No I wasn't proven wrong. In fact it was the other way around and don't take my word for it. The numbers speak for themselves
Will Property ever Boom again
- Thread starter pickle pickle
- Start date
The bears conveniently leave this part out.
Even blind Freddy can see the end result but they can't....
agreed. if we ignore rent then yes infltion is not your friend. but then you would have bigger problems, like how to pay the non-inflation component as well
What are you talking about?
I and most investors will choose to use the rent for the purpose it is collected for. i.e to pay the interest (which already includes the inflationary conponent so we don't have to pay it again
Of course. i was making the point that the rent is a sperate issue to whats happening with the loan over time and that what the banks do to cover inflation.
Ok, hypothetically, say you put the rent in the pokies but had enough money in a bank account to pay the loan interest every month.
That the tenant pays this inflation component is a given, but my point is its there and it has to be paid somehow. Thats what the initial discussion was about.
Ok, hypothetically, say you put the rent in the pokies but had enough money in a bank account to pay the loan interest every month.
That the tenant pays this inflation component is a given, but my point is its there and it has to be paid somehow. Thats what the initial discussion was about.
Oooooh I understand now.
It's like your in a boat drifting at sea
The boat is the loan.
The oars are the rent.
And the island rescue in the distance is your house in 10 years.
Theory would say row your little but off and the closer you get the more your loan is deflated.
But some are suggesting. Stuff the island. Hit yourself in the head with the oar and jump onto the shark infested waters.
Mmmmmm. Makes sense now.
lol. Well it was funny to me.
It's like your in a boat drifting at sea
The boat is the loan.
The oars are the rent.
And the island rescue in the distance is your house in 10 years.
Theory would say row your little but off and the closer you get the more your loan is deflated.
But some are suggesting. Stuff the island. Hit yourself in the head with the oar and jump onto the shark infested waters.
Mmmmmm. Makes sense now.
lol. Well it was funny to me.
Yeah, but you've paid all that interest. If you hadn't been paying for a house, you could have put the interest into another asset, then "the magic of compounding" would have made you rich.
It's all a question of interest rates vs. house price growth, isn't it.
Our interest rates have been low, and house price growth has been high. If it's the other way round, then you might be better putting your money in a bank.
Interest rates have been low, because the RBA doesn't target house price inflation, just rent inflation. This encourages boom-bust cycles in housing, as they are always picking an inappropriate interest rate.
True, but without paying the interest you couldn't have had the asset generating the rent (which would have paid all the interest)
.It's a bit of a circular argument, really.
Completely agree. That's what we're doing. Pay down PPoR debt while saving - cash-up and be ready.
This is the line of thinking that got Australian housing into this mess where an average family can't afford a decent home. Most people don't have dividends and capital gains. How is an average family supposed to buy a home if they're competing against others using unfair means to leverage up? This is just a vicious circle with capital gains feeding into more capital gains as the property ponzi bubble inflates and pushes house prices out of reach. You can easily see from these charts... Property Bubble Chart Gallery ...just how overpriced Australian housing is compared to the rest of the world. A family on average wage should be able to afford an average home without relying on bonuses and phoney dividend streams and false equity that can vanish in a puff of smoke when deflation sets in! What is so "star performing" about excessive house prices. You say this like it's a good thing. Will you not be happy until every normal family in Australia is priced out?
They can, there are plenty of properties and affordable but people don't want to start small. They want their first home to be in the blue chip suburbs.
The problem is that we can't all fit in there so whoever pays the most gets in. The rest of us can get something else in the more affordable suburbs
since when was receiving dividends unfair? if it is such a great advantage then go buy some shares
Sincerely, congratulations on taking the 1st step.... DENIAL.
Once your financial education & intelligence improves you can move to the 2nd step.... ACCEPTANCE
Only then, will you be prepared to consider step 3.... ACTION
Progress through steps 1-3 will lead to the best step of all, step 4.... REWARD
I once had a bitter view of the world, felt hard done by, outsmarted, out-manoeuvred, underpayed and undervalued.... I was merely in DENIAL of how the world operates financially.
Upon ACCEPTING my lot in life, I was inspired to take ACTION. I increased my knowledge & financial intelligence (which is now a lifelong journey) and improved my value to my employer, as the first active step. I took the less ambituous, low risk, low reward path, by sticking with full time employment.
Now that I had taken ACTION to improve my financial position and increased my income by becoming more valuable to my employer, I started to wonder why everyone else didn't do it... because it really wasn't that hard.
So now you can take financial ACTION and use some of that surplus income to "take an unfair advantage" on the masses....
Upon starting to realize step 4, you become even further inspired and begin to understand for the 1st time, that there is a parallel world out there that you could never understand, because you were always in DENIAL.
If you can't bet them, join them!
I wish you you good fortune on your journey...
People can afford what ever house they want,just might not be the location they want first time in the market,but who can you blame the
Government-TheMedia-Fast-Buck R-E's-Easy Money,the list goes on forever,but at some time in life the only person to blame is yourself.
.
Plus for any investor to first have a small income stream from dividends they first of all have to take a very high risk and buy into the copmpany it always seems so easy till you put your own money out there..
unfair means? what...they have more money than you so it's unfair?
australian house prices are oly slightly overvauled at present, certainly not the extent that your 'medians' show - which anyone with statistical nouse will tell you is useless.
how exactly is a dividend stream "phoney"? my last dividend payments were just rolled over and i bought more shares, i guess i could have just CASHED them in and got my money, therefore crystallising my profit.
it's the TT landlord special....
______
you should run for Labour with that tall poppy mentality.
just for once, i'd LOVE to see a permabear's graph showing data to the END of 2011, instead of the START of 2010 - there's 2 years hidden away in there. we're a quarter-way through 2012 and no mayan prophecy has come to fruition yet.
Geeeeeeeeeeeeeeeeezzzzzzzzzzz Aaron
Do all sandgropers think their a year ahead of the rest of the country
Put the flak jacket on I think you'll cop it off No Credit
Cheers
Pete
Probably doesn't know where it is or the equivalent in his state. Never ventured that far east.
