Whats happening to the world, traditionally Sunfish and myself have been at constant loggerheads about things.
But we are agreeing more and more (at least about housing).
This is getting scary
The RBA, Interest rates and house prices
- Thread starter dunno
- Start date
Whats happening to the world, traditionally Sunfish and myself have been at constant loggerheads about things.
But we are agreeing more and more (at least about housing).
This is getting scary
Yes another person gets it, its called moral hazard.
This is an interesting comment.
I dont think you will find many on this board (amongst those that are weary of property at the moment) that will do a Steven Kene.
The trouble with potential bubbles, you just dont know when they will finish.
Sure property has a risk of declining after a bubble but from what level????
If you sell out completely, then at what level do you buy back in? If you sell too early into a bubble, even after the eventual correction, the price may be higher than your exit price (especially after transaction costs).
Timing the top of a bubble is impossible (just lucky).
Hence i am slowly reducing my property exposure, and reducing debt. But i wont exit completely. Worst case scenario i will sit on a couple of properties with ZERO gearing.
Well thats ok, you should have NO PROBLEMS WITH THE RBA INCREASING INTEREST RATES THEN
Whats happening to the world, traditionally Sunfish and myself have been at constant loggerheads about things.
But we are agreeing more and more (at least about housing).
This is getting scary
There is another "once only" event that has put more dollars into pockets for housing since the seventies, and that was the massive reduction in the cost of household manufactured goods.
Talk to an oldie about how expensive things were in the Menzies era. The dismantling of trade barriers (some imports had nearly 50% tariffs on them I think
) and the rise of China means that TVs, radios etc might only be 5% of what they were when I got married (in constant dollars). We could only buy things on credit and consumer credit was at 10% FLAT (20% reducing) so many people had nothing to spend on a house.Prices can only rise if there is extra money in pockets. Everything else is fluff. The only extra money I see is via the resources boom, and that is not centered in Sydney and Melbourne. To illustrate this, Melbourne has done well because it is the home of the "old money", and that hasn't disappeared but Sydney was the banking hub and that suffered badly. When Macquarie once again becomes "The Millionaires' Factory" and B&B rises from the ashes, it will be time enough to buy Sydney.
one night in the Glen Stevens (GS) family:
GS Junior: Darn dad, look at the property prices!!!!! Its really getting out of my reach... is it ok if i continue to stay with you till its more affordable, pleaseee???
GS: don't worry son. i'll continue to increase the interest rates till the property prices drop and then you can buy your own place and move out and leave your mother and i alone.
GS Junior: Darn dad, look at the property prices!!!!! Its really getting out of my reach... is it ok if i continue to stay with you till its more affordable, pleaseee???
GS: don't worry son. i'll continue to increase the interest rates till the property prices drop and then you can buy your own place and move out and leave your mother and i alone.
and he continues:
But we shouldn't stop there.
We'll use the opportunity and buy a few more properties through our trusts.
By then Labor would have --$#@~# the economy so we'll have to lower interest rates and as the next property cycle will be taking off we'll catch the next wave and retire....
In the meantime, my reserve bank will sell billions of our overvalued $ and will make heaps of money. Ofcourse we'll buy them all back later when they're worth US$0.60 each
The whole reserve system is a Ponzi scheme. The name "reserve" says it all.
If people wanted their money, it does'nt exist.
That the gov gave them guarantees tells how powerful that system is.
I'm of the opinion that they are there as a cartel with the big 4 to make money. Nothing else.
All the decisions they take are for one reason only, make more money and avoid losses.
They lowered interest rates to stop the banks losing money.
Glen Stevens stated that home owners can afford to pay more, so rates are going up. All these gains they cannot expect to keep, the big boys want their cut, and they're coming to take it.
For anyone else it would be a racket, for the RBA banks it's standard business. Most high LVR investors will be squeezed, just not hard enough for to many to go broke, until prices rise and the banks can cover their loans when they sell.
Just like the US fed reserve. They screwed up the whole economy to pad their banking club's backsides. Bankrupt banks were then given subsidies to buy out other banks (who were denied assistance) with FED guarantees.
So as much as I despise them, I have no choice as an investor but to follow what they do.
And work on the assumption that they are out to screw me into spending my whole life working to pay interest to them.
It does'nt matter who's in gov they come up with whateva excuse they need to persue their agenda.
"Interest rates to most borrowers nonetheless remain lower than average. The Board judges.... it is appropriate for interest rates to be closer to average. "
If people wanted their money, it does'nt exist.
That the gov gave them guarantees tells how powerful that system is.
I'm of the opinion that they are there as a cartel with the big 4 to make money. Nothing else.
All the decisions they take are for one reason only, make more money and avoid losses.
They lowered interest rates to stop the banks losing money.
Glen Stevens stated that home owners can afford to pay more, so rates are going up. All these gains they cannot expect to keep, the big boys want their cut, and they're coming to take it.
For anyone else it would be a racket, for the RBA banks it's standard business. Most high LVR investors will be squeezed, just not hard enough for to many to go broke, until prices rise and the banks can cover their loans when they sell.
Just like the US fed reserve. They screwed up the whole economy to pad their banking club's backsides. Bankrupt banks were then given subsidies to buy out other banks (who were denied assistance) with FED guarantees.
So as much as I despise them, I have no choice as an investor but to follow what they do.
And work on the assumption that they are out to screw me into spending my whole life working to pay interest to them.
It does'nt matter who's in gov they come up with whateva excuse they need to persue their agenda.
"Interest rates to most borrowers nonetheless remain lower than average. The Board judges.... it is appropriate for interest rates to be closer to average. "
Originally Posted by Sunfish
“Have you considered that it just may have been the emergence of the "double income household" that has fueled this double decadal price rise? If it was, what will fuel the next one?”
There is an article on page 15 of the West Australian Newspaper today which suggests that Perth residents stand to inherit $33 billion – yes, BILLION in property over 15 years as parents and grandparents die in what they describe as, “…the biggest inter-generational transfer of wealth in Australian history.”
If you extrapolate this across every state in Australia, I am wondering what impact this is likely to have on the property market in one respect, the sharemarket on the other, and on the economy in general.
I’d be interested to hear what experienced investors here on Somersoft see in terms of the implications of this transition.
“Have you considered that it just may have been the emergence of the "double income household" that has fueled this double decadal price rise? If it was, what will fuel the next one?”
There is an article on page 15 of the West Australian Newspaper today which suggests that Perth residents stand to inherit $33 billion – yes, BILLION in property over 15 years as parents and grandparents die in what they describe as, “…the biggest inter-generational transfer of wealth in Australian history.”
If you extrapolate this across every state in Australia, I am wondering what impact this is likely to have on the property market in one respect, the sharemarket on the other, and on the economy in general.
I’d be interested to hear what experienced investors here on Somersoft see in terms of the implications of this transition.
No but the flipside is it's a proxy, that's all. I probably know a few along those lines of thought, but of course, they don't make the economy either.
The thing to remember is, we're all building blocks in the economy. All trends start small so even the tiniest observation in your daily life could be an indicator of what's to happen next with the market.
A similar analogy is the violent state of Melbourne. I've been commenting how I feel the city is getting dangerous even 3-4 years ago, before the media even picked up on the issue. And wham. Look what happens now. Isolated incidences I saw of violence in the city 4 years ago have escalated into the mess we're in now.
Last edited by a moderator:
Ive been amazed for at least the last 6 years at the amount of disposable money people seem to have, contantly thinking they must be on the credit knifes edge...yet 6 years later the sky hasnt fallen in and people are surving. As Ive said before though-unemployment will be the key here, NOT interest rates...though you could argue the chicken or egg theory..
I aggree, there is no housing shortage (even close to the CBD), just an excess of property investors/speculators. From what I've seen at auctions lately, people arent buying PPORs, they're buying investment properties.
If the government was serious about having more affordable property for people to live in, they would make property investment less lucrative. But they wouldnt do that, and I'm sure everyone in this forum is happy with that
And before people go on about 'if it wasnt for investors, there would be no rental properties', it also works that if investors werent snapping up properties, there would be less competion for properties, prices would be lower and more people could buy instead of rent.
Flame away.
I aggree, there is no housing shortage (even close to the CBD), just an excess of property investors/speculators. From what I've seen at auctions lately, people arent buying PPORs, they're buying investment properties.
Flame away.
No flames needed, you said it yourself like rocket did....
just an excess of property investors/speculators.....looking for property that is obviously in short supply to house the masses of people who are seeking rental accommodation in those areas.
Short supply or high demand...it's the same thing isn't it...?
Going forward with immigration and population growth set to expand and still new housing stifled at the States front desks...how can there be anything else but a drain on supply therefore an increase in demand iun certain areas ?
Really....am I missing something? I'd like to know if so...
Supply and demand are different. You can have no increase in demand and reduced supply = higher prices.
From today's local paper:
"More than 2,000 people are on the waiting list for public housing in Townsville but only 7% will find a home this year".
"Townsville has experienced near-record population growth, despite the economic downturn. The city's population grew by 5606 people or 3.2% in the year to June '09".
Nothing has changed since and the Army is still moving another battalion to Lavarack Brks.
But house prices have been struggling for a few years! I will be putting a property on the market when the grub tenant moves out in two weeks and I hope to get what I paid for it 2.5 years ago.
I think you guys overstate "supply demand". It is money in pockets and sentiment that drive prices.
"More than 2,000 people are on the waiting list for public housing in Townsville but only 7% will find a home this year".
"Townsville has experienced near-record population growth, despite the economic downturn. The city's population grew by 5606 people or 3.2% in the year to June '09".
Nothing has changed since and the Army is still moving another battalion to Lavarack Brks.
But house prices have been struggling for a few years! I will be putting a property on the market when the grub tenant moves out in two weeks and I hope to get what I paid for it 2.5 years ago.
I think you guys overstate "supply demand". It is money in pockets and sentiment that drive prices.
Gee you have done well there Sunfish,i know a few people in Brisbane in the same boat,bought development inner city blocks, took everything down too the DA stage only too find out that the banks won't lend,or if they did the rates were above 10%,i'm sure they have the same bad lingering aftertaste..willair..
