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Media Fuelled Housing Boom about to Fizzle

Discussion in 'General Investing Discussion' started by Tim, 8th Sep, 2009.

  1. Tim

    Tim Well-Known Member

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    Is it just me or is the combination of:

    - IMF suggestions of Australian house prices more expensive than other countries

    - Australian property higher in cost when measured against wages

    - artificially and temporarily low interest rates

    - Imminent significant reduction in FHOG in both Sep and Jan

    - No actual assurance of general economic recovery (just "green shoots")

    - Australia the ONLY OECD county to not yet experience significant falls across the board

    actually just an illusion which doesn't matter and doesn't make sense, meaningless because Australians will just keep paying more and more for property??

    Surely this nonsense has to end soon......

    Timbo
     
  2. Tropo

    Tropo Well-Known Member

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    Who said that houses in OZ are expensive???:confused::confused:

    Just a few numbers below:
    An average wage in Europe (Italy, France) is approx 1200~1300 Euro/month.
    One bedroom apartment (50 sq.m) in Venice costs 350 000 Euro...

    I am not sure that everyone can afford this apartment and they do not even think about houses there.
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Hi,

    Why Australia has world's most expensive houses - National - BrisbaneTimes

    Has a comparison of housing prices.

    Tim, the main difference is the tax savings through investment properties.

    In the US you get a tax deduction for paying interest on your own home!!!
    Also in Australia the LENDERS and REAL ESTATE AGENTS have been flogging the concept of "The great Aussie dream" of owning your own home. If you get told something enough times you will believe it, whether or not it is true. The media have been caught up as they generate HUGE amounts of revenue by advertising properties and also give rebates to realestate agents who spend certain amounts on advertise in their papers. Imagine a realestate collecting a commission? No wonder the property prices constantly go up, realestate agents want to get paid more money!

    A lot of people who live overseas are happy paying rent and not having the additional responsibilities of owning residential properties.

    Cheers,

    Dan
     
  4. Tim

    Tim Well-Known Member

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    I guess the reality of it is that thankfully we are in a one big ponzi scheme with residential property, so its likely to continue to go up no matter how illogical or logical it seems.

    Tim
     
  5. AsxBroker

    AsxBroker Well-Known Member

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    Yes, except our population keeps on growing so that the house of cards (no pun intended) will continue ever upward...
     
  6. da_ragazzo

    da_ragazzo Member

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    then once interest rates go back up, unemployment rises and the government bribe in the free market is finished our over inflated housing will come crashing down like the rest of the worlds.
     
  7. Tim

    Tim Well-Known Member

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    Da_Ragazzo

    exactly - well thought out, except don't expect the govt and banks to take on any risk. this will be passed onto the consumer and those that can manage the inflationary environment will do very well.

    Tim
     
  8. da_ragazzo

    da_ragazzo Member

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    The banks only lend to housing at the moment....

    Try go into a bank tell them you want to help the economy productively and that your an entrepreneur who wants to start a business to employ lots of ppl. The bank will ask how much equity you have in your properties. No equity no loan.

    BUT if your a first home buyer who wants to borrow for no benefit to the economy at all and dedicate 2 incomes to an overpriced house with a pissy 10% deposit you will get a $500k loan.

    Once housing drops watch bank profits disappear and the home equity paper wealth illusion of the baby boomers disappear along with it.

    Or based on the 'property always goes up' theory we can all buy houses and never work and get rich.

    Maybe we can try export the house to the chinese? lol
     
  9. Tim

    Tim Well-Known Member

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    Da_Ragazzo,


    this is exactly what will happen. The only thing is that banks tend to have a habit of making ever more profit, so in fact we will see house prices increase substantially.

    Tim
     
  10. da_ragazzo

    da_ragazzo Member

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    yeh thanks to rudd government socialist deposit guarantee and triple A wholesale credit funding to the big 4. good thinking rudd kill off all the small guys reduce competition and make even more profits for the big 4.
    Dont worry these politicians and bankers will get there day. when the system collapses and we have negative equity everywhere from over consumption ppl using there house as a big credit card.
     
  11. Tim

    Tim Well-Known Member

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    I can't wait to snap up the bargains!

    Tim
     
  12. Chris C

    Chris C Well-Known Member

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    I recently had a chat with a builder who is now importing house frame ala flat pack style from china... so ironically it would seem china is already export houses to us.

    Your best to avoid the housing boom blow out will be to make sure you not here when it happens. It's all well and good to talk about loads of bargain being out there but who wants a beautiful house when you are living within both a socially and financially impoverished society.

    If this balloon does go bop and we do see housing price falls like those in the US, UK and large parts of Europe coupled with high interest rates, high unemployment, higher taxes, etc then it's hard to see that being a joyful situation especially if lots of family and friend didn't come out on the winning side.

    So I'm really hoping for a housing price fizzle/stagnation where house prices spend the next 3 - 7 years letting the economy catch up to their valuations.