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#26 2017-02-22 06:25:26

willrocks
Silver Stacker
From: Yesterday
Registered: 2012-05-10
Posts: 7,629
Trades :   29 

Re: Australia Real Estate Bubble Talk (Part I)

These days it's becoming more common to have parents go guarantor for their kids house purchase. Meaning less deposit is required.

Also you can still borrow more than 80%, it just means paying mortgage insurance. The ongoing cost of mortgage insurance can be offset by using interest only loans.

IMO the biggest threats to Australian real estate are:

China recently tightening controls on moving money overseas. Limit was $50K now $7K.

Increased regulation. I work in the industry, there are new regulations requiring more granular living expense calculations. And limits on percentage of a bank's portfolio to investors.

Any significant rise in interest rates.

Stagnant or negative wage growth.


"You can ignore reality, but you cannot ignore the consequences of ignoring reality." - Ayn Rand

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#27 2017-02-22 08:57:20

clear
Member
From: WA
Registered: 2012-01-12
Posts: 992
Trades :   65 

Re: Australia Real Estate Bubble Talk (Part I)

House wrote:
clear wrote:
Cinvalo wrote:

Great assumption. How do you know i am not doing it. lol wink

It is not so much of a secret. 99% of the people will just sit in their office to earn a paycheque anyway.

Even my post is talking about Australia Real Estate Bubble, i never say the opportunities are no more. You need to just "do it". Take actions.

In fact, if you know what you are doing, you can make money whether the market is up or down.

I challenge you to do a small exercise, print 2000 flyers tonight, saying you want to BUY property and you are not real estate agent.
In the flyer you should specifically say you are looking for people are going through a divorce, a financial mess, or anything that want to settle quick. Don't worry about whether you can buy it or not. Just go out there and put theses flyers into as many mail box as you can tonight in your neighbourhood.

Let us know if you receive any calls tomorrow wink

Hi Cincalo,  I dont need you to tell me the sellers outnumber buyers right now and your saying you have a way of making a profit in real estate in a falling market  - good luck.

Ah but they don't wink What falling market? Still powering along quite nicely. House in Blacktown sold for $1m, 100 inspections and 32 registered bidders.

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

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#28 2017-02-22 10:41:01

Cinvalo
Member
From: NSW
Registered: 2010-03-19
Posts: 616
Trades :   11 
Website

Re: Australia Real Estate Bubble Talk (Part I)

long88 wrote:

if it is like this, every one just speculate on property, why would everyone work anymore...


Cinvalo wrote:

Downpayment = $1m
Borrowed $0.8m OPM (e.g bank).

1 year later,
Sold for $2.8m.

Paid back the back $0.8m.
Net $2m.
Profit = $2m - $1 (downpayment) = $1m (profit)

Good question. How many hours do you think people actually assemble deals?
It is not so much about the investment, but the investor himself/herself.


Do You Know Money is A Plan to Transfer Your Wealth Away From You?
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#29 2017-02-22 11:38:05

Cinvalo
Member
From: NSW
Registered: 2010-03-19
Posts: 616
Trades :   11 
Website

Re: Australia Real Estate Bubble Talk (Part I)

willrocks wrote:

Some reason that it's not a bubble because:

In the good old days we had: Much higher interest rates = much lower house prices relative to incomes

Today we have: Ultra low interest rates = much higher house prices relative to incomes

In both cases affordability (repayments) are not that dissimilar. Leading many to reason that repayment affordability, and not nominal prices, is the key indicator of an asset bubble.


If you look at the diagram below, you will know that Australia (Sydney) Real Estate is supported by many pillars.
SydneyHousing.jpg


Interest rate is one factor - a very important factor.

Scoring the Trump Economic Plan written on September 29, 2016 give you hints. You might want to google and download it to have a look.

If Trump really close the door of FREE trade and massively reduce the U.S. current account deficit with China. China and its trading partners will be immediately thrown into a recession. Interest rate will rise sharply, quickly, across the globe. Property price across the globe will fall. 

In fact, i just read the fiscal budget released in HONG KONG today, we have $935,700,000,000 HKD and we will still insist to use it to defend the HKD against global uncertainties. They know when interest rate rise, Hong Kong property will price falls. They just try to be conservative.
Sydney housing won't be an exception in that environment, because it is a function of China and Hong Kong.

Then people will realise it is not so much about the auction rate in Kensington, not so much about the population growth in Parramatta, not so much about BS like Sydney price will always goes up, that dictate the direction of the property market, but credit expansion and contraction.

If those pillars above are removed one by one, i hope that you have a lot of cash. wink


Do You Know Money is A Plan to Transfer Your Wealth Away From You?
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#30 2017-02-22 11:46:16

Topherclaus
Member
From: Central Coast, NSW
Registered: 2015-11-15
Posts: 485
Trades :   15 

Re: Australia Real Estate Bubble Talk (Part I)

At 11 a.m. today there will be a live stream on the future of penalty rates in Australia: https://www.fwc.gov.au/

Watch the whole jenga set fall in a heap if they remove any of them. I know plenty of people who can only afford to invest because of shift allowances and weekend penalty rates. I don't think they will, but there will be a panic if they do.


An addiction to drugs would be cheaper.
- silver and gold anon. member -

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#31 2017-02-22 12:53:02

JulieW
Silver Stacker
From: Australia
Registered: 2010-10-14
Posts: 11,101

Re: Australia Real Estate Bubble Talk (Part I)

Private-sector wage growth has slid to a record low of just 1.8 per cent, throwing into doubt budget projections and confounding the Reserve Bank, which would prefer not to have to cut interest rates again and run the risk of reigniting house prices.

Reserve Bank governor Philip Lowe identified house prices as a block on further interest-rate cuts on Wednesday, telling a business gathering that he hoped current rates would "generate stronger growth and we can avoid a further upward pressure on housing prices".

"We would like the economy to grow a bit more. If we were to try to achieve that through monetary policy, that would encourage people to borrow more and it probably would put more upward pressure on housing prices" he said. "At the moment, I don't think these two things are in the national interest."

http://www.theage.com.au/federal-politi … uifjc.html

Interesting video on the link.

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#32 2017-02-22 15:18:10

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,635
Trades :   232 

Re: Australia Real Estate Bubble Talk (Part I)

clear wrote:
House wrote:
clear wrote:

Hi Cincalo,  I dont need you to tell me the sellers outnumber buyers right now and your saying you have a way of making a profit in real estate in a falling market  - good luck.

Ah but they don't wink What falling market? Still powering along quite nicely. House in Blacktown sold for $1m, 100 inspections and 32 registered bidders.

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

In Perth yes. That's been a falling market for a quite a while now and probably hitting the bottom this year.

Generally when people speak about an "Australian RE bubble" it's only ever in reference to mainly Syd and partly Melb. Somehow all the other capitals and regionals get blanketed with that statement even though there's no signs of a bubble in any of them.


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#33 2017-02-22 18:31:08

Skyrocket
Silver Stacker
From: Melbourne
Registered: 2014-07-20
Posts: 4,867
Trades :   36 

Re: Australia Real Estate Bubble Talk (Part I)

House wrote:
clear wrote:
House wrote:

Ah but they don't wink What falling market? Still powering along quite nicely. House in Blacktown sold for $1m, 100 inspections and 32 registered bidders.

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

In Perth yes. That's been a falling market for a quite a while now and probably hitting the bottom this year.

Generally when people speak about an "Australian RE bubble" it's only ever in reference to mainly Syd and partly Melb. Somehow all the other capitals and regionals get blanketed with that statement even though there's no signs of a bubble in any of them.

All bubbles pop.

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#34 2017-02-22 19:29:30

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,635
Trades :   232 

Re: Australia Real Estate Bubble Talk (Part I)

Skyrocket wrote:
House wrote:
clear wrote:

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

In Perth yes. That's been a falling market for a quite a while now and probably hitting the bottom this year.

Generally when people speak about an "Australian RE bubble" it's only ever in reference to mainly Syd and partly Melb. Somehow all the other capitals and regionals get blanketed with that statement even though there's no signs of a bubble in any of them.

All bubbles pop.

Or the rising market slows and slightly drops off to stagnate for x number of years. No need for dramatics but that's what reading MSM headlines does for you.


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#35 2017-02-22 20:30:18

Skyrocket
Silver Stacker
From: Melbourne
Registered: 2014-07-20
Posts: 4,867
Trades :   36 

Re: Australia Real Estate Bubble Talk (Part I)

House wrote:
Skyrocket wrote:
House wrote:

In Perth yes. That's been a falling market for a quite a while now and probably hitting the bottom this year.

Generally when people speak about an "Australian RE bubble" it's only ever in reference to mainly Syd and partly Melb. Somehow all the other capitals and regionals get blanketed with that statement even though there's no signs of a bubble in any of them.

All bubbles pop.

Or the rising market slows and slightly drops off to stagnate for x number of years. No need for dramatics but that's what reading MSM headlines does for you.

I don't take much notice of what MSMs say about financial matters, or much anything else for that matter.

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