This move by the banks confirms bubble

[BayView]

Today you'd need to save half a million dollars to save up enough to buy a house outright. How many renters can save that.. no one saves the full price of a home, because it would take half if not all of your life.

You basically just proved my point and shown you don't really know what you are talking about.

Again, you are simply twisting the argument to support yourself.

My point was to buy a house in the middle of nowhere was easy to do; but who would live there?

The same scenario still exists. You are talking about a half million dollar house - but where?

You can buy a 3 bed house for under $300k in every State in Australia. That's about the same value as my $55k house in Flinders back in '92.

The thing I didn't mention about what I did - and I reckon it needs mentioning now, is this;

The $60k I saved was a result of what I did to get it. Incidentally, it took me 12 months to save this on my income of about $85k (nett; from my business) at the time. Decent money back then, but the hours are what no-one would want to do. I put it no less than 65 hours each week.

Most folk today are whining if they have to do 40 hours, and god forbid they work a weekend in that.

Not blowing my own trumpet; just telling you what I did. Would others do it? Who knows, but one thing is for sure; if you don't attempt to do what I did, then your prospects are more limited probably.

In your case; the prospects are closer to zero, because you are a sook who has given up.

Here's the formula - if you are interested;

1. Spent no money.
2. Saved at least 50% of my income each week.
3. Hardly ever went out
4. Spent no money
5. Worked about 70+ hours per week
6. Spent no money.
7. Put all my savings into a TD until I could figure out what to do with it.

Try that little exercise for a year and see how you come out at the other end.

Now, could a Uni student do this? No; they earn no money mostly. Life sucks.

 

[BayView]

Though if Beebop is right and your son only earns $35,000, a $290,000 property is a bit risky. But it does seem you and your son have considered the risks and have accepted them and in some cases that is the best we can do.

A $290k propery for a $35k earner is certainly with risk. So is driving a car.

But, I betcha the guy/girl who takes the risk (with some risk management in palce) will do very nicely, while the Beebops of the world will be left behind due to their inaction and whinging.

 

[Deltaberry]

Actually unemployment didn't really increase that much in Japan. Construction workers got hit hard. However the Japanese companies tried as hard as possible to not lay off workers due to a feeling of social responsibility.

However young people who graduated during that era were not able to find permanent positions. They managed to scrap a living chaining together temporary positions though. They weren't really unemployed though.



Yes, and Australian property dipped back further back to. As did American house prices. This is known as the property cycle.

However the areas which have dipped recently - US, Ireland, Spain, etc. are in deep economic crap due to the failures of their banking system due to their heavy debt levels due to the dependency on people speculating on property using high amounts of leverage such that small decreases in property prices caused the financial systems to seize up. In Japan I think it was more commercial property leverage that caused the banks to seize up. Which one is Australia's current system more similar to? Anyway, in the last couple of decades there has been banking deregulation and a massive worldwide credit binge which is now reversing.



You can think what you like. The key thing here is the banking system and its chances of seizing up. Personally I think the most likely weakness is the foreign lenders.



Actually in terms of house market as a percentage in terms of GDP I believe Australia is way about 3 - that is the housing market is about 3 times GDP. I think only a handful of countries have ever reached that point. China currently. Japan just before it crashed. HK just before it crashed. And that's it. The US before it crashed only had a housing market about 1.5 times its GDP. The reason why this ratio is important is because it is an indicator of how easy it is for the government to support the housing market if it starts falling.

In the end the key point is this - it doesn't matter how personally responsible you are - it's all the nitwits who aren't that will bring you down in a housing bubble. Count the number of people you know or see who you think are idiots in their property purchasing choices. If there is enough of them that it what will bring the housing bubble down because it will seize up the banking sytem and this will also bring down the value of your own property too.

HK before which crash? They've come roaring back past whatever heights they reached previously. Again not so comparable to Japan. In any case not sure I've heard of the 3x GDP stat. Be good to see a link on that.

As for your point about unemployment, it doesn't matter what the technical definition is as we're not going to get trivial being the educated people we are. Just talking about loss of or substantial reduction in income earning capacity.

Leverage is more severe in HK than it is here, as is price-to-income ratio and serviceability ratios. The ironic thing is Japan experienced the biggest savings boom before its collapse. I understand what you're talking about in terms of a liquidity freeze - I think that's the term you're referring to, it nearly brought down the world two years ago. Maybe at some point it will.

Re China, are you calling a crash?

 

[Deltaberry]

I guess I didn't choose the best example for Ireland, but in Ireland they had the big commuter suburbs too and shoebox apartments (too small to even have a kitchen!) just because they were the only things people could afford. How do you raise a family in a shoebox aparement? They are stuck there now.


People who work hard don't necessarily win in the end and just because you feel that you've sacrificed your happiness for a few years by living in a place you are miserable in the gamble that your house/unit price will go up so you can upgrade doesn't mean that fate will reward you. In fact in some cases it will likely punch you in the gut and then kick you while you are down. A common saying here is that life is not fair and it is also true the other way around.

The whole of HK lives in shoebox apartments. Just checked out a A$4m shoebox when I was there, was around 140sqm. So after reading your particular comment I find it pretty naive. You seen people raising families in a cage?

http://www.google.com.au/#hl=en&sou...&aqi=g1&aql=&oq=&gs_rfai=&fp=7a25ca7e8395071e

City still roaring ahead with 6% GDP growth. Imagine if your houses grew like that... or if this country grew anywhere near that... you'd be a multi-billionaire with your economic prowess ^_^

As for wylie's son earning $35k, well that's pretty low, for a 40 year old. Oh wait he's 20 in uni yea? I see...

 

[recruit2]

Yeah after you see the SIZE of the places in HK and Tokyo you appreciate why Oz's prices are like they are. You are getting huge places in Oz for the money, its quite ridiculous actually after living in Tokyo. Sure yeah the market has to cool off a bit more, no worries, but all the fundamentals are strong, peoples' earnings will kick back up in time again and again, prices will slightly cool and things will stabilise. My advice Beebop is to buy sometime this year while the thick fear is still in the air and people are accepting low offers.

Yes the Beebops of the world will be no better off in 10-20 years time that's for sure!

 

[Intrinsic_Value]

Personally i feel, actually i dont know what the right non-offensive word is, that far too much attention is given to the 'need' to explain by property investors to responses such as those issued by beebop.

Its almost as though property investors are like newly converted christians, and feel the need to preach their new found religion.

Personally i would just have beebop on ignore.

I never feel the need to justify my investment decisions. However i open to discussion on my thought process with those who are really interested.

There is a diference.

 

[wylie]

You are right Intrinsic Value. My husband used to shake his head when I would continue to argue with our oldest son when his side of the argument was unquestionably wrong. He just liked to argue, and had real problems admitting he could be wrong (still does ) and would keep going even when he knew he was wrong.

So I would not back down. I think that made me as bull headed as him but when I know my facts I will argue them.

There is a saying... something about arguing with idiots making me an idiot too, but I cannot remember it correctly this late at night .

 

[BayView]

Personally i feel, actually i dont know what the right non-offensive word is, that far too much attention is given to the 'need' to explain by property investors to responses such as those issued by beebop.

Its almost as though property investors are like newly converted christians, and feel the need to preach their new found religion.

Personally i would just have beebop on ignore.

I never feel the need to justify my investment decisions. However i open to discussion on my thought process with those who are really interested.

There is a diference.

You are dead right of course IV.

But I put in answers with the mindset that there are other people reading the forum who are like him - have little experience - but with the difference that they really want to learn and take action.

We don't want those people to listen to only D&G (especially with no runs on the board to back it up); we want them to learn strategies to get around obstacles and continue to make wealth from property investing.

As well as that, I like to torment people like Beebop when I'm bored.

 

[Tehanu]

The whole of HK lives in shoebox apartments. Just checked out a A$4m shoebox when I was there, was around 140sqm. So after reading your particular comment I find it pretty naive. You seen people raising families in a cage?

http://www.google.com.au/#hl=en&sou...&aqi=g1&aql=&oq=&gs_rfai=&fp=7a25ca7e8395071e

City still roaring ahead with 6% GDP growth. Imagine if your houses grew like that... or if this country grew anywhere near that... you'd be a multi-billionaire with your economic prowess ^_^

As for wylie's son earning $35k, well that's pretty low, for a 40 year old. Oh wait he's 20 in uni yea? I see...

The article you point to has the people in HK living in extreme poverty living in the 'cage homes'. And all those people seem to be single.

Also you do realize that HK is currently in a bubble which the authorities are trying to crack?

Regardless, you talk about 140sqm.

The shoebox apartments in Ireland, which by the way were marketed to young professionals earning decent incomes, could be as small as 20 square metres though the more common size was 28 square metres.

http://www.irishexaminer.com/archiv...tment-sells-for-a-kingsize-pricebr-24275.html

A studio apartment barely larger than the standard prison cell has sold for well over its €121,000 guide price.

The one-room bedsit fits the classical description of a shoebox apartment and fetched almost double the asking price, or around €700 per sq ft.

No 16 Mitchell House measures just 226 sq ft and is just about twice the size of its accompanying parking space.

With hardly enough room to swing a Manx cat, the second-floor apartment is one of the smallest residential properties ever sold on the Dublin market.

The premises consists of a kitchen-cum-living room and a small bathroom cubicle.

The standard studio apartment is usually around 300 sq ft. No 16 Mitchell House is a 3ft by 6ft kitchen and 8ft by 19ft living area with a 7ft by 5ft bathroom. Despite its shortage of space, over 100 parties were interested in buying the property, located on Appian Way, in the fashionable Dublin 6 district of the city. According to Iris Keating of selling agents Hamilton Osborne King, its selling price matched the amount estate agents would normally expect to receive for a standard one-bedroom apartment.

"There was a lot of curiosity about the apartment because of its size," she admitted. "However, many of the people who viewed the property were genuinely interested in buying it."

Although it is in need of modernisation and lacks any possibilities for creating extra space, Ms Keating explained its high selling price was due to its location. It's within easy walking distance of the city centre.

Even though it is only suitable for one person, she claimed the high selling price represented the upswing in the property market since the New Year.

Another perk which pushed up the studio's price was the accompanying parking space, valued at around €25,000.

So in 2002 not near the peak, it was about 700 euros per square foot or 7000 euros per square metre or about 9000 AUD per square metre. Probably higher back then as the Euro was much stronger. Your HK example is about AUD$28000 per square metre. Not as much, but (1) the Euro was much stronger back then (2) 2002 was not the peak in Ireland (3) HK is currently in a bubble which the authorities are trying to control. Also it is not anywhere comparable to the extremely poor people in your HK article.

In a way it is also what you are used to.

The Irish do not traditionally live in small apartments. I mean they have an abundance of space! Can you imagine many Australians being happy to live in a 20 square metre one bedder and raising a family there? In a way it is a psychological thing.

Obviously the Irish were not too happy with the sizes of the apartments as in 2007 complaints forced the regulators to increase the minimum sizes.

http://www.independent.ie/national-...x-apartments-to-apply-nationwide-1083922.html

http://www.hkjournal.org/archive/2010_spring/1.htm

Actually, apparently the people in HK aren't too happy either:

http://www.hkjournal.org/archive/2010_spring/1.htm

Through the 1990s, the widespread sense of upward mobility and improving living standards created a highly positive social environment. But today, with upward mobility largely gone, or at least not as obvious compared to the past, the grim reality of a generally poor quality of life has hit home hard among Hong Kong families. In spite of international perceptions of an opulent society (on a PPP basis, Hong Kong is among the five richest societies in the world) the reality is that half of Hong Kong’s working population earn less than US$1,300 a month, with 5% earning less than US$410.

To tackle worker poverty, Hong Kong’s government launched in 2007 the Wage Protection Movement and appealed to employers to voluntarily bring the wages of their cleaners and security guards to median industry levels. After two years, everyone agrees that employers simply ignored the appeal. The government is now legislating for statutory minimum wage. The figures being thrown around by employers and trade union representatives range from US$2.60 to US$3.90 an hour. Barely a quarter of Hong Kong families share what could be described as a “middle class” lifestyle. Note that just 15% own cars, and 10% have the resources to employ a domestic helper.

Increased contact with families in fast-rising mainland cities like Shenzhen or Shanghai make it clear that the primary measure of living standards – whether you own a car and how big is – is no longer in Hong Kong’s favour. Over 90% of Hong Kong families today live in homes smaller than 700 square feet – significantly smaller than the average apartment size in Shenzhen. This is not a plight confined to the poorest in the community who live in public housing – over half of Hong Kong’s private apartments are less than 500 sq ft. Whether an average Hong Kong family lives in private or public housing, the chance of moving anytime soon into a less-cramped home is dim.

Put these factors together, and you quickly realize why Hong Kong families are at present so discontent, why they vote for aggressive political figures like “Long Hair” (Leung Kwok-hung, an elected member of Legco) and the League of Social Democrats, and why they so cynically imagine collusive links between the government and Hong Kong’s super-rich. This is 90% of Hong Kong’s population that feels entirely disengaged from the world-leading financial services economy being “challenged” by Shanghai. This is a constituency that feels government policies focused on the “four pillars” of the economy – and the “six new pillars” – have little to do with them.

Also people in HK aren't really raising families in those small apartments either.

http://en.wikipedia.org/wiki/Demographics_of_Hong_Kong

Hong Kong has one of the world’s lowest birth rates—0.9 per woman of child-bearing age, far below the replacement rate of 2.1.

If it wasn't for large immigration from the mainland, the demographics of HK would be in serious trouble.

Anyway, just ask yourself - let's say you were a young lawyer in Ireland who bought a 20 square metre one bedder back in 2005, paying top price at the top of the market. I'm willing to bet the people who bought it thought they were only going to live there for a couple of years. Now the market has crashed, you can't sell your 20 square metre one bedder and you are stuck living there. You and your girlfriend want to get married and have kids. This is an apartment which so outraged the housing expectations of your culture that they were actually banned.

Sure people manage. People have a very good capacity to manage. Even during civil wars and devastation people get married and have kids. If they have a very good philosophical outlook on life they may even be happy. However many people won't be happy and the question is how much of the misery was un-needed. More importantly the question is would you *personally* be happy possibly stuck in the place you just bought? This is not about financial losses (though that could increase the misery). This is about human misery caused by being stuck somewhere you don't like because of a housing bust.

While the article was about apartments and this is one of the more extreme examples, the ideas also spread to houses too. So a lot of people who bought these newly bought houses (probably in the commuter belt so far away too) are also suffering from the "stuck where you may not be happy" problem.

http://ezinearticles.com/?Greed-Caused-the-Demise-of-the-Irish-Kitchen&id=3722531

The Celtic Tiger era of the period from 1994 to 2007 saw a vast increase in demand for new homes together with the associated huge appreciation in prices. The cost of land exploded resulting in developers trying to exploit every square metre of the expensive sites they bought. The outcome was of course skewered in favour of the builders with smaller houses and apartments offered to the public at sky high prices. "Shoebox apartments" was a common description of the homes for which unfortunate punters paid top dollar.

Houses fared little better with the traditional spacious semi-detached houses of the seventies and eighties consigned to the waste bin in architects offices, being supplanted by rows of terraced "town houses"; a title that were supposed to convey some aura to a small terraced house. For ever increasing money one got smaller and smaller houses. From a design point of view the main change was in the kitchen and dining areas. The dining room was once the treasured but little used room in the older quality build houses. The purpose was to entertain those special guests that arrived a few times a year. It was a show-off room of the house along perhaps with the sitting room or lounge. The kitchen was once the most revered room in the home and given the generous space it deserved. However in the greed that accompanied the boom, a smaller measuring tape was taken to this precious area in the rush to increase profits.

With the emphasis on cutting down on space, general house design eliminated the dining room in favour of the kitchen/diner. This was basically one room partially divided by various means that included archways and L-shaped kitchen units that operated as functioning kitchen at one end and an eating area at the other end. Whilst one could agree with the notion that the traditional separate dining room was a waste of space for most of the time, its demise was merely to enhance the profits of developers.

Worse was to evolve as the era wore on with builders finding as many space-saving means as possible to offer less for more. As builders had already shrank bedrooms to claustrophobic proportions and couldn't dare make them any smaller, they again turned their greedy gaze to the kitchen. Kitchens became smaller and more compact and the term "kitchen/dining/living area" entered the estate agents jargon. Basically this was the one room that previously would have been the kitchen now divided into a multi-functional room, where you cooked, ate and relaxed or rather, tried to relax, after your days work.

Sadly the madness and desire to put profit over principle has led to a situation where most urban houses in Ireland now have what once was once a generously-sized room now serving a role of effectively three rooms and the traditional Irish kitchen is now the size of something you would find on a small boat. Bring back the old days when builders built homes instead of housing units.

A final thing to consider - HK is a small rocky island that is one of the most densely populated areas on the face of this earth. Ireland has lots and lots of space...

 

[Aaron Sice]

*sigh*

your dublin example is just stupid, Tehanu. sorry, but there...i've said it.

Although it is in need of modernisation and lacks any possibilities for creating extra space, Ms Keating explained its high selling price was due to its location. It's within easy walking distance of the city centre.

Another perk which pushed up the studio's price was the accompanying parking space, valued at around €25,000.

do you know how HARD it is to get a sole-use parking space in London / Dublin / Paris / Copenhagen? When they come up for sale, they sell for a MINT. there was a garage that came up for sale just off regency st in london when i was there - i walked past the sign and thought it was odd so i walked further and had a look.

it was a 2.7m x 5.6m single garage space. the ceiling was about 2.0m high. it was selling for 80k GBP - in 2001. that was it. no plumbing, no extra loft space. just a parking spot.

THAT is the reason that your dublin example was so expensive, it was a residence and parking space IN THE CENTER OF DUBLIN up for sale.

and this...

If it wasn't for large immigration from the mainland, the demographics of HK would be in serious trouble.

is in direct conflict with hong kong's immigration laws - simplified wiki link

http://en.wikipedia.org/wiki/Immigration_to_Hong_Kong

they don't have a huge influx of mainland chinese to HK. while there are definitely more people eligible after 1999 court ruling, they still need to be 'highly skilled' or have a lot of money to prove their self sufficiency. it's not as black and white as you make out.

sorry, but some of your arguments are just oversimplified.

 

[Tehanu]

*sigh*

your dublin example is just stupid, Tehanu. sorry, but there...i've said it.



do you know how HARD it is to get a sole-use parking space in London / Dublin / Paris / Copenhagen? When they come up for sale, they sell for a MINT. there was a garage that came up for sale just off regency st in london when i was there - i walked past the sign and thought it was odd so i walked further and had a look.

it was a 2.7m x 5.6m single garage space. the ceiling was about 2.0m high. it was selling for 80k GBP - in 2001. that was it. no plumbing, no extra loft space. just a parking spot.

THAT is the reason that your dublin example was so expensive, it was a residence and parking space IN THE CENTER OF DUBLIN up for sale.

and this...

I would like to point out that was just one example and I admitted an extreme one.

However it was obviously common enough in Dublin at the time that the complaints and outraged forced the government to push laws through greatly increasing the minimum size of apartments as I already posted.

Here are some more examples:

http://webcache.googleusercontent.c...ox+apartments+dublin&cd=6&hl=en&ct=clnk&gl=au

Also note that the standard of the apartments were to be blunt, crap. Oh and no mention of car spaces.

is in direct conflict with hong kong's immigration laws - simplified wiki link

http://en.wikipedia.org/wiki/Immigration_to_Hong_Kong

they don't have a huge influx of mainland chinese to HK. while there are definitely more people eligible after 1999 court ruling, they still need to be 'highly skilled' or have a lot of money to prove their self sufficiency. it's not as black and white as you make out.

sorry, but some of your arguments are just oversimplified.

[/quote]

http://edition.cnn.com/2007/WORLD/asiapcf/06/09/hk.migrants/index.html

Today, mainlanders account for 93 percent of the city's population growth, according to the Bauhinia Foundation Research, making them a key factor in shaping Hong Kong's present and future.

Regardless your comment about HK immigration laws is quite tangential to my point which was that people living in HK in those small apartments are in fact not really raising families in them (0.9 birth rate is a pretty good indicator). And even HK was tangential to the point about shoebox apartments in Ireland.

The key point and one which I have yet to see anyone really question is that if you buy somewhere and prices drop a lot it is very difficult to move. Hence the argument about buying now even if it somewhere you hate just so you get on the property ladder only works in an environment where house prices are likely to rise. If prices go back soon then you will still make out OK. However you may still face the prospect of having to live in that place you hate for quite a few years. Hence it is important to choose somewhere you can see yourself living for at least a few years and not just buy anything just because (1) you can afford it and (2) you are desperate to get on the property ladder.

Of course since most people here think that prices in Australia will never fall the point is probably a moot consideration for most people on this forum's investment decisions or PPOR decisions. I respect that. Hence why I haven't gone to other threads and made that point. However for people like Beebop who does seriously consider the possibility that house prices will fall then it is something he definitely needs to take into account.

This is not a question of whether you can pay the mortgage or not so it's not really a question of affordability. If you can't you'd end up defaulting. That's an entirely different set of problems. This is about the majority of people who bought near the top who keep their jobs, can keep on paying the mortgage and see their house prices which they bought near the top go down and the effects. If someone bought a cheap flat then they'd still be in the same boat. It will just take them a shorter period of time to dig themselves out. However there would still be a cost to them because of the income they are ploughing into a place that is losing value just so they can leave.

How did people do when house prices didn't rise or even fell? Well, back then housing was considered a consumption item (unless you are investing for rental yield) rather than an investment and hence banks were much more loathed to lend out money. And people were much more cautious about buying.

It is not just about young people. As I showed earlier, retirees in the US are also delaying their retirement plans because of house price falls meaning they can't really afford to sell.

If most people here are right and Australian prices will keep on rising a lot then Beebop if he doesn't buy he may regret it. If however Australian prices do drop substantially and he buys he may really regret it. So the decision is really up to him. Does he want to possibly live in a place he hates for a couple of years with the idea of upgrading later. Or will he be content renting? Either way requires some level of sacrifice. Personally I would say the later option is safer. Because he will still have the flexibility to buy, even if it is a bit more expensive. However if he buys now and house prices fall a lot and he hates the place he loses the flexibility to sell and move. But in the end the decision is up to him and how he believes the housing market will move. But I would advise him not to make moves out of fear. If you want to hedge your bets, buy but make sure it is somewhere you can see yourself living for a while. This is not about financial losses so much as about psychological wellbeing.

Actually I think most people in the end make peace with themselves and even if they end up for many years in a place they didn't envision themselves staying long-term they end up OK if not happy. So in the end its' not a complete disaster. But I don't see the point of increasing the chances of yourself being unhappy just because you're desperate to buy anything affordable and get on that property ladder.

Which still doesn't excuse Beebop for not taking people's advice and driving out to the flats to see whether it really is noisy and drug infested or not rather than just complain about the possibility of it being noisy and drug infested.

 

[DJBarnstar]

Yes, it is still affordable for an investment on the assumption of Capital gains. But would you actually want to live in one of them ? I think not. LMAO !! And good luick finding a unit 207k now LOL !! More irrelevant information.

Face it. This IS a bubble. It is pretty obvious prce growth is going to stall while wages catch up. LOL just talking to a guy last week who went looking for houses with a good deposit and realises they're all too expensive.

Few years ago that would have been a buyer, and sale, now they're all dropping off an guess what that will do to prices ?

I've got a 2 beddy availible that you can pick up for $205K.....................

 

[Aaron Sice]

okay - way off topic - but my point is that while HK has a net migration figure of nearly 3mil, only net 300k to date are immigrants. that's a very transient population number skewed by tourists etc.

and now you ask yourself, were the 93% mainland chinese part of the stop over tourist trade or actually moving there? but i digress and we're probably arguing the same point from two different angles.

The key point and one which I have yet to see anyone really question is that if you buy somewhere and prices drop a lot it is very difficult to move. Hence the argument about buying now even if it somewhere you hate just so you get on the property ladder only works in an environment where house prices are likely to rise. If prices go back soon then you will still make out OK. However you may still face the prospect of having to live in that place you hate for quite a few years. Hence it is important to choose somewhere you can see yourself living for at least a few years and not just buy anything just because (1) you can afford it and (2) you are desperate to get on the property ladder.

i agree entirely. it's a PPOR so it should be an emotive purchase, a place you like or are at least happy to "settle for" for the time being, in the knowledge you can use it as a stepping stone.

if you're going to rent a home and then buy an IP it's a different story altogether.

Of course since most people here think that prices in Australia will never fall the point is probably a moot consideration for most people on this forum's investment decisions or PPOR decisions. I respect that. Hence why I haven't gone to other threads and made that point. However for people like Beebop who does seriously consider the possibility that house prices will fall then it is something he definitely needs to take into account.

come on! could you generalise a little more? there's no need to be pragmatic. most people here agree prices on the general whole have softened / fallen / busted - whatever. most people on here believe that's a good thing. most people also refuse to believe that prices drops of 40%+ are likely.

the UK's housing market tanked - quickly.
the US's housing market tanked - quickly.
the EU's housing market fell - moderately.
the Australian housing market softened - slowly.

i've posted the attached picture before and i'll do it again.

but your points about renting vs buying are very good. i woudl agree with all of your points, except that i would add that if you ARE renting, pretend you're paying it off and put the extra money aside into savinbgs or other investment vehicles.

 

[Beebop]

Australian house prices are very cheap. The only way prices can go is up ! Up ! and UP !

 

[VYBerlinaV8]

Australian house prices are very cheap. The only way prices can go is up ! Up ! and UP !

Run out of material eh Beebop...?

 

[Beebop]

okay - way off topic - but my point is that while HK has a net migration figure of nearly 3mil, only net 300k to date are immigrants. that's a very transient population number skewed by tourists etc.

and now you ask yourself, were the 93% mainland chinese part of the stop over tourist trade or actually moving there? but i digress and we're probably arguing the same point from two different angles.



i agree entirely. it's a PPOR so it should be an emotive purchase, a place you like or are at least happy to "settle for" for the time being, in the knowledge you can use it as a stepping stone.

if you're going to rent a home and then buy an IP it's a different story altogether.



come on! could you generalise a little more? there's no need to be pragmatic. most people here agree prices on the general whole have softened / fallen / busted - whatever. most people on here believe that's a good thing. most people also refuse to believe that prices drops of 40%+ are likely.

the UK's housing market tanked - quickly.
the US's housing market tanked - quickly.
the EU's housing market fell - moderately.
the Australian housing market softened - slowly.

i've posted the attached picture before and i'll do it again.

but your points about renting vs buying are very good. i woudl agree with all of your points, except that i would add that if you ARE renting, pretend you're paying it off and put the extra money aside into savinbgs or other investment vehicles.

Dunno how you feel there is such potential for growth when prices are already severly unaffordable. Wages need to spike first, then I'd tend to agree price increases will follow. Otherwise growth is about as fanticiful of an idea as a 50% crash letting everyone buy back into the market.

 

[jaycee]

So when, if at all, do you see price increases happening ?

 

[bluestorm]

So when, if at all, do you see price increases happening ?

Late 2012/early 2013. After a correction in 2011/2012
At least, that is the way I'm positioning. Then 5yrs of growth and retire.

 

[jaycee]

Thanks bluestorm, I'll take that thanks...

Wondering when Beebop thinks price increases will start again ?

 

[Deltaberry]

The article you point to has the people in HK living in extreme poverty living in the 'cage homes'. And all those people seem to be single.

Also you do realize that HK is currently in a bubble which the authorities are trying to crack?

Regardless, you talk about 140sqm.

The shoebox apartments in Ireland, which by the way were marketed to young professionals earning decent incomes, could be as small as 20 square metres though the more common size was 28 square metres.

http://www.irishexaminer.com/archiv...tment-sells-for-a-kingsize-pricebr-24275.html



So in 2002 not near the peak, it was about 700 euros per square foot or 7000 euros per square metre or about 9000 AUD per square metre. Probably higher back then as the Euro was much stronger. Your HK example is about AUD$28000 per square metre. Not as much, but (1) the Euro was much stronger back then (2) 2002 was not the peak in Ireland (3) HK is currently in a bubble which the authorities are trying to control. Also it is not anywhere comparable to the extremely poor people in your HK article.

In a way it is also what you are used to.

The Irish do not traditionally live in small apartments. I mean they have an abundance of space! Can you imagine many Australians being happy to live in a 20 square metre one bedder and raising a family there? In a way it is a psychological thing.

Obviously the Irish were not too happy with the sizes of the apartments as in 2007 complaints forced the regulators to increase the minimum sizes.

http://www.independent.ie/national-...x-apartments-to-apply-nationwide-1083922.html

http://www.hkjournal.org/archive/2010_spring/1.htm

Actually, apparently the people in HK aren't too happy either:

http://www.hkjournal.org/archive/2010_spring/1.htm



Also people in HK aren't really raising families in those small apartments either.

http://en.wikipedia.org/wiki/Demographics_of_Hong_Kong



If it wasn't for large immigration from the mainland, the demographics of HK would be in serious trouble.

Anyway, just ask yourself - let's say you were a young lawyer in Ireland who bought a 20 square metre one bedder back in 2005, paying top price at the top of the market. I'm willing to bet the people who bought it thought they were only going to live there for a couple of years. Now the market has crashed, you can't sell your 20 square metre one bedder and you are stuck living there. You and your girlfriend want to get married and have kids. This is an apartment which so outraged the housing expectations of your culture that they were actually banned.

Sure people manage. People have a very good capacity to manage. Even during civil wars and devastation people get married and have kids. If they have a very good philosophical outlook on life they may even be happy. However many people won't be happy and the question is how much of the misery was un-needed. More importantly the question is would you *personally* be happy possibly stuck in the place you just bought? This is not about financial losses (though that could increase the misery). This is about human misery caused by being stuck somewhere you don't like because of a housing bust.

While the article was about apartments and this is one of the more extreme examples, the ideas also spread to houses too. So a lot of people who bought these newly bought houses (probably in the commuter belt so far away too) are also suffering from the "stuck where you may not be happy" problem.

http://ezinearticles.com/?Greed-Caused-the-Demise-of-the-Irish-Kitchen&id=3722531



A final thing to consider - HK is a small rocky island that is one of the most densely populated areas on the face of this earth. Ireland has lots and lots of space...

Didn't read all of it. But thanks for all your information on HK, it sure provided a lot of education to a HK citizen. Oh if only I knew as much as someone from/in another place ^_^

Oh well least HK won't ever crash like Ireland. They have substantially bigger apartments (140sqm vs 20sqm). Also HK people are just living in what they're accustomed to, as opposed to Irish people who are being forced to live in 20sqm when they are actually used to 750sqm houses. Extrapolating from your top-class analysis, I predict HK property will rise another 50% in the next decade. Thank god I'm already in the market

As for your point about HK dying if there were no mainland China immigrants, I agree with you. Oh and if may add, America would not be a world superpower if it didn't have nuclear weapons. And how boring would cricket be if it was played without a ball.

And thanks for quoting Long Hair. Took a photo with him last time I studied at HK Uni. Certainly a very representative politician of HK. If only more people would listen to him, we'd have another revolution on our hands. Will be exciting times.