Sydney Silliness Warnings 2015

What is your perception of the "new reality"?
I was referring to what happens when credit freezes, not the current reality in Australia.
Methinks you are merely just trolling now.
No I am explaining what happened overseas in many markets when credit dried up. They had never experienced it before and sales dry up also as sellers don't want to accept falling prices, but they eventually do (/did). Prices track downwards after that. Apart from mining towns and some tourist areas, Australia has not experienced this, so most people don't think it can happen, just like the citizens of Ireland, Spain and USA didn't think it could happen.
 
For a first post you are one smart mofo....the Big 4 are starting to shutdown lending in Sydney...this will affect the liquidity in the market..no liquidity (less finance) means prices taper off and fall....some will be caught....interesting times indeed. As someone said the main game is financing...not property as it is the vehicle. Lot so newbies who will be burnt when the music stops....:D

The interesting thing is investors will still invest....just that they will look at Brissie or Melbourne.

Yes bit of room left in Melbourne, and lots of room in Brisbane. Sydney is dead.
 
wouldn't necessarily know regarding the sell side, on the buy side - there are less enquiries compared to say 3 months ago

Yes, you are right.
from this week, somehow I've been gettin a call and follow up from the RE agent who plans to auction at the end of this month.

Not sure why they called me and willing to organize evening or night inspection as well.

I guess, the market started to cool down a bit slowly.
 
There is no big proeprty crash just a slight correction I guess...

I was referring to what happens when credit freezes, not the current reality in Australia.

No I am explaining what happened overseas in many markets when credit dried up. They had never experienced it before and sales dry up also as sellers don't want to accept falling prices, but they eventually do (/did). Prices track downwards after that. Apart from mining towns and some tourist areas, Australia has not experienced this, so most people don't think it can happen, just like the citizens of Ireland, Spain and USA didn't think it could happen.

Hi mate,

Most of the Investment Properties in Australia here is tightly controlled by the banks and also mostly the IP is owned by the top earners in Australia, so when the price is plummetting down, the owner still not forced to sell the IP

Hence no big crash like it as in Greek, Spain, England, and USA.

See the excerpt from: McKinsey Global Institute.

Who, exactly, is actually taking on the debt. In the US it was lower income earners ' that's why they had a crisis. In Australia and some of the European countries mentioned above, debt has predominantly been taken up by high income earners or those with high net wealth. Indeed, the top 20 per cent of income earners hold nearly half the total of household debt. The next 20 per cent hold another quarter. So 75 per cent of household debt is held by the top income earners. That's not a big problem and it's not impediment to further house price growth.
 
Hi mate,

Most of the Investment Properties in Australia here is tightly controlled by the banks and also mostly the IP is owned by the top earners in Australia, so when the price is plummetting down, the owner still not forced to sell the IP

Hence no big crash like it as in Greek, Spain, England, and USA.

See the excerpt from: McKinsey Global Institute.

Hi John,

Any chance of getting that whole story from McKinsey Global Institute, it could be interesting to read the whole thing.
 
No I am explaining what happened overseas in many markets when credit dried up. They had never experienced it before and sales dry up also as sellers don't want to accept falling prices, but they eventually do (/did). Prices track downwards after that. Apart from mining towns and some tourist areas, Australia has not experienced this, so most people don't think it can happen, just like the citizens of Ireland, Spain and USA didn't think it could happen.
While there are examples of real estate crashes all over the world - and some recently such as the USA after the GFC - we have not seen anything of that magnitude in Aus (except for maybe the super-high interest rates of the late '80's early '90's which sent folks broke).

We did not have anywhere near the same level of change here after the GFC.

Our Banking system was a lot more protected, and we didn't have the same level of job losses as a result....the impact was low.

You are confusing the drying up of credit with the effects of an economic catastrophe - the end of the mining boom, or a massive industry closedown, or an act of nature such as flood or earthquake, etc..

The drying up of credit (in Aus) has usually meant that basically the r/e markets go to sleep.

A wholesale sell-off of r/e doesn't usually happen just because buyers disappear.

What it means to those who have to sell is they may find their homes sit on the market much longer, or they have to adjust their price expectations down...this has been what I have observed over my r/e life.

I worked in r/e for a short time just after the boom of early Naughties - down in Sorrento; another seaside holiday destination on the Peninsula.

The climate at that time was lots of sellers who were hoping to cash in on the boom (which had recently ended), and the buyer level had died off.

So, high expectations, lots of folks refusing to budge on their price (these were mostly holiday homes being sold)...lots of homes did not sell, or sold after a long stint on the market.

It was a nightmare for me, because our office (part of a large r/e Franchise) sold absolutely no properties in 3 months! :eek:...not one.

Folks didn't need to sell, so they stuck to their guns until they either got their price, or took it off the market.
 
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Yep.....Melbourne outer suburbs as I said and Brissie....though I reckon the gain will be less than Melbourne.

Very disappointed with how the new govt. in Qld has handled the economy in Qld. QLD would have taken off - i.e. Brisbane if labor has a clear strategy to create demand via more jobs. The other thing holding Qld back is mining..it also has a large dependency on mining like WA.

Yes bit of room left in Melbourne, and lots of room in Brisbane. Sydney is dead.
 
Yep.....Melbourne outer suburbs as I said and Brissie....though I reckon the gain will be less than Melbourne.

Very disappointed with how the new govt. in Qld has handled the economy in Qld. QLD would have taken off - i.e. Brisbane if labor has a clear strategy to create demand via more jobs. The other thing holding Qld back is mining..it also has a large dependency on mining like WA.

Not quite...the gain in the inner and mid in brisbane will be more than the gain in outer Melbourne. But outer Mel to outer bris...yes Melbourne wins that.

Fully agree in the second point. Politicians are politicians.can't say much more...they are all messed up one way or the other.
 
I have a question to those investing in RE for more then 20 years

just about every time when prices go up, there are articles and reasons why and why not the mother of all booms is coming, and yet the property cycle follows the general rule of 10 years with 2-3 years big growth, 2-3 years big falls with 4-5 years of plateau (obviously not in that order)

the doom and gloomers will get vocal in a downturn or just before, while by the end of hte boom, everyone from their next door neighbours cat is a property expert

do you guys see anything different this time?

admittedly, i have seen a few articles saying why this time its different and it wont be the same as before.

any comments?
 
I

do you guys see anything different this time

?

No . If anything , I think this Sydney boom is less dramatic than some in the past ( seriously ) . In my first boom , the biggest problem was being able to get an appointment to see the loans officer at the bank .

There are always doom and gloomers . There are always people who say it's different this time .

It is always slightly different , but that a reflection of changes in the community and communications , so it's now easy for anyone in the world to check out prices in 2770 . 20 years ago ( and in the last cycle ) , places in 2770 were advertised in the local paper or in the REA's windows .

In the last cycle we'd get a subscription for the local papers in rocky and Townsville . Not worrying now .

Cliff
 
Yep.....Melbourne outer suburbs as I said and Brissie....though I reckon the gain will be less than Melbourne.

Very disappointed with how the new govt. in Qld has handled the economy in Qld. QLD would have taken off - i.e. Brisbane if labor has a clear strategy to create demand via more jobs. The other thing holding Qld back is mining..it also has a large dependency on mining like WA.

I pick inner city Melb over outer. Outer has run already and run hard. Unless you mean very outer like beyond Ferntree Gully
 
I have a question to those investing in RE for more then 20 years

just about every time when prices go up, there are articles and reasons why and why not the mother of all booms is coming, and yet the property cycle follows the general rule of 10 years with 2-3 years big growth, 2-3 years big falls with 4-5 years of plateau (obviously not in that order)

the doom and gloomers will get vocal in a downturn or just before, while by the end of hte boom, everyone from their next door neighbours cat is a property expert

do you guys see anything different this time?

admittedly, i have seen a few articles saying why this time its different and it wont be the same as before.

any comments?


Haven't been through 20 years but been through three markets China HK Aus. Seems its all the same in every country except maybe Japan
 
No . If anything , I think this Sydney boom is less dramatic than some in the past ( seriously ) . In my first boom , the biggest problem was being able to get an appointment to see the loans officer at the bank .

It is always slightly different , but that a reflection of changes in the community and communications , so it's now easy for anyone in the world to check out prices in 2770 . 20 years ago ( and in the last cycle ) , places in 2770 were advertised in the local paper or in the REA's windows .
Agreed! It's just the same with a few subtle differences as technology gets better.
 
Hi mate,

Most of the Investment Properties in Australia here is tightly controlled by the banks and also mostly the IP is owned by the top earners in Australia, so when the price is plummetting down, the owner still not forced to sell the IP

Hence no big crash like it as in Greek, Spain, England, and USA.

See the excerpt from: McKinsey Global Institute.

top earners, I thought most own one or two IPs so this would represent average mum and dad investors, care to share your fact?
 
Agreed! It's just the same with a few subtle differences as technology gets better.

+1. I have no crystal ball into the future but there exist possibilities that challenges and impacts will occur like they did in the last 100 years or so!
 
You are confusing the drying up of credit with the effects of an economic catastrophe - the end of the mining boom, or a massive industry closedown, or an act of nature such as flood or earthquake, etc..
No I'm not confusing anything. Overseas property bubbles were caused by easy credit and popped when that credit was withdrawn. Australian market has also mostly been driven by easy and cheap credit (and favorable tax policies).

The drying up of credit (in Aus) has usually meant that basically the r/e markets go to sleep.

A wholesale sell-off of r/e doesn't usually happen just because buyers disappear.
It doesn't need a wholesale selloff. Sales volumes drop severely (go to sleep as you say), followed by a few sellers who need to drop prices to get sales and down she goes. Property crashes are usually low sales volume affairs, unless the banks start dumping repossessed stuff.
 
I have a question to those investing in RE for more then 20 years

just about every time when prices go up, there are articles and reasons why and why not the mother of all booms is coming, and yet the property cycle follows the general rule of 10 years with 2-3 years big growth, 2-3 years big falls with 4-5 years of plateau (obviously not in that order)

the doom and gloomers will get vocal in a downturn or just before, while by the end of hte boom, everyone from their next door neighbours cat is a property expert

do you guys see anything different this time?

admittedly, i have seen a few articles saying why this time its different and it wont be the same as before.

any comments?

The main danger I can see for the property market is the difference between wage growth and house price increases. House prices are relatively flat everywhere in the country (rising by inflation), except in Sydney where it?s going nuts.

I see 2 scenarios:
1. The economy recovers, business confidence increases, wage growth returns to a moderate level, and unemployment decreases. This is all good news; however, this would lead to interest rates rising. If the interest rates rose up to 8% there would be a lot of people both investors and OO who have over-leveraged during this period of low rates.
2. The stagnating Australian economy eventually hits Sydney. Business confidence drops, wage growth remains flat, unemployment increases and people are now struggling to pay their mortgages. It doesn?t matter how low interest rates are if you don? t have a job and a reasonable buffer.


http://www.abc.net.au/news/2015-06-15/verrender--a-ponzi-scheme-that-could-ruin-us/6545316

?Ever since the stock market collapse in 1987, when the entrepreneurs all hit the wall, Australian banks have deliberately targeted real estate. It may have been dull. But it was hugely profitable. And unlike corporations, homeowners would do just about anything to avoid default.

That was aided and abetted by negative gearing, a discount on capital gains tax and more recently self-managed super funds that now can gear up to buy property. Overwhelmingly, investors seek out existing properties rather than develop new ones, forcing owner occupiers to borrow more.
The more money the banks pumped in, the higher real estate prices rose. The higher the prices, the more that was needed in loans; a business model of rare beauty that some call a Ponzi scheme.

Australian households now are among the among the world's most indebted. In 1990, household debt accounted for about 60 per cent of income. By 2013it had risen to 180 per cent. The reason? Mortgages.

Between them, the big four banks hold about 80 per cent of all Australian mortgages. All up, Australians owe about $1.4 trillion on their houses, which is rising at a rapid clip each month. It is their most important business.

That concentration - both geographically and in one asset class - leaves the banks hugely exposed in the event of a real estate slump?.
 
Here it is,

http://www.eurekareport.com.au/arti...estment/why-australian-house-prices-are-cheap

Anyone can try it for 3 weeks free of obligations and no need for credit card.

See it yourself and hopefully you can learn some more :)

Well here is an extract stating our ATO facts:

"Recently Property Council chief executive Ken Morrison
says it is untrue that more than half of all people with negatively geared rental housing investments are in the top 10 per cent of taxpayers."

?The actual ATO data clearly shows that at least two thirds of Australians who declare a net rental loss earn around $80,000 a year or less."

"That includes 42,000 nurses, midwives and aged care workers, 62,000 teachers and child carers, 12,300 emergency service workers and 83,000 clerical staff all earning around or below this amount."

?These are not property barons ? they are ordinary Australians saving for their future,? Morrison says"

Sometimes we cannot believe ALL we read, wouldn't you agree? I like to see the actual facts represented by ATO or our taxpayers....
 
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