More bad news on sydney market

[House_Keeper]

even more bad new in today's syndey herald.

Property rocket ride is over - enter the bargain hunters

http://www.smh.com.au/news/national/property-rocket-ride-is-over/2005/12/02/1133422108583.html

Keep it coming!

The market might become good value in a few years...

Cheers,

 

[Bargain Hunter]

I have a couple of theories regards mortgagee sales.

1. Borrowing too much in the first place. They were only fooling themselves they could afford to buy.

2. People get caught up in th 'equity mate' scenario and then find themselves in trouble.

3. Life circumstances (underlying at all times, death, divorce, loss of job).

People who find themselves in situations 1 & 2 try to avoid the reality and delay putting the property on the market.

By the time they list they are desperate to sell, and don't have the time for an extended campaign.

With the market falling they are unable to get the price they need (a rising market can cover up their ineptitude).

They're unable to sell or make their payments and the mortgagee moves in.

We have bought a couple of properties at mortgagee, and we have seen properties passed in at prices in excess of their estimated value (probably due to 'equity mate').

It is impossible to avoid life's circumstances. And it is sad when you have to sell because of these reasons (we have been there).

However when I read these articles and hear people blame the banks because they were able to borrow for a holiday and now the holiday is over; well, it makes me mad.

Regards


Andrew

 

[quoll]

equity mate

In my opinion it was the banks equity mate marketing that has fueled the retail spend for the last 5 years. Everyone I talk to now is telling me about the retail spend downturn. Some retailers are down 40% on last years sales. Thats huge.

Will have to put up with a few more years of down before things get better.

cheers
quoll

 

[Panic]

Because Australia's population density is too great! Hey - hang on a minute...

In all seriousness, the fact that our repayments are higher as a percent of net income may be an indicator of a market that should drop, but it may mean another factor at play. I suspect both. The 'other factor at play' is Australia's negatively gearing rules, housing depreciation rules and it's inter-relation with Australia's fairly high income tax levels. What you then have are lots of people trying to reduce their tax bill through residential property speculation - "I know the yield is 3% but prices have doubled in the past 4 years so surely they will double again in the next 4 years!"

Does anyone know if any other country in the developed world has such thing as NG?
If the government really wants to improve the afordability, then logical move would be to phase out NG and to introduce tax concessions for home owners.

Abt the " I know the yield is 3% but prices have doubled in the past 4 years so surely they will double again in the next 4 years!" phrase I recently found one that I liked a lot:
"What history teaches us is that history does not teach us anything"

Thx
V

 

[see_change]

phrase I recently found one that I liked a lot:
"What history teaches us is that history does not teach us anything"

Thx
V

I'd always thought that was a Winston Churchill quote ( though he does have some nice quotes about history ) . Seems not. Found three alterantives.

The only thing we learn from history is that we do not learn.
-- Earl Warren


That men do not learn very much from history is the most important of all
the lessons that history has to teach.
-- Aldous Huxley


We learn from history that we do not learn from history.
-- Georg Hegel

See Change

 

[geoffw]

Found three alterantives.

Ah. That must be an alterantive spelling

 

[kaf]

Hi Panic

Does anyone know if any other country in the developed world has such thing as NG?
V

I know that Germany for example has no CG tax for houses kept for more than a number of years (I think it might be something like 10 years, not sure about the NG situation). But then Germany's residential property has been growing just ahead of inflation in a steady manner for ages (no real cycles and I still don't really understand why this is) so investors buy for rental yield and most rental properties are held by large companies. Social housing is huge so that’s another (positive) pressure on the investment market removed. Germany has a much lower percentage of home ownership than Australia so many people don't ever buy because affordability is low and because renting for life is an accepted option.

I'm a bit surprised about the 15% of salary figure for mortgage mentioned before (because houses are so expensive). However the banking system is very old-fashioned and it’s impossible to up your payments so people do take 30 years to pay off their home (on relatively low interest rates). Also, salaries are high but people pay high taxes, health insurance, all sorts of other contributions and costs like water, electricity, heating and petrol (~AU$ 2.20 per liter last I remember) are incredibly expensive so this represents a large part of the average German household bill (I still have to laugh when I get my electricity bill here at the end of ‘winter’…).

So it’s quite difficult to compare countries because so many other factors come in.

I think the issue of social housing and NG is a strong one: as long as the government here doesn’t make any noises about their serious investment in social housing (and I’m sure they don’t want to go there!!) they can’t afford to get rid of NG in the long term since they need investors to provide the rental stock.

Cheers

kaf

 

[RichardC]

Does anyone know if any other country in the developed world has such thing as NG?

To the best of my knowledge the US allows home owners to deduct their interest payments from taxable income. Now THAT would be far more widespread than -ve gearing allowed here.

And don't forget that FHOG was a CORE promise from the lying rodent to get that mongrel tax past the Dem's.

So if you are laying blame for for overpriced r/e, don't blame the gov.

 

[MichaelW]

More doom and gloom for Sydney...

http://finance.news.com.au/story/0,10166,17497116-462,00.html

Basically, expect the property bear market to persist longer than you might think. 5 years is the number touted here. And, makes the case that yields without CG make Sydney property a bad investment at the moment.

Cheers,
Michael.

 

[see_change]

More doom and gloom for Sydney...

http://finance.news.com.au/story/0,10166,17497116-462,00.html

Basically, expect the property bear market to persist longer than you might think. 5 years is the number touted here. And, makes the case that yields without CG make Sydney property a bad investment at the moment.

Cheers,
Michael.

Not saying I disagree with the conclusion ( at least I know I don't know...) but for those who are discerning aren't Fat Prophets a share recommending company .

Personally , the more doom and gloom stories I hear the better

See Change

 

[MichaelW]

Personally , the more doom and gloom stories I hear the better

Cliff,

I agree. 5 years would see me having paid off my PPOR and built a rather sizeable war chest ready for deposits when the Sydney property market crawls back into life. You better PM me your contact details so I can give you a call and wake you up when this happens!

Cheers,
Michael.