scaremongering!
- Thread starter arriety
- Start date
Also I like how in one breath he says that investors will dump their properties, then next breath tells people to sell their houses and rent.
So if people rush sell, then it will drive prices down. Prices going down will then also cause investors to rush sell. So if everyone is sellinig their ppor's and their rental properties, where are we all going to live, tent city?
So if people rush sell, then it will drive prices down. Prices going down will then also cause investors to rush sell. So if everyone is sellinig their ppor's and their rental properties, where are we all going to live, tent city?
Does that also include articles spruiking properties to rise 30% in the next couple of years in the boom times?
Yes, I feel articles like this serve only to de value my property portfolio and should not be allowed. Only articles with a positive spin should be allowed - ones that re assure me that prices double every 7 years.
Insert sarcasm emoticon
I feel a little stressed when I read these articles.
But then I sit down and think of the fundamentals.
The US property market is a shambles.
About 10 years ago, Congress demanded that banks borrow money to the NINJA's. That's to people with: No Income. No Jobs and no Assets.
So they did. With honeymoon rates to boot.
Then came the sub-prime crisis.
Then the Global Financial Crisis.
Then the honeymoon was over.
Interest rates to mortgages went back up to normal levels and people hit the wall.
In the US of A. If you dont' want the house anymore, you simply send the keys back to the bank and walk away. The bank is powerless to do anything about it. Thats the law.
Today.The US sub-prime crisis is over.
Many Americans can afford to pay their mortgage but choose not to.
Why???
It is estimated that 23% to 28% of all properties in the USA that have a mortgage are in negative equity territory.
It takes approx 17 months for the bank to kick out the non-paying home owners. So the homeowner lives rent/mortgage free for 17 months. Some economists have stated this behaviour has actually helped the USA avoid a double dip recession since these non-paying home owners are spending their mortgage money in the retail/service sector thus stimulating the economy!!!!!!
Another reason so many Americans are underwater with their mortgages:
I read in one economic report stating there was a massive campaign by the banks back in early 2000's. They encouraged home owners to come in and unlock the equity in their houses. Push out their mortgage by $50K to $100K based on the theory that property values would go up soon and this equity would be replaced. Economists state this avoided a USA recession then as millions of home owners took out this equity and stimulated the economy. Of course, when the GFC hit and house prices tanked, many properties went into negative equity.
I remember in Australia banks doing this advertising campaign with Greg Chappell (cricketer) encouraging Australians to unlock the equity in their homes and spend the money to improve their quality of life.
Greg Chappell visited his neighbor and this guy had all these new and wonderful things and Greg Chappell asked:
"How can you afford all this stuff?" The response:
"Equity Mate"
Thankfully most Australians saw this for what it was and ignored it. It was an advertising failure.
In Australia, try walking away from your committment to the bank paying your mortgage and see what happens. Australian banks have big sticks.
The four big banks have annual profit margins in the $billions$.
I remember reading in an Australian paper not so long ago that some Australians were falling behind in their mortgages at alarming rates and that a disaster loomed. It made scary reading suggesting our market was about to be flooded with foreclosures from desperate banks.
A couple of weeks ago there was another tiny hidden article revealing that almost all Austalians were now on time with their mortgates and the % of people behind was now at historical lows.
Last year there were heaps of houses for sale in Adelaide. Too many. The reports I read a year ago stated a disaster was looming. Too much stock. "Expect price falls of up to 40%". Of the 100 houses (approx) opens I went to in 2011, 96 were tenanted or lived in. They weren't empty. People have to live somewhere. I notice many houses that don't get near the price they want end up staying on the market longer or simply taken off the market altogether.
This carbon tax will increase the cost of building a new house by anywhere from 10-20%. This will discourage new houses being built thus increasing the competition for available stock.
Employment is the key indicator.
I read one interesting article suggesting that if China somehow keeled over and could no longer buy our resources then India would step in within a heartbeat............
So much noise out there................
But then I sit down and think of the fundamentals.
The US property market is a shambles.
About 10 years ago, Congress demanded that banks borrow money to the NINJA's. That's to people with: No Income. No Jobs and no Assets.
So they did. With honeymoon rates to boot.
Then came the sub-prime crisis.
Then the Global Financial Crisis.
Then the honeymoon was over.
Interest rates to mortgages went back up to normal levels and people hit the wall.
In the US of A. If you dont' want the house anymore, you simply send the keys back to the bank and walk away. The bank is powerless to do anything about it. Thats the law.
Today.The US sub-prime crisis is over.
Many Americans can afford to pay their mortgage but choose not to.
Why???
It is estimated that 23% to 28% of all properties in the USA that have a mortgage are in negative equity territory.
It takes approx 17 months for the bank to kick out the non-paying home owners. So the homeowner lives rent/mortgage free for 17 months. Some economists have stated this behaviour has actually helped the USA avoid a double dip recession since these non-paying home owners are spending their mortgage money in the retail/service sector thus stimulating the economy!!!!!!
Another reason so many Americans are underwater with their mortgages:
I read in one economic report stating there was a massive campaign by the banks back in early 2000's. They encouraged home owners to come in and unlock the equity in their houses. Push out their mortgage by $50K to $100K based on the theory that property values would go up soon and this equity would be replaced. Economists state this avoided a USA recession then as millions of home owners took out this equity and stimulated the economy. Of course, when the GFC hit and house prices tanked, many properties went into negative equity.
I remember in Australia banks doing this advertising campaign with Greg Chappell (cricketer) encouraging Australians to unlock the equity in their homes and spend the money to improve their quality of life.
Greg Chappell visited his neighbor and this guy had all these new and wonderful things and Greg Chappell asked:
"How can you afford all this stuff?" The response:
"Equity Mate"
Thankfully most Australians saw this for what it was and ignored it. It was an advertising failure.
In Australia, try walking away from your committment to the bank paying your mortgage and see what happens. Australian banks have big sticks.
The four big banks have annual profit margins in the $billions$.
I remember reading in an Australian paper not so long ago that some Australians were falling behind in their mortgages at alarming rates and that a disaster loomed. It made scary reading suggesting our market was about to be flooded with foreclosures from desperate banks.
A couple of weeks ago there was another tiny hidden article revealing that almost all Austalians were now on time with their mortgates and the % of people behind was now at historical lows.
Last year there were heaps of houses for sale in Adelaide. Too many. The reports I read a year ago stated a disaster was looming. Too much stock. "Expect price falls of up to 40%". Of the 100 houses (approx) opens I went to in 2011, 96 were tenanted or lived in. They weren't empty. People have to live somewhere. I notice many houses that don't get near the price they want end up staying on the market longer or simply taken off the market altogether.
This carbon tax will increase the cost of building a new house by anywhere from 10-20%. This will discourage new houses being built thus increasing the competition for available stock.
Employment is the key indicator.
I read one interesting article suggesting that if China somehow keeled over and could no longer buy our resources then India would step in within a heartbeat............
So much noise out there................
Who's next?
So its...
-40% KEEN
-50% DENT
-60% WIRSZ
So the next merchant of doom needs to aim for -70% to get any publicity, KEEN would seem a ray of sunshine compared to WIRSZ (Worse?)
Do they all eat their M&M's individually and with a glass of water?
Prices have always gone up, down and sideways over time...but -60% seems a big stretch
From the same story
Perhaps I should write an article stating that houses will fall by 200%, meaning that you'll have to pay people a large sum to take them off your hands.
I keep on hearing the assertion that Australia is different and therefore immune to significant house price falls, but no one has ever articulated how these will prevent a crash.
My belief is that Australia survived the GFC better than Europe and the US because in 2008 it was in a better fiscal position (low levels of government debt), tied into the Asian economic zone more tightly than the Atlantic, and it became the beneficiary of flows of foreign money looking for a yield compared to 0.5% interest rates in some countries.
Then there are the similarities with the UK: Rental yields falling below interest rates, and a collapse in the numbers of first home buyers. Even the reasons given why the market will remain high.
The risks are different though. Take a look here (particularly the comments), here and here.
I don't know what's going to happen next. The last three years have rammed home the point that markets remain irrational longer than any sensible person remains solvent, and that they do really unexpected things. So despite my bearishness, I'll no doubt be scratching my head when the Sydney median breaks $1 million in a few years.
I keep on hearing the assertion that Australia is different and therefore immune to significant house price falls, but no one has ever articulated how these will prevent a crash.
My belief is that Australia survived the GFC better than Europe and the US because in 2008 it was in a better fiscal position (low levels of government debt), tied into the Asian economic zone more tightly than the Atlantic, and it became the beneficiary of flows of foreign money looking for a yield compared to 0.5% interest rates in some countries.
Then there are the similarities with the UK: Rental yields falling below interest rates, and a collapse in the numbers of first home buyers. Even the reasons given why the market will remain high.
The risks are different though. Take a look here (particularly the comments), here and here.
I don't know what's going to happen next. The last three years have rammed home the point that markets remain irrational longer than any sensible person remains solvent, and that they do really unexpected things. So despite my bearishness, I'll no doubt be scratching my head when the Sydney median breaks $1 million in a few years.
who's next?
so its...
-40% keen
-50% dent
-60% wirsz
so the next merchant of doom needs to aim for -70% to get any publicity, keen would seem a ray of sunshine compared to wirsz (worse?)
do they all eat their m&m's individually and with a glass of water?
Prices have always gone up, down and sideways over time...but -60% seems a big stretch
From the same story
-40% keen
-50% dent
-60% wirsz
-99% donald duck
-110% keen+dent+wirsz
.....and being an astute, well read, experienced journalist....not some dripping wet behind the ears head nodding gullible 'but I'm just the messenger, don't shoot me' type journo....Sonja immediately took issue with this statement and quizzed him further as to the reasons behind this astounding statement.
He was predicting every hotel, every motel, every nightclub, all petrol stations, all shopping centres, every cafe...even the buzzing ones, every factory, every corner store, every dock and wharf, every cinema, thousands of McDonald stores, every high rise building in every capital CBD.....the lot....all smashed down by a full half.
Yep - no worries - I'll print that...sounds OK to me.
Sweet.
Me and my buddy have been planning on a local cocktail bar. 50% buy in. I'll start counting my pennies now.
Me and my buddy have been planning on a local cocktail bar. 50% buy in. I'll start counting my pennies now.
no, a webinar. only $89!!
ABS data Sep 2011 - Sep 2012
http://www.exfin.com/files/property_data/ABS September Quarter 2012.pdf
http://www.exfin.com/files/property_data/ABS September Quarter 2012.pdf
Nice data Erica - good link.
Front page says it all.
Over the past 12 months, house prices have ranged from the bottom of the pile (Melbourne) at -2.3% for the year up to (Darwin) at 8.2% for the year, with a weighted average across all 8 Australian cities of + 0.3%.
I guess the alarmist -60% sells papers, and the +0.3% doesn't. Ain't it funny how all of the predictions go off with a bang, and then the factual numbers when available hardly raise a whimper.
Journalists who swallow anything hook, line and sinker from any crackpot.....is that the degree you do at Uni when no other faculty will accept you ??
Front page says it all.
Over the past 12 months, house prices have ranged from the bottom of the pile (Melbourne) at -2.3% for the year up to (Darwin) at 8.2% for the year, with a weighted average across all 8 Australian cities of + 0.3%.
I guess the alarmist -60% sells papers, and the +0.3% doesn't. Ain't it funny how all of the predictions go off with a bang, and then the factual numbers when available hardly raise a whimper.
Journalists who swallow anything hook, line and sinker from any crackpot.....is that the degree you do at Uni when no other faculty will accept you ??
