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Why we need to know whether the first home buyers grants will stay

Discussion in 'Real Estate' started by Simon Hampel, 8th Apr, 2009.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Why we need to know whether the first home buyers grants will stay: domain.com.au's real estate blog

     
  2. Chris C

    Chris C Well-Known Member

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    Ugh...

    So let me get this straight, media pundits are now arguing that removing this bad government policy may mean that there will be negative effects on the economy in the short run therefore we should continue with the bad government policy. This sounds like a terrible policy of how to deal with bad government policies.

    Blind freddy could have seen the negative consequences that were ALWAYS going to arise if global recession hadn't abated by the time this bit of bad government policy was scheduled to be removed!

    The last 6 months is a clear cut case that housing prices in Australia (if left up to the market) need to fall a little. The government should get out of the bloody way and just let housing prices slide a little, who cares if FHOs bought at a bad time, if they are happy to sit on their investment over 5 - 10 years I'm sure the majority of them will be fine.

    I say remove the grants let the low end of the housing market cop 5% value loses on the chin and let's all get back to sound economic management which start with working hard for our money and expecting less hand outs from governments - that's the only way to save housing prices in the long run.
     
  3. 02bsure

    02bsure Well-Known Member

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    OMG, if they remove the FHOG then house prices will crash ...leading to more affordable first home buyer prices .. oh, wait a minute, somethings wrong here.
     
  4. Billv

    Billv Getting there

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    02

    I am also waiting for that famous housing price crash to come
    and you know why?
    so that I can buy more properties...:D

    It's not coming though, and it looks like I'll be paying more for my next IP :eek:
     
  5. 02bsure

    02bsure Well-Known Member

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    Bill, if you have 40% equity in your IP's then go for it but if you don't then look out.

    Ultimately the market will squeeze out anyone who has less than 60% LTV, imo.
     
  6. Billv

    Billv Getting there

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    How are they going to be squeezed out?
    In recent times LVR's have increased as prices have come down a bit.
    40% LVR is an unimaginable figure in my books because as soon as I have available equity I know what to do with it.
    The trouble is, I am finding it hard to secure anything at a good price.
    First home buyers are buying everything and Vendors are not flexible in price. Often people end up paying the asking price if not more. :eek:
     
  7. 02bsure

    02bsure Well-Known Member

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  8. Billv

    Billv Getting there

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    Thanks for the link.

    We investors forget that if property prices crash, the legislitive protection home owners enjoy here won't necessarily be passed on to investors.

    So far Australian property prices haven't fallen significantly to justify intervention by the lenders and I don't believe that this will ever happen
    however, we've seen the banks pull the plug on property developers / home builders so I don't trust them.

    The good thing is that our lenders are VERY profitable and despite what some people are saying there is HUGE under supply of housing and that in itself will put a floor on property prices.

    Property prices at the bottom of the market are now moving upwards and in some areas we could have double digit growth.
    However, I don't believe that we'll see double digit growth in the more expensive areas. In Sydney there's been price contraction at the top end and price increases at the bottom end so we'll end up with a flatter price structure across the city which is more like the norm.

    IMHO
     
  9. 02bsure

    02bsure Well-Known Member

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    In my opinion you're flying on a wing and a prayer. By all means leverage-up in a bull market but remember to de-leverage when the tide turns. I think you've missed the sign post that said 'Danger road out'.

    How many people do you now know of that has either -

    1. lost a job
    2. lost a contract
    3. been forced to accept a reduced contract rate
    4. lost a part-time job
    5. seen significant commission money drops
    6. lost bonus money

    I'm seeing this, its real and its coming to oz.
     
  10. AsxBroker

    AsxBroker Well-Known Member

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    Hi 02BSure,

    I have seen about 3 or 4 clients who have been made redundant. It is definitely happening!

    Cheers,

    Dan
     
  11. Billv

    Billv Getting there

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    We don't want it here, you can keep it :D

    Seriously though, Oz companies are like well oiled machines and are running very efficiently so there is no much fat to trim off.

    We can reduce a few of our staff but there is no much room for big job cuts.
    Ok the automotive and resourses sectors has reduced employee and contractor numbers but the majority of those people are not from Sydney.

    I think we are fortunate to live in this country.
    In the past when other countries were going through recessions we managed to stay afloat and didn't get dragged down with them.
    Now we'll do it again, just watch us :)

    The only thing that worries me is this government and it's spending.
    They've wasted the saved surplus on handouts and are now spending money they don't have. Soon they'll want to access the money in the future fund....:eek:
     
  12. Chris C

    Chris C Well-Known Member

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    Our massive current account deficit paints a different picture... but hey I'm happy for Australia it keep looking the other way.

    Seen any recent unemployment figures...

    We are the first link in the chain... it just took awhile to reach us. Rest assured we are as leveraged as any other nation out there, this recession is going to bite hard.

    That said the only saving grace will be that we are resource rich going into a period of massive expansion in Asia plus we have SOME savings for our aging population (though the savings we have is still very inadequate).

    No doubt the government is bad when it comes to spending, but their debt pails in comparison to Australian household debt. I'm afraid the real fat cats of this economy are the everyday Australians who thought that borrowing money to splurge on renovations to their McMansions, plasmas, ipods, clothes and other economically useless crap... the crazy thing is most just thought they could just sell their house in a few years time and make an easy profit.

    We've had our party, it's time for the hang over...
     
  13. Shady

    Shady Well-Known Member

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    To be honest, I do not know one person that falls into any of those categories. I sold my business late last year and managed to get the first job I had an interview with, in Feb 09.
    I do know several people that have sold property within the last 6 months and got top dollar for it within 2-3 weeks of it hitting the market.

    My point is that the 'bad times' or 'economic crisis' hasn't filtered down to many segments of the population.......yet!
     
  14. 02bsure

    02bsure Well-Known Member

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    1 million tipped to be out of work | theage.com.au

    "You are seeing job losses in financial, mining and manufacturing sectors at the moment but as the recession bites there will be a flow on effect to service and retail industries,"

    Shady, perhaps you don't work in financial, mining or manufacturing sectors ...perhaps you're involved in the service and retail industries.

    Regardless, if it comes to pass that 1 million Australians are unemployed in 2010, you will know some of them.

    I forgot to add one important category of household income decline 7)

    1. lost a job
    2. lost a contract
    3. been forced to accept a reduced contract rate
    4. lost a part-time job
    5. seen significant commission money drops
    6. lost bonus money
    7. Shortened working week, reduced hours, forced holidays.
     
    Last edited by a moderator: 11th Apr, 2009
  15. Billv

    Billv Getting there

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    I personaly feel that the worst is over and that we are entering the recovery phase.

    For example, I know of a company which had little work for about 6-12 months. They decided to reduce staff, gave people nice redundancy packages and now that the work has come in they'll have to employ new people. Change is sometimes good but it comes at a cost. Some of those people walked away with 6 months pay and they'll walk straight into a new job.

    Also, the Banks and investment firms have been reducing staff but situations do change, now with the new home loan activity the banks have so much work they'll be forced to take those people back.

    And finally as the share market starts to recover the investment firms will employ more people and the cycle goes on...:)
     
  16. Chris C

    Chris C Well-Known Member

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    The worst will be over when the downward slide stops accelerating.

    I find it difficult to accept that the worst is over when Australia, along with the rest of the world posted some of the worst job loses from this recession so far. Unemployment is of course just one variable in a big chain but when it comes to people, families, states and countries I think we can all agree that when unemployment is rapidly rising, good times do not follow in the short term.

    So I don't know what others are looking to as good gauge as to if we are getting close to the worst of it, but for me one simple very test would be, is the rate at which unemployment is rising decelerating.

    We have yet to reach this point, but that's not to say I think we are terribly far off, but we definitely aren't there yet, and even when we get there, there will be many more bad months of rising unemployment which will do nothing to boost the economy. So I think it is safe to say at this stage this recession still has quite a bit of nastiness to play on both Australia and the world.


    Share market rallies don't prompt economic recoveries, economic recoveries prompt share market rallies.
     
  17. Tropo

    Tropo Well-Known Member

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    "Share market rallies don't prompt economic recoveries, economic recoveries prompt share market rallies."

    Many traders/investors confuse the economy with the market - the two are very different beasts.
     
  18. 02bsure

    02bsure Well-Known Member

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    Hi folks,

    This will be my final post.

    As I see it the future is now pretty much flying on auto pilot. As such there is little more to say as the dominos are toppling as predicted.

    My advice is to take out a fixed mortgage now if you're going to hold investment property (I don't expect to see cheaper fixed rates in future).

    Be honest with yourself about the effects of unemployment or reduced income on your debt obligations. If you think you could be at risk then reduce your exposure to debt. While this is pretty obvious many make the mistake of waiting too long to do it.

    Clearly the next 12mths will reveal the true state of affairs in Australia and I believe it will be ugly regardless of what rescue/support measures Rudd and crew attempt to implement.

    I'll post again when I see a reason to buy property (ie value).


    Good luck,
    o2.
     
  19. Shady

    Shady Well-Known Member

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    Sorry, I might have misunderstood your question. I don't know anyone personally friends/family that have lost their jobs. I know people are loosing their jobs, I see it in the papers, on the TV, heck I even know that people in the company I work for have been made redundant, but I have no idea who they are or have never met them.

    I work for AMP, so you could say that I'm in the financial industry.