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The Perth Property Crash Thread; Let us enjoy the inevitable collapse as it unfolds in WA
Topic Started: 13 Aug 2014, 12:28 AM (89,652 Views)
doubleview
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The bulls are just parroting deeply held beliefs, they cant see shit!

As the fundamentals deteriorate rapidly the bulls continue on with their insidious method to change the bears mindset.

APF bulls debate is more like being brutally mentally molested.

It is a good laugh though as the basic bull mindset is they they are winning regardless!

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Mike
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15 Aug 2014, 09:42 AM
Thirteen properties . How long have you been investing there ?

Do you try and stick with a certain level of leverage, if so , what is this ?

Are you not concerned with the economic downturn being experienced there at the moment , and how it may effect future price growth or rental returns ? Or that prices may see decline from the slowdown being experienced ?
I have answered all of this long ago in another thread but I will do so again.

I have been investing/developing for the better part of 15 years now. Started off slow and steadily built my way up.

Early on I tried to keep to 80% LVR to avoid mortgage insurance, once they get there claws into a loan you never know what will happen. Plus hard to get multiple loans if you are going above 80% due to LMI.

For awhile now I have tried to keep my portfolio at 60% LVR as I do more development these days. I like to build and sell/rent. I do multiple dwelling sites 3-7 dwellings is what I focus. Build affordable housing that any buyer can afford. Most properties I sell are under $450k.

I have bought and built all through every other slow down, world crisis, the GFC and so on. People always need housing, if you build the right products you always have a market. Hence why I stick to capital cities, I build affordable housing so it is quickly and easily sold even in slow economic times.

This is why I never bought into the whole get rich quick theme in mining towns, as you can also lose a lot when it slows and mining such as what has happened in Karratha and other towns in the far north. They are down some 30% which is roughly $500,000 as the median was around the $1.5 million mark.

Of my 13 properties I keep they are spread over 4 different states. NSW, Victoria, Tasmania, Western Australia concentrated on all capital cities. I do not own anything outside of capital cities.

Of my new constructions, I will decide as they near completion to either sell or keep to rent. I like to recycle my properties through my portfolio. I sell a few older properties I have, and replace with new ones I just built, helps keep depreciation levels nice and high to offset as much capital gains tax as I can.

Property prices would need to collapse 30-40% for me to start making a loss and that is mostly on the new properties.

The reason I build and sell so much is because im all about making money, cash flow. This helps to keep LVR way down and it keeps falling as im at the point I don't need a bigger portfolio just pay down what I have and live a nice life off the money I make.
http://mike-globaleconomy.blogspot.com.au/
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newjez
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Jimbo
15 Aug 2014, 09:07 AM
You are missing the point. If you buy at house at 80% LVR and the value of the house drops in a market slump, placing you into negative equity, the loan could become (say) 110% LVR.

If you need to move house (say for work), and you are buying a house of the same value, the loan ratio stays the same. All the bank and insurer are doing is transferring exactly the same loan conditions to a different property.

I will not be doing badly with my finances? I will be in negative equity only because house prices have fallen across the board.

The risk for the bank and insurer is exactly the same whether I stay in my existing property or transfer my loan to a different property.


You seem to be assuming your mortgage is transferable. Many are not. What I believe happens, is that you close your current mortgage and open a new mortgage on the new property. You don't have the funds to close the old mortgage. If you could borrow the shortfall maybe, but then you would still be signing up with 100% debt on the new property. Good luck with that in this climate. The risk is not the same as when you entered into the first mortgage. Do you really think a bank is going to say, we're in the shit with this one, so we'll lend them more money?

In this situation people become reluctant landlords. This or declare bankruptcy.
Edited by newjez, 15 Aug 2014, 12:37 PM.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Blondie girl
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peter fraser
15 Aug 2014, 10:22 AM
No Jimbo negative equity is an issue for anyone who owns a house and wants to sell and buy elsewhere.

Of course they can simply sit and make their repayments, that will be fine. If the have other property they may be able to absorb the equity loss using a second security, but for the average family with just one house and not a lot in cash savings, they simply don't have the options that you suggest.

It's a good story, but it's simply wrong. You could always phone a couple of brokers or banks and ask them. Please try to talk to people who have experience - I get told incorrect policies by banks quite often. Not many well trained staff on the ground these days.
What about a Simple Transfer of Land process, that Landgate has in WA ?

If a family member has some financial issues, they could be bailed out by one they trust, then when & if all is well the Certif of Title gets redone.

It's got tax perks..

Another thing.
The godamn banking industry is oh soo Constipated ive met some real morons, there's a branch manager that is incompetent, we directly deal with the next in charge she knows her stuff...she should be the one in the management role. SHe would be a dinosaur, been in 1 branch for over 20yrs.

I've always liked dealing with this 1 broker he's gay & effeminate but when you go beyond that he knows his stuff..had to persuade the hubs ..hes quite efficient when we did the loan phases. Way before kids..When we lived in one of the old houses to avoid CG he wanted this retro front door knob..so when the house was being demolished I salvaged the door knob...he was happy to know I didn't forget. :to: it's hard to find those that honestly give 110%, but when you do you hang onto them.
Edited by Blondie girl, 15 Aug 2014, 02:24 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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Mike
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newjez
15 Aug 2014, 12:34 PM
You seem to be assuming your mortgage is transferable. Many are not. What I believe happens, is that you close your current mortgage and open a new mortgage on the new property. You don't have the funds to close the old mortgage. If you could borrow the shortfall maybe, but then you would still be signing up with 100% debt on the new property. Good luck with that in this climate. The risk is not the same as when you entered into the first mortgage. Do you really think a bank is going to say, we're in the shit with this one, so we'll lend them more money?

In this situation people become reluctant landlords. This or declare bankruptcy.
What you can do is this.

If you have mortgage and decide to sell the house you can swap the security to a new property. This will all go through a normal process with the bank, valuations, income, affordability and so on.

It is all handled at settlement. Once the funds for one house have paid down the bank the loan is redrawn to pay the owner of the house you are buying (the lender for the previous owner).

The bank will not say, oh you are $100,000 short on your first mortgage. We will over look that as you are buying a $600,000 house so you need $700,000 as you still owe the bank $100,000 due to negative equity. Now the house you are buying as a value of $600,000 so you can borrow up to 80% without LMI as LMI will never approve negative equity situations. So you need a loan of $480,000 plus costs to cover the first property, plus $120,000 of your own money. As the previous house had $100,000 negative equity situation your loan is now $580,000 on a $600,000 property. This is about 97% LVR. Which means you need LMI which will never approve the loan.

So what Jimbo is saying is not possible with Australian lenders. If an Australian lender would lend up to 120% LVR then this may be possible depending on the size of the loan, valuations and amount of negative equity. However all lenders require the first property to be repaid in full prior to looking at finance for the new property, it will never happen.

Even in the glory days prior to the GFC, I only recall loans from lenders to 110% of LVR and that was for first home buyers, where the lender leant them the 10% deposit + costs, then did 100% loan. That was risky enough for banks in the easiest credit environment on record. Good luck getting that now.

http://mike-globaleconomy.blogspot.com.au/
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skamy
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Jimbo
14 Aug 2014, 08:39 PM
People sell for whatever they can get at the time. If you own property to live in, price falls are your friend if you are trading up. If there was a 50% fall and you sell your previously $400k house for $200k, the formerly $600k house that you want to trade up to now only costs $300k. A saving of $100k.

I did this years ago in London. I sold my house that would have fetched 80k five years earlier for 70k and traded up to a house that would have cost me 100k five years before but now cost 85k.

Whenever I have been a homeowner (most of the last 30 years), I have never given a monkeys about prices going up or down.

The idea that I would not sell because someone down the road sold for $100k more six months ago is plain bollocks. He would have paid more for his replacement house and I would be paying less.

The only people that gain when property goes up are the RE industry, banks and investment buyers.

High house prices help nobody who uses the house for its intended purpose.


Mostly people will not sell when prices are deflated that is just a fact look at the sales numbers during the GFC. Selling and buying in the same market can be worthwhile, look at Perth now the upmarket houses are discounted more than the sub $800 k market, but you are very wrong if you think most people will take advantage of this. Most people keep a close eye on property prices in their area, and if they hear prices are lowering they will not put their place on the market

If you look at charts for house prices anywhere in the world excepting the few recent basket cases eg US, Spain,Ireland. Most countries rarely, if ever show drops in price. Look at the Reiwa graph, there were only 3 or 4 annual price drops in the past 3-4 decades.
Jimbo
14 Aug 2014, 08:39 PM
People sell for whatever they can get at the time. If you own property to live in, price falls are your friend if you are trading up. If there was a 50% fall and you sell your previously $400k house for $200k, the formerly $600k house that you want to trade up to now only costs $300k. A saving of $100k. I did this years ago in London. I sold my house that would have fetched 80k five years earlier for 70k and traded up to a house that would have cost me 100k five years before but now cost 85k. <br /><br />Whenever I have been a homeowner (most of the last 30 years), I have never given a monkeys about prices going up or down. <br /><br />The idea that I would not sell because someone down the road sold for $100k more six months ago is plain bollocks. He would have paid more for his replacement house and I would be paying less. The only people that gain when property goes up are the RE industry, banks and investment buyers. High house prices help nobody who uses the house for its intended purpose.
Mostly people will not sell when prices are deflated that is just a fact look at the sales numbers during the GFC. Selling and buying in the same market can be worthwhile, look at Perth now the upmarket houses are discounted more than the sub $800 k market, but you are very wrong if you think most people will take advantage of this. Most people keep a close eye on property prices in their area, and if they hear prices are lowering they will not put their place on the market

If you look at charts for house prices anywhere in the world excepting the few recent basket cases eg US, Spain,Ireland. Most countries rarely, if ever show drops in price. Look at the Reiwa graph, there were only 3 or 4 annual price drops in the past 3-4 decades.
Edited by skamy, 15 Aug 2014, 07:53 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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Blondie girl
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Unless
It's a very urgent sale.

It's also interesting when the agent whispers "divorce". Or there's job relocations...or no job.

Sometime, I wonder if they're really advocating for the seller.

:lol

Otherwise yes people want to make the most of their $
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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newjez
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Mike
14 Aug 2014, 01:53 PM
You really are thick, can't even read a simple post.

I said sales volumes are above 2013 levels for the same time last year. Sales are tracking at the highest level for winter since 2007 which they are.

I said stock on market has been declining the last 4 weeks which it has, rental stock has also declined the last few weeks.

Do try and read carefully.

You are making so many mistakes I really cannot believe you have much experience at all in property, development or anything else. Your experience does not stack up with your knowledge or constant errors in your posts.

This is basic stuff yet you cannot get it right.

Hmm you must have missed supply falling for the past month.

While stock levels have increased from last year, we were at critically low levels of supply in 2013. Perth is presently 2,500 to 3,000 properties short of what is considered a balanced market for property stock. Property stock is still tight although supply has increased from last year.

Once Perth hits 13,000 properties ore more on the market as per Reiwa, Perth will be considered to be a balanced market. Until then price pressure on houses and land will continue, as demand is still outstripping supply due to strong sales volumes.

You need to look over sales data, this winter is tracking as the strongest since 2007, even better then 2013 which lead into a strong 7% surge in houses prices over spring and summer in 2013.

While I agree supply is increasing as more construction is happening, demand is also increasing as sales indicate. Demand for property has not fallen as yet as sales continue to increase over 2013 levels for winter. If this trend continues it will make for a busy spring/summer. Hence why I have said we will have some solid growth over the next 6 months.

In fact I am a little surprised by the strong sales results I'm seeing, and I might have been to bearish in my predictions in recent months. I was also concerned about a glut of apartments being built but they continue to sell strongly. Seems apartments are a new fashion statement in Perth.

There are also a few other factors in play which will also help for a solid spring/summer sales and prices, but I will keep that close to my chest to see if anyone else mentions it. Then I know who the real serious people are and know what they are talking about. I will wait and see.
So what's the secret Mike? The fact that there are lots of Chinese? Keep that one quiet, else everyone will want one.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Mike
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newjez
16 Aug 2014, 08:59 PM
So what's the secret Mike? The fact that there are lots of Chinese? Keep that one quiet, else everyone will want one.
You tell me, the bears like to think they have all the answer despite getting nearly everything wrong most of the time.

http://mike-globaleconomy.blogspot.com.au/
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Jimbo
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"Once Perth hits 13,000 properties ore more on the market as per Reiwa, Perth will be considered to be a balanced market. Until then price pressure on houses and land will continue, as demand is still outstripping supply due to strong sales volumes."

Why 13000 Mike?

Surely the number of buyers vs the number of sellers is a two side equation?

13000 sellers v 18000 buyers = bull market

13000 sellers v 5000 buyers = bear market.

By the way, ore is a metal bearing earth and not an alternative (as in or).

There is not the same as their or they're.

If you want to sound clever, learn how to farking spell.

Also, Reiwa is REIWA (but then that is just me being pedantic).






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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