between high debt levels and recessions. Australia's are now at a record high.
- The FHB boost and record low interest rates encouraged buyers into a market that had started to fall, and caused a mini boom. And that's why Keen thinks he's going hiking.
- The removal of the boost and the rise in interest rates means that there's less money to support the market. This won't end well.
EvanD got it WRONG he missed the boat in 2009, missed out on 30-40% growth, while some want to analysis it to death, other's will jump and make money that is reality.
Reports on what may, should, could happen are irrelevant, look at what is happening in Australia NOW, in some States we are in the early cycle of upswing with Melb leading the way. You don't need to agree with me or EvanD we just have opinions, and they are like belly buttons everyone has one. Look at the figures and sales stats its in black and white not an opinon, these are facts.
Oh well, history repeating itself, same old same, some will not jump into the market until they are convinced it is actually a boom and then purchase at the peak losing money.
Cheers, MTR
Reports on what may, should, could happen are irrelevant, look at what is happening in Australia NOW, in some States we are in the early cycle of upswing with Melb leading the way. You don't need to agree with me or EvanD we just have opinions, and they are like belly buttons everyone has one. Look at the figures and sales stats its in black and white not an opinon, these are facts.
Oh well, history repeating itself, same old same, some will not jump into the market until they are convinced it is actually a boom and then purchase at the peak losing money.
Cheers, MTR
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actually i feel its a good read.
Why? because its good to get a feel for the risk.
Maybe i have just been lucky but i never got caught up in the
*asian economic crisis
*the tech boom and bust
*US housing and finance boom
*Global meltdown in equities in 2008/09
And i dont plan to start now.
Mc Knights comments on the GFC could easily apply to australian property owners is they dont account adequately for risk.
I am not saying sell and run to the hills. I am emphasising that one look at their personal situation and the increased risk caused by property prices rising rapidly.
I would agree with this statement if you where buying a liquid asset with sufficient transactional volume.
BUT PROPERTY IS NOT LIQUID.
You cant apply a stop loss, like you would if you where trading a position in shares.
Why is liquidty important?
because if the winds change or your circumstances change you cant exit the investment as easily.
When you say look at the stats you are effectively doing a momentum trade.
The trend is up so go with the flow.
Again this type of logic is only suitable for investing in liquid assets where the position can be exited efficiently and with low cost.
I am not commenting on the intrinsic value of the residential property market here, only what i believe to be to be a very risky thought process that has no place in property investing.
Evand missed 30-40%...!!! Come on now, that's an exageration isn't it? What property market has done that?
I bought a unit in Mortdale Sydney in November 2008. I'd reckon prices are exactly the same now as then, although there is one big difference. On 'realestate.com' there is now just 4 pages of forsales, but 16 months ago there was 15 or 20.
See ya's.
Funny thing is, Keens predictions of armegedon in Australia's property market, and the media circus that followed, probably had a big influence on the RBA slashing interest rates, and also encouraged little Gough into bringing in the FHO boost and other stimulous. In a small way Keen really helped housing not to crash.
See ya's.
Finance figures right down, owner occupied numbers down, investor numbers steady (but increasing as a percentage due to drop in other areas), listings are right up, national auction clearance rates are down, interest rates are up...we've seen a bounce from the shocking figures in January into February, but even Feb figures aren't looking that good. Yes Melbourne is still looking pretty hot, but that will change.
Please provide:
- The specific states you were referring to when you said "some" were in early stages of upswing
- Links to the facts (figures and sales) that you are looking at "in black and white", besides Melbourne's
I am also open to Keen's view. I somehow don't think Aus property could drop 40% while supply is so tight, but as I am looking now, I am emotionally prepared for a 20-25% drop at some stage in the next 10 years.
Ultimately, property prices are a function of credit cost and wages, despite supply.
And when you consider it has taken the RBA 8 years to finally realize rising house prices are a drag on the economy, and they along with every other central bank had no idea a GFC was a risk, I am glad there's a Keen around to counter their wisdom.
Even though Keen says he's not an Austrian school economist, a lot of his stance re housing fits with it. And the Austrians make a lot of sense to me.
Ultimately, property prices are a function of credit cost and wages, despite supply.
And when you consider it has taken the RBA 8 years to finally realize rising house prices are a drag on the economy, and they along with every other central bank had no idea a GFC was a risk, I am glad there's a Keen around to counter their wisdom.
Even though Keen says he's not an Austrian school economist, a lot of his stance re housing fits with it. And the Austrians make a lot of sense to me.
It's possible to have a small correction after the combined 20-25% increase of 2009-2010 but is unlikely due to the shortage of housing and the low interest rates.
Although from now on there will be lesser number of buyers, there is no reason for vendors to lower their prices because the few listed properties will sell.
They might not sell the same day but they will sell to those who can afford the higher property prices and the higher interest rates.
IMHO
Hi topcropper
my purchases in Melb have achieved this. Broadmeadows, development sites.
I purchased a couple side by side for $597K, was offered $800K yesterday by a developer but will not be accepting this as I know I can achieve about $960K. Purchased last August 2009. It's actually not on the market yet, waiting for DA.
Another purchase $305K is now worth $440K, purchased in April 2009.
Another purchase $365K purchased September 2009 worth $440K.
Another purchase Coburg purchase 2007 period home $500K now worth $720K
Check out the stats on various areas.
Just starting out in Syd, settling tomorrow $315K am told it may be worth around $360K now only because I have increased income from $350pw to $550pw.
If you research some of the areas I mentioned or contact RE agents who have figures at their finger tips you can confirm.
I am not great with figures, but I would say these results add up to a strong rising property market.
Cheers, Marisa
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Great stuff then.
But, surely this is a result of great buying by yourself. Purchased half a year ago..?? A bit like what Dazz did 4 or 5 years ago with his commercial. Like what Nathan is doing, or Rob Williams. If those figures your saying over just 6 months are correct, you obviously can see what others can't. I'd say you should make it your business then. It doesn't mean that property has gone up 30 or 40% though, because it simply hasn't.
See ya's.
Hi Evand.
From my own personal experience investing in Melb property market and jumping in at the early stages of a rising market.
I have mentioned some examples, there have also been many posts on this forum confirming growth well above the norm by locals.
We may have to agree to disagree on that one.
Cheers, MTR
A pundit on the ABC pointed out yesterday that Australian banks are fast approaching a trillion dollars in mortage commitments which is funded by a giant amount of overseas borrowings. The reporter concerned was making parallels to 'all the other RE bubbles' in the world and giving credence to the 20-25% drop - if not more.
With this type of exposure to overseas funding I think we're in a perilous position. With everyone feeling 'rich' with their very valuable houses and the whistling wind of a close miss GFC a distant memory, caution is advised in my humble opinion. The tumble in the top end in 2008 will be exceeded next time and all those upgraders with increased mortages will be under water for about 10 years if our history, and other country's, is repeated.
The recent barely published reference by China to a possible W shaped recovery is worth taking on board I'd say. Granted you can't believe the official statements - and it may be a commodities bargaining ploy - but!
I read a lovely quote yesterday from Seinfeld 'The road less travelled is often that way for a reason', but at this juncture I think the wise will be planning for a positive cash flow even after the RBA is fighting inflation with interest rates and re-sale values are down by a third and the country is in unemployment stress. Personally my plans are for a 90's scenario, and I just hope it's not a 70's scenario. We are too populous and selfish to cope with too much hardship these days.
With this type of exposure to overseas funding I think we're in a perilous position. With everyone feeling 'rich' with their very valuable houses and the whistling wind of a close miss GFC a distant memory, caution is advised in my humble opinion. The tumble in the top end in 2008 will be exceeded next time and all those upgraders with increased mortages will be under water for about 10 years if our history, and other country's, is repeated.
The recent barely published reference by China to a possible W shaped recovery is worth taking on board I'd say. Granted you can't believe the official statements - and it may be a commodities bargaining ploy - but!
I read a lovely quote yesterday from Seinfeld 'The road less travelled is often that way for a reason', but at this juncture I think the wise will be planning for a positive cash flow even after the RBA is fighting inflation with interest rates and re-sale values are down by a third and the country is in unemployment stress. Personally my plans are for a 90's scenario, and I just hope it's not a 70's scenario. We are too populous and selfish to cope with too much hardship these days.
YES well done, i agree with Top Cropper it was your ability to spot a 'sweet' deal that has created the performance figures you achieved.
The danger is when you try to extrapolate that over the broader market.
Hi topcropper,
Thanks.
This is my business I gave up my day job 4 years ago, and I am your average Jill.
I just see opportunities and I jump at it. I see the same in Syd now.
Various areas in Melb have actually gone up 30-40%, these are areas where developers are jumping in and pushing prices up due to scarcity of land.
It is only when you start looking closely do you actually realise it is happening.
Cheers, MTR
I don't believe it is rocket science but you do need to understand cycles and not get caught up with the noise. Easiest way to make money is to purchase in the early stages of a rising market.
Sweet deals are out there all the time but if you don't believe it you wont find them.
Have a read of "Grow Rich with the Property Cycle", Kieran Trass.
I just love this book.
Cheers, MTR
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