The winning apartment on channel 9's The Block, clearly shows how easy it is to over capitalise on property and not even break even.
It also shows how reliant housing investors are on the generosity of the Tax Payer, many of whom have been locked out of the housing market because of manipulation and corruption of current and past governments.
@ 5% over 25 years = $10,522 per month, plus rates etc. Let's make it an even $11,000 per month. And god forbid rates rise up from emergency lows!
This slop job apartment would likely rent for only $1200pw = $5200 per month. That's a loss of $5800 every month which the infestor expects a tax payer funded rescue from!
Negative gearing must go, housing is a dreadful investment and like the show demonstrates we will all soon be renting Aussie homes from overseas landlords!
Go back and check your homework. If you can't get basic interest calculations right you have no business commenting.
I honestly don't think it has started and if we were to have a tectonic shift from this current long term price inflation phase to a period of equilibrium then I cant see it starting before 20205 for that matter.
Well unfortunately bardon, it does not really matter if you, 'honestly don't think' it has started already, because it has.
That's the very reason the GFC surfaced in the first place in 2008, because debt levels and prices had become unsustainable, and the economy and jobs were falling as a result of so much money being diverted into housing and away from the economy.
If it was not for the rapid rise of china from around 2003, the gfc may of not surfaced for another ten years. But the rise of china has not only bought the inevitable much closer but also made it much worse.
And the proof of everything mentioned above is clearly shown in 'THE FACT', that interest rates at at ZERO, and now into its SEVENTH YEAR, with TRILLIONS AFTER TRILLIONS , being pumped in YEAR AFTER YEAR AFTER YEAR, and still will all this, its still NOT WORKING, SEVEN YEARS LATER.
So bardon, what chance do you ever think they have of functioning on their own, or not to mention if interest rates were to rise. All they have is stimulus now, and thats got to a point it does not work. Maybe they have been diverting it into the wrong areas Instead of the economy(jobs). First it was housing, and then the bond and stock markets.
But feel free to ' HONESTLY BELIEVE' , whatever you like bardon.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
Whats the correct amount then genius? Percentage of your brain cells at work? 0%
I think that he's trying to say that the cost of 5% interest is $7579 per month. Any reduction to the debt is more or less the equivalent of savings assuming a steady or slowly rising market, so you are about $3500 per month out in your calculations although other costs like rates and insurance also need to be deducted.
Of course the real interest cost for a loan of that size would probably be about 4.65% or $7048 per month.
Your other mistake is that a 90% LVR loan would probably not be an option for a loan of this size - probably 80% would be the maximum for most lenders, and then the interest cost reduces to about $6312 per month.
To add to that error you probably understated rental income - lets call it $1500 per week (4.1% gross) which is $6500 per month so the losses are not much at all especially for a high income earner.
The actual net result of close to break even is a far cry from you purported loss of $5800 per month.
It's time you bought a calculator.
Any expressed market opinion is my own and is not to be taken as financial advice
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy