It's about time somebody asked this question. It's like the taboo subject around here.
I have now come full circle, after going through the GFC, watching Keen rise to prominence and following his views, and those of other bears such who reside here. I don't really understand everything Keen and co. say, I really don't and I'm not ashamed of that (I have an IQ of 135). They are clearly very very smart guys. Smarter than your average smart guy.
But I put it to you all that academic smarts don't always lead to real life success. Sometimes it comes down to politics and backdoor deals and factors that academic analysis may not be able to grasp as well as the man on the street. As well as the man whose gut tells him although the argument sounds right, it clearly isn't - for a reason unknown.
I wish I had more street smarts and less academic smarts, the older I get, the more I realise street smarts are far more valuable.
Look, I don't really care anymore, it's a hopeless situation. I've missed the boat and now it's either mortgage myself to the eyeballs or buy something I don't wanna buy. I'm going for the mortgage myself to the eyeballs route. What's the worst that can happen. Bankruptcy I guess. Not optimal, but it's a risk I'm going to take. I can honestly see this market steaming ahead for a long time to come. There is no respite out there on the streets. The desperation is tangible.
Tell me please, where are all these buyers going to go? The 100 or so who walk through a property with me every weekend. Where are they going to go?
Honestly, it has hit home hard since I've hit the Saturday inspection trail over the last couple of months.
It's hopeless. It's frustrating. It makes me hate this city I call home.
Now, I'm not blaming anyone for my extremely bad decision not to buy a home when prices were significantly cheaper. That was my bad decision. My decisions are my own. But I wish I never had of found this forum and others like it. I wish I had never seen Keen on "your money your call". Then I'd be like all the other ignorant buyers who dived in and are now on their way to the easy life. Ignorance really can be bliss.
But I think it needs to be pointed out that there are people on this forum and elsewhere, the proclaimed expert on the topic of home prices, who have got it FLAT OUT WRONG. I just want them to admit that (Keen did with his walk to some degree and I respect that a lot). I just want them to admit, that even though they are super duper smart and understand economics and markets and whatever to a level that us mere mortals could never dream, that their smarts may not be so "street smart".
I'm done following them. I am no longer a bear. I am not a bull. But I just don't believe these guys any more. Good luck to those who follow them into the future.
I would love to hear some other experience of FHBs on the street each Saturday. Maybe theirs is different to mine and there are properties within 10km of the Sydney CBD that are not in high demand. There may be opens without an air of desperation from the buy side. I'd like to hear it. I'd also like to hear where all these displaced buyers are going. I've upped the ante on my finance arrangements and willingness to pay. I suspect many others are doing the same.
All this may make the crash bigger, or it may set a floor under the market forever. No one really knows!
At least your an ex-bear that is prepared to admit the called it wrong.
Here's a tip. It's never to late to get into property. I was 30 in 2006 when I got my first property (now 38), and on the way to retiring at 45 in 2021. Also we still rent (on the harbour :-)), and will get the primary residence last in around about 2018 once Sydney cools (and interest rates rise, then less competition in the market then). There is benefit to doing it around this way, rather than getting a primary residence first. Building up a nice asset base first, then selling a couple of investment properties and paying cash for the primary residence. As I'm renting and have never had a primary residence, I guess that makes me a FHB like you Still enjoy life, travel, eat out. There is no shame to renting. Rent in the meantime for lifestyle for a fraction it would cost to buy the same place - we rent 2br Sydney harbour view unit for $600/wk that would cost $900K to buy), but then ensure you invest the difference.
PS: most of us investors lost interest in the overheaded Sydney mid last year(2013). Hitting inspections became pointless unless you were prepared to pay over the odds. Just like the peak of 2003 when the market overheaded and overshoot, then the market then cooled in 2004-2006, it will do the same this time. Normal cycles. No point in getting into bidding wars. The smart investors were already ahead of the expanding wave out south and north to Central Coast (Woy Woy, etc).
There are many markets around the country, each on different cycles. While one is booming, another one may be falling slightly. Diversify, manage the risk. Better to get 4 * $300K properties, than 1 * $1.2m property. Less risk, like diversification in shares.
And the biggest tip. LEAVE this forum of whingers and bears. I found Somersoft an excellent place to learn about property, property finances. Many like minded people there.
... What's the worst that can happen. Bankruptcy I guess ...
In defence of 'the bears', having listened to them in what has been an extraordinary (and as such I'd contend, extraordinarily risky) time, you aren't bankrupt. So still have options/the ability to make choices.
And it sounds like for you personally at least, they'll be more informed choices than they would have been back around 2008.
You should have listened harder, you should have bought gold way back then and you would have made enough profit to cover the difference. But if you desperately want on the property ladder at the old prices, then move to the goldcoast or brisbane or any number of other places that have lost all thei gains since the gfc.
Like the Bulls always say, stop bitching about prices in the suburb where you rent and go find one that's cheaper.
Shadow was hopelessly wrong about the Gold Bull Market. What else is he wrong about?
You should have listened harder, you should have bought gold way back then and you would have made enough profit to cover the difference.
I'd have needed to buy half a million dollars worth of gold, and got my timing with it spot on to make that strategy work. Sadly, I didn't and still don't have a spare half mil burning a hole in my pocket!
I'd have needed to buy half a million dollars worth of gold, and got my timing with it spt on to make that strategy work. Sadly, I didn't and still don't have a spare half mil burning a hole in my pocket!
Now is hardly the time to turn bullish.
Sydney prices are only 15% higher than they were in 2010. If you looked at shadows area, you would see some are barely above 2003 levels. And just so you all know, the huge maoney has gone from the market since 2007. Go and look at the most expensive areas of sydney, look at there top end rents . They are all way down from 2007. Shadows northern beaches area, look toat clontarf rents since 2007 , look at eastern suburbs belview hill or simliar, you will see rents much cheaper than 2007..
Now that was sydney, most other capitals are cheaper than 2010, and any other like perth were 3% up om 2010 prices. And in 2010 , our economy was much stronger, we had a lot of room to move down with interest rates, and we had not lost all the jobs you see in the jobloss thread. So if adjusted for inflation , that means all capitals are down , except of sydney , with inflation added , they are up around 3% since 2010.
But to achieve all this , very minor growth really , they have had to drop interest rates to lows not seen since the great depression, have thrown home grants, free stampduty and building costs at buyers. Then let superfunds borrow by leveraging into property.
One thing you say is , where are all these people going to make house prices drop. And that they will not dissapear. But they did not dissapear in the uk euro or US either, bit there prices crashed. The us has a population of around 350 million, more immigrants than here and plentu of foreign investment, but it did not stop their economy and house prices crashing. They did not crash because people had left, they crashed for a number of reasons but the main one being not having the means to pay for it. All there jobs and businesses headed overseas and then they had no job to pay for it all. If the jobs and money were there, it would not have happened. Spain has 60 million or something , did not stop their prices crashing.
You can go and buy a Sydney home at the top of the market, pay top dollar at a time when Interest rates are at record lows with little room to the downside but with plenty to the upside, jobs and buissiness are declining in record numbers and nobody has ANY answers to address this. There are no answers or solutions to the economies of the western world.
I don't know what it is you people cannot see when it comes to the future of the economy. All you need to know, is that our wages are $17 an hour minimum, $7.25 in the US and about a dollar an hour in China. If you dopes did economics in year 7 at high school , surely you can understand that we have absolutely no chance of competing when our wages are so high. Chinese property prices and economy are now in decline for the first time.
The fact is , there is no real fundamentals left for real estate, just borrow more money than the next person and hope you can keep a job for the next thirty years.
You can see from the comments of yourself why housing has held up so well to an extent, because many still believe the bullshit being fed to them constantly. But like yourself, you also seem worried that you will buy and then the prices will crash through the floor as you talk about bakruptsy, it shows the clear desperation and confusion of the herd and what they are being fed.
I will show you some Interesting footage from the IMF leader. I might show you two clips if I can find them. Now in the first, you will see her talk constantly of a reset in global markets. Does she refer to a return to the mean of reality instead of debt spriralling. Looks like it. She can't say straight out that things are screwed, but its pretty clear there are no real solutions here, mainly hope. The hard questions have vague answers. In the second video , from April , you will see her dealing with some hard questions , with no confidence of a solution but plenty of warning of great risks now and in future.
I highly recommend you all watch these videos, once you start , I doubt you will stop.
Its not a bullish or bearish thing, just showing the reality facing the world.
Now this one below was in April this year I think , where she is interviewed by a BBC reporter with some sticky questions and comments. Very interesting stuff.
Look, I don't really care anymore, it's a hopeless situation. I've missed the boat and now it's either mortgage myself to the eyeballs or buy something I don't wanna buy. I'm going for the mortgage myself to the eyeballs route. What's the worst that can happen. Bankruptcy I guess. Not optimal, but it's a risk I'm going to take. I can honestly see this market steaming ahead for a long time to come. There is no respite out there on the streets. The desperation is tangible.
Take a breath, relax. Think about it. The only reason the prices have risen SO sharply the past year especially is because of what you say above. Desperate want to be owner occupiers prepared to pay ANY price to get in. We purchase an investment in Merrylands in early 2013, but would not touch Sydney again until the heat comes out of sydney again, and it will. Just look at the median price graphs for 2003-2006. The peak of 2003 was followed by flat prices for 3yrs in a lot of Sydney, with some suburbs experiencing 20% falls. This cycle will be NO different. This peak of 2014 will be followed by the market cooling 2015/2016/2017. Investors have moved on to other parts of the country which are yet to see their growth spurt.
Cool you heels. Once interest rates start rising in late 2015 the market will cool (just as it did in 2011/2012 when interest rates started rising).
And as per my email above, check out Somersoft. it's not only for investors, but have a wealth of knowledge in general on property. The investment route to get into the market is also an option.
2017/2018 will be good buying in Sydney. Picking up the scraps for cheaper from the people who got too desperate at the peak of a property cycle, and payed too much in 2014.
It's not a crash, but a normal property cycle ( I expect that Sydney will correct 15-20% through to 2018) - or back to 2012 prices. Think counter to the masses. That is, buy when most of the population are afraid (such as during the GFC in 2008) - in a BUYERS market, and sell when the population is confident (such as now) - in a SELLERS market. Following the crowd, and you pay a premium against large competition in the market now (in a SELLERS market), and sell when everybody else is selling for less - in a BUYERS market, when buyers can ask for 10% discounts on asking price.
My tips for saving money — sell your car. Use public transport instead. For the odd tricky destination, engage a taxi driver or hire a car. That's infrequent, and you'll still be well ahead. Stop travelling overseas — that's an indulgence for the truly well-off. Don't buy takeaway coffees, just get a spice grinder, grind your own beans and brew them in a plunger. Avoid cafes and restaurants. Try to cook one-pot dishes at home where you get plenty of freezer-friendly portions. You don't need to eat out to enjoy the pleasures of food if you gain some skill in the kitchen. Watch cooking videos and you can get better than many chefs. For your wine consumption, buy cleanskins — you can get a nice drop sometimes for as little as $5. Grow your own herbs, very handy for when you only need a tablespoon or two of something.
This post by MMM (and posters like this) demonstrates exactly the sort of bear-crap that the OP was talking about.
Don't listen to fools like this guy (has been here with several persona's including Dave289, Ted Bullpit, Fulvada, and MMM both registered and unregisterd) - He has no idea what is actually going on in the market, or even any clue about economics in general for that matter. He simply rants on about collapsing economies and crashing empoyment, falling house prices and so on, despite all the actual evidence to the contrary.
To add even more proof of this (beyond the evidence provided in his own rambling posts and the content of those stupid "youtube-economics" video links), he sold his Sydney house in 2012 (at the bottom of the last trough) and piled into gold (when it was near the top of it's epic fear/doom/gloomer driven bubble) - Property since increased over 20% and gold crashed 40% - talk about the "dumb" move!
To all readers - as pointed out by ex-Sydney-Bear in the OP, listen to the "advice" of posters like this at your own financial peril. Make your own decisions based on your own circumstances and research, experience actually in the market and so on, and don't let the perma-doom-and-gloomers force you into inaction for no good reason. The perma-bears, ironically, completely ignore the risk that they could be wrong, or at least "far less right" than what they think, and they ignore the impact that could have on someone financially. Classic example of this are the MMMs, and the David Collyer's etc floating around internet forums like this one.
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