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Beware Mining Town Bulls - Perth and Darwin Housing Bubbles Ready To Burst!; Entire generation of speculators needs to be wiped out and made an example of
Topic Started: 30 Jul 2014, 04:19 PM (14,990 Views)
Lef-tee
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Incorrect. You just need to demonstrate that you are trying to rent the joint.


Fair enough. So what checks are in place to ensure this actually occurs? A few inadequete ones? None at all?

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And Gladstone is not (also) a "retirement lifestyle" destination in the same way that Mackay, Cairns, or Port Douglas are. The recent harbour pollution debacle has put paid to that.


We never actually were - retirement places typically feature nice beaches, Gladstone has lots of mud, mangroves and sandflies. Actually, the other side of the island to where the LNG plants are has over 50km of beautiful open ocean beaches with only a tiny hamlet at one end. Curtis island is quite nice on the seaward side and sections of it are national park these days. But almost no one lives there and there are no services (I think the ferry to South End does a daily trip) even though you can see Gladstone not far away.

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Gladstone will thwart decline if the coal price does; quite possible, but still an uncertain bet.


Gladstone will decline from the peak in any case because the bulk of the current wave of economic activity revolves around the construction of the massive LNG projects. A workforce of 10 000 at the peak - and that's not counting the thousands of others who service the boom and contract to the projects - and only hundreds to operate the whole show once complete. We've seen this before whenever a new industrial giant came to town - most of the jobs are in the construction phase.
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Jimbo
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I have just sold my house and moved into a rental. I had 100% equity in my property which is now in the bank
The reason I sold and came out of the market is that I can see what is coming. Not by looking at charts and reading reports, just by looking around me at what is going on in Perth right now.
Anyone living in Perth will know people who work in FIFO roles. They earn very good money and have high tax burdens. So many reduce their tax liabilities by purchasing investment property. Many are heavily leveraged and hold four or five properties. Fine if your houses are occupied and returning rent, fine if you are earning high pay and can absorb your losses.
They generally buy up established homes, do a bit of reno work and then rent them out to would be FHO's who can't afford to buy.
The investment buyers push up the prices at the lower end of the market, effectively pricing FHO's out of established property.
The reasons I sold my property, were the changes in WA stamp duty favouring new build and the mining infrastructure slowdown.
The stamp duty changes and the FHO grant for new build have created a building boom in more affordable properties. Smaller block sizes in fringe suburb new developments have created house and land packages well below the median. FHO's are building new and on completion, they are leaving behind an empty rental.
These rentals are sitting empty for longer and rents have begun to fall. The mining infrastructure slowdown means that WA has ceased to be the magnet for interstate and international migrants that it was a few short years ago so there is less competition for rental property.
It is pretty simple really. FHO's are building new rather than buying established property. Investors thinking of coming into the market now, face falling rents, increased job insecurity and increasing vacancy rates. REIWA projected slowing or stagnant growth rates over the coming six months will also make would be buyers hold out (no rush to buy in a quiet market).
With so many leveraged investors in the Perth market, any slowdown or reversal in prices could force a rush to the exits.
The coming six months will be very interesting.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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zaph
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Lef-tee
1 Aug 2014, 07:03 AM
Fair enough. So what checks are in place to ensure this actually occurs? A few inadequete ones? None at all?
If you were claiming a load of expenses for an IP and no income you'd be audited by the ATO.
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Lef-tee
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Mike
31 Jul 2014, 03:45 PM
I like all this talk of the Boom, mining boom, investment and on and on it goes.

So why did we have a boom (increase in demand and prices for what we sell) mostly due to China, South Korea, Japan and a lesser extent India. Japan provided growth over previous decades to raise Australias living standard, Australia did not go backwards because Japan slowed down, instead we continued to grow, same for South Korea. It continues today with China and exports to India are our fastest growing market and could well move into 2nd place pushing Japan to 3rd within 10 years.

During each growth phase Australia provided different types of resources as each of these Nations economic development progressed. Demand increased from these nations as they developed providing a permanent increase in demand from a richer population.

The increased demand for our resources may ebb and flow as it always does but it has moved up due to 1,300 million Chinese wanting a richer life. This is a permanent increase in demand, meaning we will export higher and higher volumes. so what some call a boom, I call the new normal demand and supply. The reason Australia does well is because we are on the door step of 3 billion people wanting lives like we have, we have the resources to help them reach this goal.

China is only the start, another 800 million in ASEAN are also on the march and our markets grow each year to all of them.

Our trade and exports to India are growing faster then our trade with China, India is playing catch-up. Keep in mind in 1990 China and India had roughly the same size economies. With the right policies India can unlock huge potential which the new government seems intent on doing.

So for those of you who think this is a once off boom you are misreading history. Australia is likely to ride a resource and export boom for decades as Asia develops and demand will rise to new levels of normal as we add billions of people to the consumer list.

It will not only be resources but energy, agriculture and services are all likely to see large and sustained export growth and booms in prices over periods.

You need to look at the bigger picture. For those who say this is a once of boom, I say you are wrong. 3 billion people cannot be stoped, they may stumble along the way, it may take longer then expected but they want and need what we have to develop and live a richer life.

This will be the new normal and nothing bears or anyone else says will change this huge development in the human species. The largest migration to cities in human history along with billions of people lifted out of the slums and into jobs and cities. We this is complete in 50 years or so the world will be massively different.

Our grand children will live in a world of 4-5 billion educated, prosperous people in developed nations. Developing nations will become a minority. This is our future.
I have no problem with the argument that Asia will continue to rise and demand more and more resources.

Where I have doubts is the extent to which Australia as a whole stands to benefit. The biggest mining investment boom in our history is still surging on, most of the decline so far has been in the purchases of imported machinery and equipment. We are not any significant way down the downslope yet, we are only just stepping over the cusp now.

Exports of our dirt are thundering away as more of these mammoth projects come on stream.

Yet the seemingly impossible is occurring - the economy appears to be failing to respond despite all this. If mining really made such a contribution then it defies logic as to why the economy remains lacklustre. Mining itself - as in the digging up and shipping out of dirt - is capital intenstive, not labour intensive. This is why the mining sector is such a tiny employer outside a massive investment boom that requires great numbers of people to actually build the things. Most of the industry is owned by foreigners and that is where the profits flow to. What incentive do they have to re-invest here in other areas of the economy? Yes, government rakes back some taxes and royalties but it isn't enough and governments are not of an expansionary mindset today anyway.

If our resources were state-owned like Norway, then perhaps we would benefit to a greater extent as Norway does. But this would be "evil socialism" so it will never happen.

zaph
1 Aug 2014, 07:12 AM
If you were claiming a load of expenses for an IP and no income you'd be audited by the ATO.
Back to the original question then - how are negatively geared ip owners likely to be impacted when the expensive houses they have bought cannot be rented out?
Edited by Lef-tee, 1 Aug 2014, 07:27 AM.
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Blondie girl
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herbie
31 Jul 2014, 05:53 PM

Careful Blondie - You're getting perilously close to being labelled a shark cum vulture by the highly indebted bulls.

'Course meself, I incline to the view that both sharks 'n vultures serve a most useful purpose in ecology ...
No Herbs..
I'm just doing a clean up on potentials by those unable to realistically continue due to various circumstances, if you are not heavily hocked up & not bank dependant ..
Well
You & others who have cold hard ca$h would do exactly the same.

No place for being altruistic.
No one ever wants to pay top $ if they don't have to...

Yes, theres a glut of rentals, yes, some people have left due to less or no work..however, I've still got tenants they are all renewing at present..
There's 1 tenant in limbo ATM....

I'm still waiting if 1 tenant got the work with the CV I gave to a person at the helm of a company that still employs hundreds of people ...his parents came here also came here with zilch from Europe after Ww2. They also have strong family values & hard work ethics....l(although he's got a Brother that's a moron).

If he does get the work I will be delighted as he's quite a genuine person, & I would hate for them to go to QLD fr work as they do a great job with garden.




So, life continues onwards & upwards financially for family & I.



@ Leftee..
Your qn about how NG investors are impacted by some experiencing problems in letting their property or properties?

It depends on how much debt they've loaded up, the areas & property type.

An average property in a convenient location close to amenities is going to be snapped up rather that a top notch exec property that some company employees get perks with..

There's tax obligations on rental properties... The ATO has about 38 pages of great reading of tax stuff ..then one goes to get feedback with the accountant to decide certain measures to make the tax man "happy" legally..
Edited by Blondie girl, 1 Aug 2014, 03:41 PM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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herbie
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Blondie girl
1 Aug 2014, 03:30 PM
You & others who have cold hard ca$h would do exactly the same.
In theory at least, the highly leveraged take on significant risk - And seem rather happy to contend that they should be rewarded for doing so.

Though if/when things go leg up, as they can be expected to sometimes in risky situations, then I'd contend that they've not got too much to cry about if/when they get gutted ...

Hmmm - Recall talking to my accountant when the GFC blew:- I was seeing the ASX crashing 50% and the AUD getting smashed as well; And doing a few back of envelope calcs I reckoned some who weren't even leveraged at all were down 70% - In USD terms anyway. I was frankly appalled and commented on it to the dude; But also commented that he and I both seemed to be doing OK regardless - To which he replied: "Yeah; But we weren't greedy."

Edited by herbie, 1 Aug 2014, 04:30 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Foxy
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Zero is coming...

Blondie girl
31 Jul 2014, 02:42 PM
One of my Brothers has covered three aspects of the Perth market (land, rentals, construction) during 3 different peaks & troughs ..2007-2011, I think he's generally made some witty choices. One block(elevated .. great water views) bought right at the peak..he still owes on it $30-40k, but he purchased 2 others right at the very bottom & It's more than compensated...


The important thing to understand about debt, is it doesnt go away until you have pAid it off..& if the value of the asset you borrowed against goes down in value, then yeah you are in serious trouble.


ATM, I'm going through the influx of of annual water, & shire rates to pay off..now my thoughts? To pay in full or installments... :to:

Bloody hell. ..ones bill nearly 2k, mostly averaging $1383-$1699. The rents still coming To me, & Perth is not down the toilet.
Not bothered by any negative sentiment.

Oh well I'm tempted with one potential prize ...if I pay up one rates in full
10 days in the Big Apple for 2... No kids


Bliss.

Another thing with markets,, when selling if you have assets in high demand locations it will sell..

As a landlord, I win if govts do nothing for FHB I will still have rent....

As a landowner I win when I am the vendor of what Mr & Mrs Average wants..

1999
The market was hot, it ran hard, we lucky dipped in buying properties..anyone who was never expecting correction has got rocks in their head.

But for the future?
I will dip my toe in the water regarding picking up 1 more...for cash .

I just watch, wait, & pounce when it's appropiate.

Hey Blondie my wife and i played croquet in Central Park New York.
Loved it.
Have fun, you deserve a break.
Peter
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skamy
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newjez
1 Aug 2014, 02:30 AM
Have you got anymore of that magic land for sale skamy? Put me down for ten blocks please!
Gonna take some time to live that one down :(
Jimbo
1 Aug 2014, 07:07 AM
I have just sold my house and moved into a rental. I had 100% equity in my property which is now in the bank
The reason I sold and came out of the market is that I can see what is coming. Not by looking at charts and reading reports, just by looking around me at what is going on in Perth right now.
Anyone living in Perth will know people who work in FIFO roles. They earn very good money and have high tax burdens. So many reduce their tax liabilities by purchasing investment property. Many are heavily leveraged and hold four or five properties. Fine if your houses are occupied and returning rent, fine if you are earning high pay and can absorb your losses.
They generally buy up established homes, do a bit of reno work and then rent them out to would be FHO's who can't afford to buy.
The investment buyers push up the prices at the lower end of the market, effectively pricing FHO's out of established property.
The reasons I sold my property, were the changes in WA stamp duty favouring new build and the mining infrastructure slowdown.
The stamp duty changes and the FHO grant for new build have created a building boom in more affordable properties. Smaller block sizes in fringe suburb new developments have created house and land packages well below the median. FHO's are building new and on completion, they are leaving behind an empty rental.
These rentals are sitting empty for longer and rents have begun to fall. The mining infrastructure slowdown means that WA has ceased to be the magnet for interstate and international migrants that it was a few short years ago so there is less competition for rental property.
It is pretty simple really. FHO's are building new rather than buying established property. Investors thinking of coming into the market now, face falling rents, increased job insecurity and increasing vacancy rates. REIWA projected slowing or stagnant growth rates over the coming six months will also make would be buyers hold out (no rush to buy in a quiet market).
With so many leveraged investors in the Perth market, any slowdown or reversal in prices could force a rush to the exits.
The coming six months will be very interesting.
This is property speculation some bet on growth you are betting on falls. It's just gambling. It would take a huge price drop to recover sales and transaction costs. Perth does not usually see such large drops in price . do u read sites like macrobusiness?
Edited by skamy, 1 Aug 2014, 07:29 PM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Foxy
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Zero is coming...

Jimbo
1 Aug 2014, 07:07 AM
I have just sold my house and moved into a rental. I had 100% equity in my property which is now in the bank
The reason I sold and came out of the market is that I can see what is coming. Not by looking at charts and reading reports, just by looking around me at what is going on in Perth right now.
Anyone living in Perth will know people who work in FIFO roles. They earn very good money and have high tax burdens. So many reduce their tax liabilities by purchasing investment property. Many are heavily leveraged and hold four or five properties. Fine if your houses are occupied and returning rent, fine if you are earning high pay and can absorb your losses.
They generally buy up established homes, do a bit of reno work and then rent them out to would be FHO's who can't afford to buy.
The investment buyers push up the prices at the lower end of the market, effectively pricing FHO's out of established property.
The reasons I sold my property, were the changes in WA stamp duty favouring new build and the mining infrastructure slowdown.
The stamp duty changes and the FHO grant for new build have created a building boom in more affordable properties. Smaller block sizes in fringe suburb new developments have created house and land packages well below the median. FHO's are building new and on completion, they are leaving behind an empty rental.
These rentals are sitting empty for longer and rents have begun to fall. The mining infrastructure slowdown means that WA has ceased to be the magnet for interstate and international migrants that it was a few short years ago so there is less competition for rental property.
It is pretty simple really. FHO's are building new rather than buying established property. Investors thinking of coming into the market now, face falling rents, increased job insecurity and increasing vacancy rates. REIWA projected slowing or stagnant growth rates over the coming six months will also make would be buyers hold out (no rush to buy in a quiet market).
With so many leveraged investors in the Perth market, any slowdown or reversal in prices could force a rush to the exits.
The coming six months will be very interesting.
Hi Jimbo,
Good luck, i think you logic is flawless.
Over my life though markets can be less than logical.
I am always invested as i find cash slowly losses it's purchasing power.
So i look for under valued sectors and allocate capital to that area. (If i can find a position)
Some assets i keep and will not sell unless i get a far better deal in another area.
One of our assets has been on our books for 49 years now.
Our newest asset 4 months.
These times are uncertain, i do wish you the very best of luck.
Peter


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Veritas
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skamy
1 Aug 2014, 07:19 PM
Gonna take some time to live that one down :(

This is property speculation some bet on growth you are betting on falls. It's just gambling. It would take a huge price drop to recover sales and transaction costs. Perth does not usually see such large drops in price . do u read sites like macrobusiness?
Who best on falls?

To be a property speculator in any meaningful sense of the word you have to own an investment property.

Seeing as rental yields are so shit, the nations army of property investors are all betting on increases.

Watch them rush for the doors in Perth.

And what does it matter if he reads Macrobusiness? I read the bible once. Does this mean I believe the world was created in seven days by a celestial being? :re:
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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