The great Oz property crash of 2005.
- Thread starter InnerWestie
- Start date
I'm still a student! No investing experience yet. Why? Do you disagree?
Sure, we'll buy more properties and retire early but IMO a large downturn isn't coming anytime soon.
It didn't come a few years back when we were paying 10% interest so its unlikely that it will come now.
From what I've read on Scott's blogs he only recommends shares as a long term investment (7-10 years). If you had invested in an index fund for example you would have experienced a massive rebound after the GFC and made you money back + some?
I didn't say there was going to be a big crash soon, I'm just saying it doesn't hurt to consider the possibility and have a plan for when it does happen! Whether it happens tomorrow or in 50 years all markets will have a downturn at some point! You need to make sure you can get through that downturn or you will be forced to sell at an unfavourable time!
Ok thank you.
I have some funds in an offset acct and I'm not selling.
I'm still in accumulation phase.
We probably have a slightly higher property investor percentage than most other Countries, but as for stocks....I reckon most Aussies are merely gamblers, who have found stocks to gamble on instead of the usual gallopers and dishlickers, pokies and Tatts.
Not really... still a long way down from the peak. But instead if you had bought a house, you'd be up. Anyone can make whatever they want of the situation... if your mindset is fixed, it's fixed.
As some guy said (was it Churchill?), the best thing people can agree on is that they won't agree on anything.
Scott Pape is like everything else in the media these days - sensationalist.
I think he was a good influence on young people early in his media career, but unfortunately in the hunt for ratings has now become the "Today Tonight" of finance. Very little of what he says is helpful, mostly generic.
Just another pretty face on the idiot box with an inflated opionion of himself making simplistic comments in the hope of feeding his young loyal disciples on his brand of fast food finance.
I think he was a good influence on young people early in his media career, but unfortunately in the hunt for ratings has now become the "Today Tonight" of finance. Very little of what he says is helpful, mostly generic.
Just another pretty face on the idiot box with an inflated opionion of himself making simplistic comments in the hope of feeding his young loyal disciples on his brand of fast food finance.
He is better at stopping people from getting into massive financial difficulties, rather than showing people how to make money.
Both have their merits, he just needs to stick to what he knows instead of trying to appeal to everyone.
Both have their merits, he just needs to stick to what he knows instead of trying to appeal to everyone.
That's a mammoth wrong.
"Get out now" means he expected an imminent crash.
Bzzzzzt. Massive fail there Scotty boy.
Like these doomsayers who dribble year in year out that there will be crash. One day they will be right. And on that day when they are saying "Har Har Har, I told you so" (with a little Roscoe P. Coltrane laugh) many people would have made sufficient gains over previous years when it didn't crash and will comfortably ride the storm.
Then I'm not sure why you're backing Scott Pape? He's masquerading as a guy in the know. He didn't just get a prediction a little out, he got it wrong by a mile.
He's a charlatan.
Thanks for your input Scott.
3/11 Moore Street, WEST GOSFORD NSW 2250
21/12/2007 Government Notified Sale (Normal Sale) Residence $330,000
12/08/2005 Government Notified Sale (Normal Sale) Residence $460,000
Just as an example;
If I invested $40,000 in the stock market and the market dropped by 50% I'd lose $20,000.
If I invested $40,000 and borrowed $360,000 to invest in a $400,000 property and the real estate market dropped by 50% I'd lose $200,000.
Most people who invest in stocks understand that CFDs are one of the riskiest ways you can trade because the leverage increases your gains and your losses. I think sometimes people forget how leveraging in the property market increases our risk and our exposure to losses. For whatever reason people consider it as a much safer investment. I suppose it's because property has performed so well in Australia in recent history.
I still think understanding the impact of a property crash is very important. I'm confused as to why people here disagree with what I'm saying? I think what I'm saying is very reasonable.
If I invested $40,000 in the stock market and the market dropped by 50% I'd lose $20,000.
If I invested $40,000 and borrowed $360,000 to invest in a $400,000 property and the real estate market dropped by 50% I'd lose $200,000.
Most people who invest in stocks understand that CFDs are one of the riskiest ways you can trade because the leverage increases your gains and your losses. I think sometimes people forget how leveraging in the property market increases our risk and our exposure to losses. For whatever reason people consider it as a much safer investment. I suppose it's because property has performed so well in Australia in recent history.
I still think understanding the impact of a property crash is very important. I'm confused as to why people here disagree with what I'm saying? I think what I'm saying is very reasonable.
Hear, hear!
I read his Herald-Sun column most weeks. I wouldn't say it includes 'bad' advice, but it's not all 'good' advice.
I could probably sum up his doctrine in a few bullets:
- Minimise consumer (particularly credit card) debt. If you have it, pay it off, if you don't have it, don't get it
- Put aside money into an index fund*
- Don't buy property, unless you REALLY feel the need to buy your own place to live in - I'll look down my nose at you, but we all have our weaknesses
- Put money into super (don't worry if you don't understand that super is an investment environment and not an investment in itself - when you retire you might understand, and then it's too late, and you'll thank me)
*This is not BAD advice, especially for those who have no thoughts or ideas on how or where to invest.
Lowest common denominator stuff - vanilla investing... what can one expect from Herald-Sun?
Ok I only really have knowledge on the Melbourne property market. I can say that the Melbourne property market has not crashed from 2005 till today. You may find a few properties in Melbourne that sold for less later on than what it was bought for in 2005, however as a whole the Melbourne market has gone up. A few examples of prices going down is not an example of a crash, when most of the market has gone up.
So you're admitting that they are anomalies?
How do you know most of the market has gone up when you only know Melb.? My suburb in Townsville, according to RP Data, has had a cumulative 2% rise in 4 years. Not enough to get out of bed for.
Good post - this makes a lot of sense to me. The high AUD is causing problems with the international student market and that is obvious in Melbourne at the moment.
Having buffers in place is essential - low LVR's are also a wise move at this time.
Credit is tightening - people are being surprised at being turned back for credit. Loan assessors are looking back on people's credit habits -and they are looking for reasons to decline loans - like going back as much as 4-5 yrs in a person's finances. One slight blemish on the file means no loan.
Restricting credit in this way means that house prices will have to drop somewhat.
Regards Jason.
Hi Jingo,
I agree about the international investors investing less due to the high $A....but domestic demand and immigration still has things moving, albeit at a much slower rate than early 2010.
Yes, LVRs are always prudent.....my goal is to keep it under 40%.
On the credit side I think things are definitely loosening. Most of Big 4 banks now offer 95% plus LMI (takes it to 97%) loans. Though I agree the level of scrutiny and checking on serviceability is tighter.
Over the next 6 months we should see prices comeback a bit or stabilise in most areas.
However, due the local disasters and world events (Libyan/Middle East crisis and the Japan Tsunami) we should see the RBA look to make a downward move on rates in the next 6 months or so. My prediction is Sept/Oct this year.
I agree about the international investors investing less due to the high $A....but domestic demand and immigration still has things moving, albeit at a much slower rate than early 2010.
Yes, LVRs are always prudent.....my goal is to keep it under 40%.
On the credit side I think things are definitely loosening. Most of Big 4 banks now offer 95% plus LMI (takes it to 97%) loans. Though I agree the level of scrutiny and checking on serviceability is tighter.
Over the next 6 months we should see prices comeback a bit or stabilise in most areas.
However, due the local disasters and world events (Libyan/Middle East crisis and the Japan Tsunami) we should see the RBA look to make a downward move on rates in the next 6 months or so. My prediction is Sept/Oct this year.
