Potential for growth versus crash?

Hi all,

Just pondering...if you were a betting man surely the odds would be stacked that the property bubble will pop? Thinking of the fors and against in a very simplistic manner:

For a pop:
-unsustainable levels of growth in comparisson to levels of debt and serviceability
-world economic crisis is far from over
-further debt will need to be offset by infationary measures which will be met by higher interest rates
-increasing taxes to help repay the massive government splurge

For further growth:
-limited supply of housing (a furphy imho)
-immigration

Furthers ideas please? Im trying to play devils advocate and its really hard to argue the pro property mantra with these 'considerations' staring me in the face..?
 
Maybe wait until the FHBG ends in a few weeks and hope to God that prices settle a little.
I'd love to know how $7K less cash in the hands of about 20% of the whole market (usual % of FHBs) will make a scap of difference. :rolleyes:

Sounds like a lot of people are sitting on the sides,
According to surveys done by mortgage choice, 3 out of 4 investors are waiting until the FHOBoost expires. The FHOG & stamp duty relief stays anyway.

so start praying.
While I believe prayer is always a good thing, I don't personally put all of my eggs in this basket in lieu of an investment strategy that needs to be worked thru. ;)
 
For further growth:
-limited supply of housing (a furphy imho)
-immigration

- cessation of supply
- the mother of all resources booms about to be unleashed
- cash on sidelines waiting to be invested
- existing stock at or below replacement value
 
Ah, the proverbial "where is the market heading" debate...

There are, as always, a lot of uncertain points in the current environment. Many things point to either flat or down except for two major things.

1) employment has remained high, therefore consumer confidence has stayed up there, therefore people willingness to buy
2) supply / demand is still out of whack.

Another boom? Not sure if the country has the money to sustain that, however I think that talks of 20% being wiped off the market are a bit too much really. I recall an economist saying that property was going to drop by 25% over a certain time. One of the guys from my office sent him an email saying that he would buy his property for 20% under it's current value. Didn't get a nice response :eek:

Sames rules still apply, buy value, be able to afford it and hold on.

FS
 
Hmm thanks for the replies thus far...

So let try a different angle, everything is going to be rosey, employment will remain high, economic crisis is averted and consumer confidence remains strong. So as a result we would have inflationary pressure, in combination with increased taxes-dont for a second think that at some point we arent going to have to repay the $4 bazzilion rudd splurge..


Soooo how much margin for 'error' would people have? Do you think a increase of 2% interest rates would knock the sales out, would 2% in combo with increased taxes cause a increase in defaults/supply?

Im trying to work out my next move-I want to buy another property but I have a freind who is a tax accountant and is positive we are going to cop a walloping....


Mabey another point-how much capacity would you all have for increased repayments? $300, $600 a week?
 
Look Dunno,

We were all paying 7% just 2 years ago and a couple of mine were 9% and nothing happened - values for my median priced stuff stayed the same (and in some cases went up a little). We are all swimming in cash now @ 5% rates and that is why some of us are buying in again.

Be careful who you take your advice from. Just because they are 'qualified' accountants, in the case of your friend or a "Professor" in the case of Steve Keen does not make them right about future forecasts.

Can I ask you to have a read of this thread:
http://www.somersoft.com/forums/showthread.php?t=52398
 
I'm trying to work out my next move-I want to buy another property but I have a freind who is a tax accountant and is positive we are going to cop a walloping....

I also listened to the experts in the industry many years ago and waited and waited and waited.

Ever wonder why my signature states, "Could have, should have, but didn't"? If I hadn't listened to them back then, I would have been well on my way to retirement by now.
 
Rising interest rates are always going to put the squeeze on some, while others will rejoice. We seem to have an ever increasing level of debt, which means that as time moves on, each change in interest rates has a more leveraged effect. Taxes will have to rise, or spending will have to fall, and that is going to pinch some of the gloss from tomorrows good story. However, putting things into perspective, our past fiscal policy was somewhat optimistic. When times are good, taxes should increase to keep a lid on things, and when times are bad, the government should use the money it has stored up to keep things bubling along. Kinda doing things in the wrong order now, as the country doesn't have the savings to pay for what we just did. But I digress...

I had a client once that would not buy a property, not matter how much we talked about it - he was always waiting. We're talking back in the 90's, so imagine what he's missed out on. He was part of the "I'll wait until after the olympics" crew - whoops! If you're buying something you think people can afford today, and can still afford tomorrow, you've got a good market and generally speaking, you're not going to get too whollopped. But investing has risks, if you don't want any, get out of the pool and sit and watch everyone else have fun.

As Propertunity, we were all paying a lot more not that long ago, and generally speaking, most people did ok.

I tend to carry so, so I'll get off my little box now :p
 
- cessation of supply
- the mother of all resources booms about to be unleashed
- cash on sidelines waiting to be invested
- existing stock at or below replacement value

i think the market is too broard of term as it has been proven over and over that there are many markets in this great country of ours.
However in saying that l think there will be a steady as she goes approach for the next 12 to 18 months, then a bit of a frenzie of buyers. "here we go again"

Now Ausprop you have mentioned this "mother of all resources boom" a couple of times of late, can you direct me to the thread or other info that is pointing to this boom. I am really interested in it.
cheers
yadreamin
 
Im trying to work out my next move-I want to buy another property but I have a freind who is a tax accountant and is positive we are going to cop a walloping....

Not trying to be rude here, but what would a tax accountant know about property investing?

I have a number of friends who are accountants (I used to work at PricewaterhouseCoopers), and despite some of them having 10+ years of experience in their chosen field, they really don't know very much aboout property investing (except that "you have to be negatively geared"). That said, none of them are what I would call wealthy, either, despite having 6 figure incomes, although they mostly drive very nice cars ("because you need to salary sacrifice a new car every 3 years to save tax").
 
Not trying to be rude here, but what would a tax accountant know about property investing?

I have a number of friends who are accountants (I used to work at PricewaterhouseCoopers), and despite some of them having 10+ years of experience in their chosen field, they really don't know very much aboout property investing (except that "you have to be negatively geared"). That said, none of them are what I would call wealthy, either, despite having 6 figure incomes, although they mostly drive very nice cars ("because you need to salary sacrifice a new car every 3 years to save tax").

Unless the Tax Accountant is a Property Investor: Not much.

Property Bubble? What property bubble.......the time for a "burst" has been and passed.

Regards JO
 
Now Ausprop you have mentioned this "mother of all resources boom" a couple of times of late, can you direct me to the thread or other info that is pointing to this boom. I am really interested in it.
cheers
yadreamin

no one specific information source. we had quite a discussion under the Gorgon thread. The $300bn gorgon project, with Pluto vying for number 1 spot, oakajee, the $23bn out at olympic, the gas projects in Qld, uranium opening up in WA...it's going to be a great time to be in this country. Check out the listings in karratha - everything has pretty much cleared out in the last 2 weeks. i spoke to an agent yesterday and he said he has run out of listings. Barnett is talking of skills shortages - trouble is I think the labor market is close to the margin now, I think it will be extreme next time round. It will cause a lot of problems however it will result in either immigration else contracts will be tendered offshore. There will be a lot of upside but there will be challenges with it. IRs is one - trying to cool the run away parts of the economy without killing the other sectors. The $ will go nuts as a consequence.
 
Thanks Ausprop,
l have been following the Gorgon thread.
Its just hard to keep up with this state at times
gold,gas diamonds,ore, coal, uranuim, pearls, nickle, it just goes on and on:D
cheers
yadreamin
 
Dunno:
Furthers ideas please? Im trying to play devils advocate and its really hard to argue the pro property mantra with these 'considerations' staring me in the face..?

Weeell, everyone has different wants, needs, vision, SANF, strategy etc.

For us it's a no brainer.

Property investing and a little developing is setting us up (financially) for life.

Yes it's probably a risk, I am a risk taker.

The option, old age pension is something that is not on my radar.

So far, so good, the last 12 months has been some great acquistions in land and properties, (by us), now I'm building upon those "buying wells".

For us, it's all good.

And fun.
 
I had a client once that would not buy a property, not matter how much we talked about it - he was always waiting. We're talking back in the 90's, so imagine what he's missed out on. He was part of the "I'll wait until after the olympics" crew - whoops! If you're buying something you think people can afford today, and can still afford tomorrow, you've got a good market and generally speaking, you're not going to get too whollopped. But investing has risks, if you don't want any, get out of the pool and sit and watch everyone else have fun.

So true.

We have a friend (not a friend - a work colleague of the wife) who is a total yuppie snob in every sense - schools, post code address, clothing (especially her kids), which car type etc.

Loves to drop little hints about all of the above - a total pain in the @rse.

My wife is the total opposite and down-to-earth (one of the reasons I love her), but a few select acquaintances know of what we have done and do in property investing etc. The snob has managed to find out and is often piping in about property.

This snob is always "waiting for the market to do X, or the rates to do Y before we buy" as if they are far more knowledgeable than all of us and know when the time is right, and has been doing so for the 10 years that I have had the displeasure of knowing her.

Still has bought zero....
 
I'd love to know how $7K less cash in the hands of about 20% of the whole market (usual % of FHBs) will make a scap of difference. :rolleyes:


So Propertunity, then you could conclude that the FHOG grant has not made any difference to the current housing boom then by that argument? i.e. the existing FHOG has made no difference to anything?

Tim
 
So Propertunity, then you could conclude that the FHOG grant has not made any difference to the current housing boom then by that argument? i.e. the existing FHOG has made no difference to anything? Tim

No Tim. To use an analogy, I think the FHOG & Boost is the match that lit the fuse and got some action started. The match is slowing burning down now but the fire is well underway and does not need anymore matches to keep it going.

Meanwhile Glen Stevens is sitting in his fire-truck threatening to pour water on it.
 
We have a friend (not a friend - a work colleague of the wife) who is a total yuppie snob in every sense - schools, post code address, clothing (especially her kids), which car type etc.
Loves to drop little hints about all of the above - a total pain in the @rse.
This snob is always "waiting for the market to do X, or the rates to do Y before we buy" as if they are far more knowledgeable than all of us and know when the time is right, and has been doing so for the 10 years that I have had the displeasure of knowing her. Still has bought zero....

Ahhhh, I love these types!! They ad lots of fun to my life.
Even thou I rarely converse with them these days.
And maybe they don't converse with me as they probably think I'm a hobo not an investor.
I'm starting to miss those convos, better dress up and go out today and seek out some "expert" advice.
Should I tell'em the Merc was a prize I won?:confused:
Or maybe I won lotto and blew it all on the Merc, that should get the convo going. :)
 
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