"The Gloom Boom & Doom Report"

[Shadow]

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.

Hi NR,

So it's all just a big cover-up? House prices are really crashing right now, but we're just not being told about it? Do you have access to some other data that proves prices are crashing, and if so, are you able to share?

By the way, any chance you could address my questions from post 32?

Cheers,

Shadow.

 

[freddie]

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?

Well according to this (18/6/2008) he's invested in diversified shares - for the long term. He's a buy and hold fan.

Actually there are some academic studies that have proven active management of shares has done no better than a diversified portfolio simply left alone. Mine is diversified and long term.

Speculating in shares takes intense levels of active management though. Investing doesn't. Pick a diversified bunch of stocks that have good fundamentals and then leave them alone.

I am drifting off topic here ....

and he said this at the same time, June last year:

I've stopped even looking at my share portfolio. What a nasty year this year is!!!????

What would he say now?

 

[sparky23]

As (in comparative terms) a Token Doom and Gloomer as well as the Token Funder, I'd have to disagree..

My observation was that there have been fewer D&G posts and I stand by that one! There are more and more optimistic posts popping up every day and you know what if we all clap our hands at the same time Tinkerbell won't die!

 

[sparky23]

The opera ain't over. The fat lady hasn't sung yet.

No but I'm sure she is warming up!

 

[sparky23]

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.

Maybe you should sue somebody then.

We have increased the houses we were selling at the end of last year by $10,000 each and they are selling faster than ever doesn't look like much of a crash to me - oops I am in Real Estate so I guess I must be making it up!

 

[yorke]

If you hadn't sold your house in Brisbane just before the boom then you wouldn't need to...

Sold it before the boom ?
That could explain a lot.

 

[nonrecourse]

Another deposit in"Have a nice life on the government pension"

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.

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.

Keith this post by you is offensive and implies impropriety.
You don't have a chip on your shoulder mate you have a railway sleeper.

You really are a bitter and twisted little sock puppy and you have doo doo'd on my welcome mat for the last time. Since you persist in acting like a little mongrel I'm taking you by the scruff of your collar and rubbing your nose in your still warm dookie and am depositing you outside my view. You can drop your lunch box on someone else.

 

[yorke]

I'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 guess you'd need to do so, if Shadow is correct and you sold your house before the boom then you'd need to pay 3 times as much to buy it back now. That really sucks and I think I know how you must feel. I sold some stocks for what I believed was a good price only to see them shoot up a week later. Could have bought them back at double the price I sold them for and still made over 500% profit but pride and the desire to be proven right stopped me from getting back in. Every time I looked at them I'd get that sick feeling in the stomach and it wasn't gastroenteritis.
I feel for you man.

 

[yorke]

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.

You do know that most of the posters here are in Australia and unlike the US and UK it really is different here ? We may have had some correction in certain places but to call it a crash its at best misleading and at worst fraudulent and so is comparing our market to US UK and Japan.
You and your mates have been dribbling on about a property crash just around the corner for at least 4 years now and its always the same. Someone is always conspiring against you to stop the crash, if its not the RBA lowering the rates, the government doubling the FHOG or the SS spruiking then its the REIA cooking the numbers. You can continue to be in denial or admit that you were wrong about a property crash happening here and do what most of your other bearish mates did - buy a house and get over it.

 

[Token Funder]

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.

Not different enough. There's a reason it's characterised as a Global Financial Crisis rather than a Global-Other-Than-In-Australia-What-With-All-Their-Mining-Immigration-And-Whatnot Financial Crisis

You highlight "hedging risk". Risk of what? Did they/we have it wrong or did we have it right but the environment has changed. If, as unrestrained optimisits would argue, there won't be a major economic downturn (It's different here[/I)]or, if there is, it won't impact further (remember, prices dropped in '08) because of *insert usual list*, why would a lender worry?

Particularly given the relatively small portion of your overall book business written in any given year actually represents.

The reason lenders are talking about it/doing it, is that our risk metrics and analysis are telling us that economic contraction plus downward pressure on house prices plus the inherent risk of the rise in high LVR/bugger all money down associated with FHB's with FHOG plus pockets of dead cat bounce means the sorts of LVRs and serviceability ratios of the last 5-10 years are best avoided for a while.

So, not because they can; because they think they need to.

Expect another major to pull their max LVR down to 90% within the week.

 

[keithj]

Keith this post by you is offensive and implies impropriety.
You don't have a chip on your shoulder mate you have a railway sleeper.

You really are a bitter and twisted little sock puppy and you have doo doo'd on my welcome mat for the last time. Since you persist in acting like a little mongrel I'm taking you by the scruff of your collar and rubbing your nose in your still warm dookie and am depositing you outside my view. You can drop your lunch box on someone else.

I'm sorry to feel that way NR. Anyway, getting back to your post & my question.... Can you confirm that your lender is asking for a valuation of a commercial property that secures a residential loan and that your post was misleading ?

A simple Yes or No will suffice .

 

[andrew_de_a]

Keith this post by you is offensive and implies impropriety.
You don't have a chip on your shoulder mate you have a railway sleeper.

You really are a bitter and twisted little sock puppy and you have doo doo'd on my welcome mat for the last time. Since you persist in acting like a little mongrel I'm taking you by the scruff of your collar and rubbing your nose in your still warm dookie and am depositing you outside my view. You can drop your lunch box on someone else.

You sound like your losing your marbles NR

 

[chilliaa]

You sound like your losing your marbles NR

Especially as he highlighted in a previous post that he got those loans by a 'little nice Indian banker who no longer works for the bank'.

 

[chilliaa]

Token Funder, since when did a banker not grab at security when the opportunity presented itself.
Competition between banks allowed for the erosion of demands for security. Less compettion, more security demanded.

At the end of the day the banks are still readily lending against residential property compared to:
1) commercial property lending
2) small business lending (without security)
3) corporate lending etc

So ask yourself WHY ARE THEY STILL LENDING realatively easily to average people seeking an average home loan for an average house.

Lending demands such as increasing LRV ratio's from 100% to 95% or even 90% is not an indication that property prices are going to fall 40% as the D&G'ers are predicting.

Even if the banks decrease LRV to 90% as you are suggesting, this in itself suggests they dont expect much more than a 10% drop against average house prices, otherwise they would be demanding much lower LVR ratios.

AND MOST OF THE MODERATE MEMBERS OF THIS BOARD DONT GIVE A HOOT WHETHER MEDIUM PRICED AVERAGE PROPERTY DROPS 10-15%

 

[Rockstar]

So ask yourself WHY ARE THEY STILL LENDING realatively easily to average people seeking an average home loan for an average house.

They obviously haven't been reading the posts of our resident D&Gers analysis of the looming catastrophe in Oz. Someone should warn them that they need to be taking notice of these hugely successful property analysts.

 

[Token Funder]

Token Funder, since when did a banker not grab at security when the opportunity presented itself.
Competition between banks allowed for the erosion of demands for security. Less compettion, more security demanded.

At the end of the day the banks are still readily lending against residential property compared to:
1) commercial property lending
2) small business lending (without security)
3) corporate lending etc

So ask yourself WHY ARE THEY STILL LENDING realatively easily to average people seeking an average home loan for an average house.

Lending demands such as increasing LRV ratio's from 100% to 95% or even 90% is not an indication that property prices are going to fall 40% as the D&G'ers are predicting.

Even if the banks decrease LRV to 90% as you are suggesting, this in itself suggests they dont expect much more than a 10% drop against average house prices, otherwise they would be demanding much lower LVR ratios.

AND MOST OF THE MODERATE MEMBERS OF THIS BOARD DONT GIVE A HOOT WHETHER MEDIUM PRICED AVERAGE PROPERTY DROPS 10-15%

Yes, resi is easy compared to commercial. Equally, I am young compared to Methuselah

North of 80% the mortgage insurers are bearing the risk. Moving LVRs from 97% to 90% isn't a material change to the exposure of the lender.

The key issue for investors on this board (and they are significant portion of posters..regrettably not the majority) is that the broad approaches to lending are moving back to historical parameters.

Regressing to the mean, if you will.

If you take the view, as I do, that a significant % of growth since the early 90s has been on the back of the availability of relatively cheap and flexible credit, you would be wise to consider the implications of lower LVRs, greater serviceability ratios, historical savings requirements, limited cash-out and potentially higher interest and related costs to investors.

Oh, and - at least - a shallow recession.

Obviously, the cohort of members who argued loudly 18 months ago that the credit issues facing the US would not impact Australia should feel free to look the other way

 

[nonrecourse]

You sound like your losing your marbles NR

No andrew I'm not picking up my marbles. I have no problem with you disagreeing with me, I do though have a problem with trolls.

What many who are critical of my scenerio fail to appreciate is that you are not home owners only. We are investors. That means we risk capital to invest. That means we are vulnerable. The banks can and do look at investors with interest when times are tough because they can because that is outside the ombudsmans scope.

 

[nonrecourse]

Especially as he highlighted in a previous post that he got those loans by a 'little nice Indian banker who no longer works for the bank'.

Hello chillie my Indian banker may have had a problem but I don't. The fact that the bank doesn't like the deal it agreed to is neither here nor there. There are many on this site who have signed documents that they wished they had not signed with the bank. The fact that the bank risk assessors were stupid and agreed to resi terms all be it with a whack of security means that until 2012 unless I want to change the agreement it remains. After 2012 it rolls onto a variable home loan

My only challenge is to roll the tenant into the next term of the lease with another increase to put an even more positive spin on it. The notice went out last month and they have until August 20th to renew.

I am not a passive investor who has a faceless board that determines my destiny

 

[BoatBoy]

Hi NR,



By the way, any chance you could address my questions from post 32?
.

Apparently not.

NR has left the building without answering, yet again.

Mustn't have any.

Dave

 

[nonrecourse]

Apparently not.

NR has left the building without answering, yet again.

Mustn't have any.

Dave

Hiya BB. That particular individual was consigned to the "have a nice life on the government pension" as he was another troll. What I find so amusing is I have stated innumerable times. If you find my posts too upsetting the site providers allow you to not see the posters who you feel are not conducive to your continued learning journey

If you want just to see the blue sky geared to the back teeth be my guest
I don't give oxygen to trolls.