What will you do when Rudd decides to turn the FIRB tap off?

[VYBerlinaV8]

here is the answer at 7% growth the average house price in ten years would be 944k

average wage grows by 5 % in ten years time 97k

repayments on 944 k are 76k a year .. that 97k is pre tax .

ok so your saying richer people will move into the area to maintain price growth .where are these riches coming from .

the public debt in australia is now approaching 200% .its has to be paid back and we cant mow each others lawn forever and sell each other ever increasing houses . we need to get the country back to producing something .when the piper comes a calling things will shock people

I think there may be more to the story here. Don't forget that over the next 10 years the population of a large Australian city will grow - in the exmaple of Melbourne it will grow by a lot, perhaps a million or more. This means a lot more people living in Melbourne, meaning that nice inner suburb now represents a smaller percentage of the overall housing pie. Because it's nice, and well located, there will be more people trying to buy into that suburb, and the richest people will 'win'. Remember, with growing population and a healthy economy, there will be more wealthy humans. But no extra properties in your nice inner suburb.

As such, the price rises, and rises, and rises. Even though the median and/or average doesn't change much, properties in that nice inner suburb rise the the ranks of desirability.

 

[Bigtone]

here is the answer at 7% growth the average house price in ten years would be 944k

average wage grows by 5 % in ten years time 97k

repayments on 944 k are 76k a year .. that 97k is pre tax .

ok so your saying richer people will move into the area to maintain price growth .where are these riches coming from .

the public debt in australia is now approaching 200% .its has to be paid back and we cant mow each others lawn forever and sell each other ever increasing houses . we need to get the country back to producing something .when the piper comes a calling things will shock people

Hello Urbanprospector,

Your are clearly very intellectual and have a firm grasp on numbers and economics. Obviously the share market and the housing bubbles will burst shortly. So could you please provide some advise on where we should be placing our money and additionally is which assets your current wealth is held?

Regards

Bigtone

 

[dan c]

here is the answer at 7% growth the average house price in ten years would be 944k

average wage grows by 5 % in ten years time 97k

repayments on 944 k are 76k a year .. that 97k is pre tax .

ok so your saying richer people will move into the area to maintain price growth .where are these riches coming from .

the public debt in australia is now approaching 200% .its has to be paid back and we cant mow each others lawn forever and sell each other ever increasing houses . we need to get the country back to producing something .when the piper comes a calling things will shock people

The average wage has not been able to buy an 'average' house in Sydney, Melbourne and Perth for some time. It's hardly news.

It's also irrelevant. Most households now have two incomes, so average wage compared to average house is misleading, and only used in tabloid papers to whip up d&g frenzies.

 

[Ruddprime]

thought you women might like some more doom and gloom

This is a piece by Alan Mitchell, One of AFR's most senior commentator's.

House prices are rising strongly even though new lending for housing is falling, and cashed-up foreign investors are prime suspects. The government should put foreign investment in residential real estate under closer regulation of the Foreign Investment Review Board, and the sooner the better.

Foreign investment and housing affordability are a politically explosive combination, and a godsend in an election year for politicians who don't mind engaging in a little outer-suburban racism....

More at http://petermartin.blogspot.com/2010/04/we-need-to-stop-foreigners-buying-our.html

 

[urbanprospector]

Hello Urbanprospector,

Your are clearly very intellectual and have a firm grasp on numbers and economics. Obviously the share market and the housing bubbles will burst shortly. So could you please provide some advise on where we should be placing our money and additionally is which assets your current wealth is held?

Regards

Bigtone

i have a decent chunk of mine in bullion at present . an amount im comfortable with . have been since house sale (played bullion longer though) .

i feel the stock market could go either way atm so not very comfy there but some stocks will do ok . these are very unpredictable and uncertain times we are navigating . i for one will be happy to see the other side wealth intact ,if possible .

commercial real estate .personally wouldn't touch with a barge pole at present . just a drive along scarborough bch rd though osbourne pk and the amount of for lease or for sale signs up .spent the last year in melb prior to this and noticed the same with the closer in commercial areas and sydney rd is awash with for lease . ... closing down sale .


whilst they still guarantee the bank deposits ill sit getting 6% at call and be happy .

on the property side of things we have been building an over supply for many years that has only got to an even level as we speak . perth rental mkt stands at 5% vacant and growing (no shortage there ) noticed the signs in melb too and newspaper adds for rentals . un heard of 2 years ago ..

as the cost of living increases more people will share . i know many that at 40 have sold to live with elder relatives due to cost .

i will share further thoughts as they come to me . and thanks for the welcome ..

p.s. notice the ground swell of opposition to the boat people and immigrants that is appearing . feels like a rerun of the 70s .. but unfortunately i feel will end a lot worse .

 

[urbanprospector]

are prices also rising due to forced sales at the top end .skewing the averages .. that place nicole kidman paid 20 mill for didn't she palm it off for 13 mill.

 

[wobbycarly]

as the cost of living increases more people will share . i know many that at 40 have sold to live with elder relatives due to cost .

Maybe I'm unfairly cherry-picking your post, but I think anyone at 40(ish) who has to move in with someone else "due to cost" has made some pretty bad mistakes! Don't think there'd be too many of them around.

 

[urbanprospector]

Maybe I'm unfairly cherry-picking your post, but I think anyone at 40(ish) who has to move in with someone else "due to cost" has made some pretty bad mistakes! Don't think there'd be too many of them around.

is a win win for both parties involved .the elder relative gets some help and the costs cheaper for both .

my present situation i have a place in qld . ill get around to putting something on . but happy to rent in a million $ suburb in perth for 250 a week 4 bed house . 4 km to city . no headaches with cost of maintaining ,rates ,insurance etc.

if your refer to my original post i showed an actual example of property prices that sold .. not what someone says its worth . that post also proved property there has dropped by 16 % aprox

the other points i made all valid and honest observations . id be very happy if things kept going the way they where, sheeesh i was killing the pig . but all good things come to an end .

if property is such a good investment why does it need subsidising by the tax payers ? that to me doesn't add up

 

[BayView]

are prices also rising due to forced sales at the top end .skewing the averages .. that place nicole kidman paid 20 mill for didn't she palm it off for 13 mill.

I wouldn't count this end of the market in the figures at all, because we are talking about maybe .01% of sales.

And, these people are in the ball park where there is no ceiling what they will pay if they really love it, and a loss of a cupla mill to Nic is pocket money.

 

[urbanprospector]

I wouldn't count this end of the market in the figures at all, because we are talking about maybe .01% of sales.

And, these people are in the ball park where there is no ceiling what they will pay if they really love it, and a loss of a cupla mill to Nic is pocket money.

so a house in perth sells for 57 mill .and this dont skew the numbers hmmmm

also 3 sold in vic last month or the one before 20 mill each

 

[craigb]

but thats exactly what a medien price is, some sell for millions and others sell for thousands , whats the confusion...I don't get it!

 

[Tony3008]

Looks like the FIRB tap has been turned off:

... Canberra finally caught up with public ire yesterday when the federal government reversed rules - conceived in late 2008 to avoid recession and established in March last year - that relaxed the laws of property ownership by foreigners, in the name of market flexibility.

Temporary residents will now have to go through pre-approval from the Foreign Investment Review Board before they are allowed to buy property. It is billed as a major retightening of the rules, although the previous $300,000 limit on property for student visa holders has not been reintroduced ...

http://www.theage.com.au/business/hammer-falls-on-foreign-investors-20100423-tjcy.html

 

[Wibbly Pig]

looks Like The Firb Tap Has Been Turned Off:

... Canberra Finally Caught Up With Public Ire Yesterday When The Federal Government Reversed Rules - Conceived In Late 2008 To Avoid Recession And Established In March Last Year - That Relaxed The Laws Of Property Ownership By Foreigners, In The Name Of Market Flexibility.

Temporary Residents Will Now Have To Go Through Pre-approval From The Foreign Investment Review Board Before They Are Allowed To Buy Property. It Is Billed As A Major Retightening Of The Rules, Although The Previous $300,000 Limit On Property For Student Visa Holders Has Not Been Reintroduced ...

http://www.theage.com.au/business/hammer-falls-on-foreign-investors-20100423-tjcy.html

Finally Common Sense Prevails! (And not before time!)

 

[jaycee]

I wouldn't count this end of the market in the figures at all, because we are talking about maybe .01% of sales.

And, these people are in the ball park where there is no ceiling what they will pay if they really love it, and a loss of a cupla mill to Nic is pocket money.

How little the loss means to Nicole or pthers with more money than us is not the issue is it ? I think we all know tht, so not sure why you mentioned it at all.

The issue is tht the statistcs used, DO include properties such as Nicole's whether you would include them or not personally. But people are using them to discuss whts occured / occuring/ going to occur to the 'average' property market excluding these sales...

 

[jingo]

Finally Common Sense Prevails! (And not before time!)

According to the article though, foreign buyers account for less than 1% of the market. So I'm not sure how much of an impact this change will have.

Further on, the article states that foreigners with approval for perminant residency will be able to buy.

Anyway, interesting times! The Rudd machine seems to be rather jumpy at the moment - reacting to the general public's every whim. I wonder why!!! Perhaps fiddling with -ve gearing will be his next move!!

Regards Jason.

 

[urbanprospector]

I wouldn't count this end of the market in the figures at all, because we are talking about maybe .01% of sales.

And, these people are in the ball park where there is no ceiling what they will pay if they really love it, and a loss of a cupla mill to Nic is pocket money.

ok just did some sums on the 57 mill house that sold in perth

on an average sales price of 480k x2600 sales for the month as a % of total sales value the 57 mill house was 4.568% of the total sales for the month .

now tell me it dont skew numbers

 

[Ruddprime]

According to the article though, foreign buyers account for less than 1% of the market. So I'm not sure how much of an impact this change will have.

Further on, the article states that foreigners with approval for perminant residency will be able to buy.

Anyway, interesting times! The Rudd machine seems to be rather jumpy at the moment - reacting to the general public's every whim. I wonder why!!! Perhaps fiddling with -ve gearing will be his next move!!

Regards Jason.

The quoted 1% figures were from the year pre-relaxxing of FIRB rules. No way is that relevant today.

It was the unreported purchases by TR that was the problem. Estimates of 30% of sales by some REA in Melbourne. Touche' it won't be such a problem now.

The requirement of TR's to sell as they leave will mean for most, the transaction costs will deter foreign land bankers, as students at least are only here for roughly 3 years?

 

[wobbycarly]

ok just did some sums on the 57 mill house that sold in perth

on an average sales price of 480k x2600 sales for the month as a % of total sales value the 57 mill house was 4.568% of the total sales for the month .

now tell me it dont skew numbers

Exactly why median values, and not average values, are most often quoted.

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

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

 

[keithj]

No-one (not even FIRB) has any figures for what proportion of buyers have recently been buying.

However, we do have figures for what proportion of FHBs were buying before the FHOB was ditched and what proportion were buying afterwards. At the time there was much D&G about huge numbers of buyers suddenly absent from the market & causing prices to plummet.... .

Before the end of the FHOB, FHBs represented ~28% of the market, afterwards they fell to only ~21%. So ~7% of buyers disappeared from the market.... and prices failed to plummet.

If O/S buyers took up 7% of the market today (highly unlikely IMO) & the FIRB said NO to every single one of them starting from tomorrow (again highly unlikely), how much effect would that have on the market ?

 

[jingo]

The quoted 1% figures were from the year pre-relaxxing of FIRB rules. No way is that relevant today.

It was the unreported purchases by TR that was the problem. Estimates of 30% of sales by some REA in Melbourne.

Which REA in Melbourne, Ruddprime. Any source to back up such a claim??