"The Gloom Boom & Doom Report"
- Thread starter Propertunity
- Start date
You gotta admit the bulls have won so far. Hired Goon and his mates have been harping on this forum for YEARS now and I haven't seen ANYTHING that REMOTELY RESEMBLES a crash.
I think we'll have a drop in the median house price in the next round of data that comes out due to all of the increased FHB/lower end sales, the removal of the grant, and say 6 months after that will be buying season again.
I think we'll have a drop in the median house price in the next round of data that comes out due to all of the increased FHB/lower end sales, the removal of the grant, and say 6 months after that will be buying season again.
No they wont, they will be comming up with other reasons not to buy.
For some people justifying why not to do something is easier than taking action.
Hired Goon always used to say that the property market would crash under it's own weight, as prices were unsustainable. To prove this point he would always spam the same chart of Australia's credit vs GDP ratio, which was at 160%, to somehow demonstrate that debt levels could not possibly get any higher (because Steve Keen said so). This despite the fact that the credit vs GDP ratio for many other countries is over 300%.
He also claimed that investors would all panic-sell when interest rates got too high, releasing a flood of empty houses onto the market. Apparently the majority of specufestors were sitting on empty houses that they wouldn't rent out (forgoing rental income and negative gearing benefits) because they didn't want to get the carpets damaged.
What HG didn't seem to understand, is that the majority of these 'empty dwellings' that he harped on about could be explained by people simply not being at home on Census night, and also by the amount of holiday homes in places like Palm Beach and Byron Bay. And sure enough, now we're seeing some forced sales in those places (i.e. holiday locations), but that's not going to have any impact on median prices in the population centres where the majority of people live. The percentage of empty houses in Australia hasn't really changed much in 30 years.
Year Occupied Empty %Empty
1976 4162064 431200 9.4%
1981 4691425 469742 9.1%
1986 5285571 543539 9.3%
1991 5765021 597582 9.4%
1996 6496072 679165 9.5%
2001 7072202 717877 9.2%
2006 7596183 830376 9.9%
I always explained to him that the vast majority of investors had their properties tenanted, and that interest rates would be going down, not up, by the end of 2008. And that the only thing that could cause his utopian 40% crash would be very high unemployment levels.
I explained my thoughts on this in more detail in the thread below...
Why a house price crash is off the table. For now...
http://www.somersoft.com/forums/showthread.php?t=44972
Of course the gloomers all laughed at this, said I was wrong, and eventually banned me from posting on their site.
So anyway HG decided property was doomed and put all his money into oil, energy, food and resources stocks instead.
Apparently he was convinced that energy, food, oil and resources prices were not in a bubble (but everything else in the world was).(I told HG repeatedly in 2008 that oil prices were actually in a worse bubble than anything else).
More recently, Hired Goon has acknowledged on the other forum that I was right and very high unemployment levels are actually required to cause his big crash (having seen all his other predictions fail to eventuate, and having lost a lot of money on food, energy and resources stocks). I'd link to his quote on the other forum except I'm not allowed.
Cheers,
Shadow.
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As (in comparative terms) a Token Doom and Gloomer as well as the Token Funder, I'd have to disagree.
In my world we watching the worst parts of the financial crisis being overtaken by the real economic impact. Kind of the like the worst of the actual earthquake being over ("that's a relief") and now you're watching the tsunami develop ("holy ****!)
As a consequence I still struggle with the attitude of some that somehow a global recession will, at worst, bring about a temporary halt in the growth of resi prices, after which they will rip along like nobodies business.
Funders are voting with their LVRs. Why do you think that is?
Recessions, be they technical, slight, shallow, deep or OMFG!, are not good for house prices.
Most of his mates are now proud home owners and I think even HG was going to see his bank manager for a home loan. I think he was looking at buying around Oct-Nov ,a couple of months before FHB bought his place, but then changed his mind. Probably because of job insecurity and I suspect because he got his loan application knocked back. With interest rates at record lows the only reason you'd be bearish on property now is if you couldn't afford to buy one in the first place. The fox and the grapes fable comes to mind.
The opera ain't over. The fat lady hasn't sung yet.
That's if they kept the cave in habitable condition and payed their rent on time. Of course they could always move to Detroit and buy some of them $1 houses they keep harping about.
Starring into the abyss
I'd love to know what hallucinogenic your on mate. China's growth rate is down to 2.5 % hello anyone home? The lights are on but no one is homeSource todays IMF report
I'd love to know what hallucinogenic your on mate. China's growth rate is down to 2.5 % hello anyone home? The lights are on but no one is home
Source todays IMF reportI'd guess I make 3 times more than most here (in a secure job) and I wouldn't go near it for the moment.
I'd love to know what hallucinogenic your on mate. China's growth rate is down to 2.5 % hello anyone home? The lights are on but no one is home
Hi nonrecourse,
I posted this question to you in another thread, but you may have missed it...
You have said that you expect the 'soft depression' to exhibit the following attributes:
- Unemployment to remain a reasonably low levels
- Very low interest rates
- Increasing rents
If we have low unemployment, low interest rates, high demand for property and higher rents, then what exactly will force so many people to sell that it causes a 50% dive in residential property values.
For prices to drop 50% we would need to see massive levels of forced sales. Unless you are a forced seller, why on earth would you sell for a 50% discount? What will cause all these forced sales?
For prices to fall 50% there needs to be no buyers at 5% down... no buyers at 10% down... no buyers at 15% down. There are plenty of buyers ready to jump in right now (even before any significant falls) and even more ready to jump in at 10% down. Most people just want a house to live in and will buy when they can afford it. Many can afford it right now.
Property investors are already seeing cashflow positive opportunities without any significant falls in house prices required. Why sell for a 50% loss if you're cashflow positive?
I'm really interested to hear what you think will actually trigger this big crash. What aspect, specifically, of the 'soft depression' will force enough fully employed cashflow positive Australians to sell at a 50% loss that it causes the Australian median house price to crash by this amount?
Cheers,
Shadow.
If you hadn't sold your house in Brisbane just before the boom then you wouldn't need to...
Wouldn't need to ..... "what" ?
There is no shame in that you must invest as you feel comfortable. But out of curiousity what are you doing with your savings? and what have you done with your savings over the last couple of years that you have been a member here?
Token funder on this point i must politely disagree with you (and there are not many times i am prepared to do this with your posts).
Funders are voting with their LVRs: To me this is good risk mitigation strategies. Why are they doing it? because they can, with foreign lenders withdrawing from the australian market, the local players (and the remaining foreign players) have the opportunity to both increase margins and increase hedges against risk by demanding increased LRVs. This does not mean they expect property prices to crash, otherwise they would be demanding a hell of a lot higher LVR ratios than current practices dictate. Its just prudent lending.
There was a recent article distributed amounst institutional lenders about recessions against house prices. I have deleted the source, but basically it showed that even in the 1990's in australian house prices didnt crash in nominal terms, now given that inflation might have been higher then, maybe this argument cant be upheld in a low inflation (deflationary) environment.
In regards to the financial crisis being translated into mainstreat:
In the UK and US this is definately happening, in australia its the 'fear' of this happening. Very different.
This discussion about LVR's is an interesting one. We have a very large fixed residential interest only payment due on the 16th of June that we pay a year in advance as part of our ongoing loan commitments.
The bank just notified us via email yesterday asking us which account to take the valuation fee out of for this particular property and when will we be making the interest payment. I am about to send them as please explain email. As part of our risk assessment 8 months ago we had the bank do valuations on all our properties that they hold.
There continues to be denial on this board about house prices crashing and it just being fear. The real estate institutes median price and clearance rates is nothing more than fraudulent activity to mask the real extent of the carnage that is now starting to unfold.
The bank just notified us via email yesterday asking us which account to take the valuation fee out of for this particular property and when will we be making the interest payment
. I am about to send them as please explain email. As part of our risk assessment 8 months ago we had the bank do valuations on all our properties that they hold.There continues to be denial on this board about house prices crashing and it just being fear. The real estate institutes median price and clearance rates is nothing more than fraudulent activity to mask the real extent of the carnage that is now starting to unfold.
Can you confirm that they are asking for a valution of a residential property or one of the commercial properties you mentioned here when you told usThis discussion about LVR's is an interesting one. We have a very large fixed residential interest only payment due on the 16th of June that we pay a year in advance as part of our ongoing loan commitments.
The bank just notified us via email yesterday asking us which account to take the valuation fee out of for this particular property and when will we be making the interest payment
nonrecourse said:
If that's the case then your above post is scaremongering as you imply the bank is asking for a reval of a residential security.
Have you checked to see if the residential loan contract you signed for your commercial properties has a clause saying that the lender can demand full repayment at any time. If this is the case then I would be v. worried, they can force you to refinance to a commercial loan (on their terms), or worse refuse finance entirely. No amount of trust structures & non-recourse loans will stop them foreclosing. Or worse still, suggest that you were party to fraud by supplying commercial security for a residential loan, although I'd hope this scenario would be unlikely.
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