Sunfish, I am sure you will still be on SS in year 2050.
If one has enough cashflow and buffer, and not looking to refinance why does a high (or low) LVR matter ?
Why all the D&G on this forum now ?!
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If one has enough cashflow and buffer, and not looking to refinance why does a high (or low) LVR matter ?
The young can afford the consequences of bad timing, due not just to age but increasing income. The old, less so. Risk taking early on in life can result in losses, which the young are better able to afford due to rising incomes and time. It can also result in gains which sets the young person up for life.
Is it worth the risk? Individual opinion. For those who have succeeded in the last 10 years, there's no question whether it's worth it. But colouring the strategy with hindsight is always dangerous.
Is it worth the risk? Individual opinion. For those who have succeeded in the last 10 years, there's no question whether it's worth it. But colouring the strategy with hindsight is always dangerous.
Who cares about short term price movements when holding your long term assets becomes easier to keep.Its funny, you guys say we are not immune from the rest of the world, wich have cash rates at around 0-1% but on the other hand dont think it is possible for our gov to cut rates accordingly. Thats called CONTRADICTION
Governments don't cut rates....central banks do (or don't, as the case might be).
Did i say government or gov of reserve bank of ( immune from the rest of the world banks ) australia
Sunfish, I am sure you will still be on SS in year 2050.
If one has enough cashflow and buffer, and not looking to refinance why does a high (or low) LVR matter ?
Sunfish is wrong when it comes to a low LVR, there is no 'slow death'.
A low LVR will enable one to take adavantage of of low LVR to buy more property when its cheap.
Look at those who have created generational wealth. It wasnt created through constaintly maintaining high LVR's, but for many it was created through varing the LVR depending on the cycle.
Unfortunately Sunfish is almost like an inverse person who constantely maintains high LVR ratio's regardless of the cycle.
Thanks Sunfish
So Drawdown in the sense of "The peak-to-trough decline"
Yes, started to look at that.
So if one is confident that there is going to be a big draw down in one area, and also confident that another area is going to be a bull-market, one switches investments.
I'm still not clear on the need to reduce LVR if house prices fall. I can see it if mortgage rates go very high so that you don't want to be paying so much interest.
I think that Sunfish is even more against a high LVR (unless I've misunderstood)
Yes of course. but what Sunfish fails to recognise is that some people prefer to concentrate on property as their long term wealth cration vehicle.
They lack the knowledge to invest in other asset classes. So they prefer to put all their eggs under one roof and then watch the eggs closely.
In such cases maintaining a low LVR ratio after such a strong run up in property prices seems the most intelligent thing to me. Such people are just sitting back at the moment and waiting for the market to go through a correction phase before they start adding to their portfolio's. With a low LVR ratio they will be in a financial position to do this.
I personally dont do this, but i can still recognise the intelligence of doing this for those that want to concentrate just on property as as investment asset class.
BUMP.
I notice another thread got closed, probably due to a discussion I was having with Beebop. Is it necessary to close threads altogether, or can we simply moderate out any off topic or inflammatory remarks?
I notice another thread got closed, probably due to a discussion I was having with Beebop. Is it necessary to close threads altogether, or can we simply moderate out any off topic or inflammatory remarks?
I've found that results colour my opinions. If you've make money using a certain strategy, you're obviously more positive about it. If you haven't made money using a certain strategy, either because you didn't actually participate or it didn't work out (if you bought in Perth in 06, say, or Western Sydney in 2003) you would likely see the downside of high LVR (at least at first) IP buying like most people here start with.
If you have never used or succeeded with a certain strategy, then you're likely to only see the downside, without realising that one can start with higher risk (higher LVR), make money, then move to a lower LVR.
If it gets to a point where editing out off topic and inflammatory remarks would make the thread look like something after it's been gnawed by a pack of hyenas, it's usually closed instead.
Fair enough. Thanks for the response.
These threads always seem to degenerate into a mudslinging match between Doom and Gloomers and Perma Bulls. Even the labels are insults.
Why can't we all just get along?
I've noticed the change in tone here too. Could the mood on Somersoft actually correspond to wider sentiment in the market? Posters are much less bullish than they were six or twelve months ago, and I've heard talk that the market peaked towards the end of last year.
House prices are often a leading indicator of a downturn. But that's my D&G side coming out.
I'm in agreement with the comments in the thread that there are still big risks out there. However, I think that the US could well be a bigger risk than the PIIGS: It's fiscal position is similar to these countries (budget deficit of over 10% of GDP, national debt at 95% of GDP, no austerity measures, in fact quite the opposite), whereas the PIIGS represent a proportion of the Eurozone. The UK's not looking too clever either.
Why can't we all just get along?
I've noticed the change in tone here too. Could the mood on Somersoft actually correspond to wider sentiment in the market? Posters are much less bullish than they were six or twelve months ago, and I've heard talk that the market peaked towards the end of last year.
House prices are often a leading indicator of a downturn. But that's my D&G side coming out.
I'm in agreement with the comments in the thread that there are still big risks out there. However, I think that the US could well be a bigger risk than the PIIGS: It's fiscal position is similar to these countries (budget deficit of over 10% of GDP, national debt at 95% of GDP, no austerity measures, in fact quite the opposite), whereas the PIIGS represent a proportion of the Eurozone. The UK's not looking too clever either.
I generally try not to get too involved in arguing for the sake of it, but those that have not taken the plunge arguing with those who have been in it for the long haul and trying to convince us that we are taking a risk just annoys me. Every house we bought was a huge risk. There was NEVER a guarantee that houses would keep going up in price.
I was gunna say "Wanna bet?" but you are betting aren't you? You are betting us old codgers are silly old fools. Only time will tell.
I am. I think the old codgers have enjoyed large capital gains with little effort, and think that CG will just happen and that there is little chance that things can actually go backwards in Australia.
I agree with the idea of a lower LVR currently into 2011/2012, when things hit the fan. Then I'll leverage up again in 2013, when others have taken the hit and suffered the pain of being overleveraged.
My argument for being bearish would be that in a lot of places it's cheaper to pay rent on a property than to pay the interest on a mortgage. (This UK property can be rented or bought, but the yield is 4.4%.)
As such, I'm effectively shorting the housing market, and taking a gamble that I'll be able to enter it at a lower price in the future.
I reckon that I'm more bearish than Wylie is, but I think that the differences between us are probably a matter of degree than kind. (She thinks that there's a chance than prices might soften, I believe that they will.) I'm just taking a riskier strategy...
Whilst I might label myself as a Doom and Gloomer, I'm a lot less bearish than the goldbugs on the Credit Crash forums. For a start I think that gold is also in a bubble, and property offers an excellent hedge against hyperinflation.
As such, I'm effectively shorting the housing market, and taking a gamble that I'll be able to enter it at a lower price in the future.
I reckon that I'm more bearish than Wylie is, but I think that the differences between us are probably a matter of degree than kind. (She thinks that there's a chance than prices might soften, I believe that they will.) I'm just taking a riskier strategy...
Whilst I might label myself as a Doom and Gloomer, I'm a lot less bearish than the goldbugs on the Credit Crash forums. For a start I think that gold is also in a bubble, and property offers an excellent hedge against hyperinflation.
That's not to say that I think that property is a bad investment, but rather I think that now's not a great time to be highly leveraged.
Over fifteen or twenty years buying a house is a good move, provided we don't see a Japanese style slump. (Hence my comment in the Did You Do Enough in 2010 thread.) But I'm willing to be patient and see if I can get a better deal.
Incidentally, Japan offers pretty good rental yields if you fancy going a bit off piste.
The other point I wanted to make is that property owners tend to be more bullish and renters are more bearish. There's probably a behavioural economics study there about biases.
Over fifteen or twenty years buying a house is a good move, provided we don't see a Japanese style slump. (Hence my comment in the Did You Do Enough in 2010 thread.) But I'm willing to be patient and see if I can get a better deal.
Incidentally, Japan offers pretty good rental yields if you fancy going a bit off piste.
The other point I wanted to make is that property owners tend to be more bullish and renters are more bearish. There's probably a behavioural economics study there about biases.
Cognitive dissonance maybe?! Depending on which fence you sit that's either the SS bulls or the 'Steve Keen' styled acolytes.
