Discussion in 'Real Estate' started by Simon Hampel, 16th Feb, 2009.
Homes most affordable in five years: HIA - ABC News (Australian Broadcasting Corporation)
It scares me when the media try and suggest that "housing is now affordable" just because rates are low... and make no mention of the fact that interest rates are WELL below their long term average and are unlikely to remain this low for an extended period.
Then the articles goes onto say that the RBA will drop rates further without making mention of the fact that banks are not obligated to follow the RBA, and some are already forewarning the market that they will be unlikely to pass full cuts on from here on out.
Ahh... the worst part is the majority of people jumping into the market right now are the FHB's, the people that can least afford to get caught short, and who will be pushed to the wall the quickest if things turn south.
Home ownership is a great forced savings mechanism - and a home is something special to most people - they will generally go to quite a bit of effory to pay down the loan and hold onto their home. If they can genuinely afford the repayments and are smart with their interest rate risk management (5 year fixed should serve them well) - then assuming they don't lose their income they won't really be bothered much by any problems with the property market.
It's the potential for loss of income from rising unemployment which is the big problem ... but there are still many people in jobs which are largely recession-proof (health care, emergency services, etc) - and so they would generally be pretty confident in meeting repayments.
This is more my concern, along with their high leverage and the inevitablitity that interests will go back up in the not too distant future to fight what I'm guessing will be a period of quite dramatic inflation (if the RBA continues to use them to fight inflation).
I will actually be very interested to see how the RBA handles the next 2 - 3 years given that many major developed economies are more than likely going to hit periods of stagflation.
I know a couple who bought a £1million flat in London 6 months ago.
They have just revealed its lost £190K in value. Wonder where it will be in another 6 months?
Would you classify this as 'forced savings'?
To add to the greif, her £150K job is looking dodgy.
Another girl I know is in the process of selling her deceased mothers house in Dublin. Price 12mths ago ...900K, currently on the market at 450K ...and no bites.
She went on to tell me about the incredible pain that exists there now. She has friends in there 30's who have been forced to move in with their parents because they've lost everything.
Guy across the road from me has just lost his job.
Talked to a fellow from South Dekota who has moved to Germany. Explained to me at length the pain that exists over there. How its impossible to earn enough to live and that you simply don't hear about it in the media. All you hear about are Wall street issues. He says ordinary people are suffering.
All of the above anecdotals came from one modest party on Saturday night. ...and I didn't fish for it, they volunteered it.
To top it off, another fellow told me his business partner of 20yrs died suddenly one month ago , he was 49.
I came away a bit stunned I must say.
C'mon mate, share some happy stories with us, please
Ok , one there was one bright spot.
Another woman who lives in my street has a few therapeutic clinics. Her business is doing better since she concentrated more on a niche market ‘breathing ailments’. She said her business always picks up when economic conditions deteriorate. Furthermore, shes moved one of her clinics into a much nicer location because as she put it ‘there is so much empty commercial property that she was able to upgrade and there is no rent increase’. Finally, she told me she has bought two new company cars because of the government subsidy (5K AUD per car) to buy a new car if you trash an old one.
Her new cars are Fiats and the purchase price per car after the discount is $12,000 AUD.
Yes, some professions are doing better during the doom&gloom. Fortune tellers and economist have plenty to prove. Also degradation in mental and physical health seems to be doing OK.
On serous note, I was not aware they are getting cars subsidised. Social benefits are also bigger than in AU. While they are looking after their own people Australian government is running country like a business. Nothing is done unless brings profits. Hence people must look after themselves by investing in RE.
Not to get rich but to retire with dignity.
The car subsidy was announced only about 1 month ago.
The have allocated enough funds for 600K new cars (I think it is). Once the 600,000th car has been bought using the rebate then its over.
To qualify, you must currently have a car over 9yrs old and have owned it for 1yr.
Did they have stimulus package as well? or is this their form of throwing money at people?
I don't know if its officially part of the 58Bill stimulus package or additional
to it but I think its part of it.
The stimulous package includes the usual other things such as improve schools, roads etc.
Will probably soon include things like, buy Irish government debt, ouch. Can't imagine them bailing out Ireland and the rest of the jokers but whats the alternative? Allow them to default?
It looks like world coordinated efforts. I don't believe AU government needs to splash 42bl especially on cash handouts but it looks like they had no choice. Every one has to share pain. As of Ireland, they did so well over the last decade or so....the higher you go the harder the fall. Well, more charming people coming to AU I guess.
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