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Back to boom: Sydney house prices jump 14% in 2014 - APM; Sydney property market is in hyperdrive while the rest of the country is in second gear
Topic Started: 29 Jan 2015, 08:49 AM (5,616 Views)
John Frum
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Bardon
29 Jan 2015, 09:20 PM
Yep those diving in right now will be miles ahead of you in wealth terms in 30 years, same as it ever was.

So says an anonymous troll on the interwebs.

"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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TheTruth
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John Frum
29 Jan 2015, 10:28 PM

So says an anonymous troll on the interwebs.
This is why you are pissing and moaning though so he's right currently, those who purchased 30 years ago are very wealthy because of it.

But instead of using what's happened in the past to guide you, you think you are smarter than the market, you think your genius will guide you to riches through predicting a never seen before event.

The floor is littered with guys who thought they were too clever, I suspect you'll end up like the rest.
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John Frum
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Clive
29 Jan 2015, 10:24 PM
Not just '91, honestly, anyone who bought Australian property any time over the last two or three hundred years has been very lucky indeed with almost constant nominal price appreciation, and much of the time real inflation adjusted appreciation too. Personally I think the last few hundred years was an anomaly and the luck has now run out. House prices will go back to doing what they did before that little run of luck. Bad luck for anyone buying today!

Yes, amazing really - it's like a magic pudding, isn't it!

That's why I work in financial services, better to get closer to the source of all the magic, so I can siphon more out of dip-shits like you!
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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TheTruth
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John Frum
29 Jan 2015, 10:42 PM

Yes, amazing really - it's like a magic pudding, isn't it!

That's why I work in financial services, better to get closer to the source of all the magic, so I can siphon more out of dip-shits like you!
Don't you work in IT? I hope you speak Punjabi.
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peter fraser
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John Frum
29 Jan 2015, 10:23 PM

Hilarious. Tell me Pete - for any one successful person, how many burnt out debt-ridden basket cases with a trail on broken friendships/relationships are there, who also threw it in the ring and gave it their all? You just chose to overlook it because you're not clever enough to realise you're getting a dose of survivor's bias when you talk to these people.

Actually I write a lot of business for people who have just come out of bankruptcy or have issues on their credit file. I don't keep records but the two common reasons for bankruptcies are a business failure and divorce. They pay for their past failures via a higher interest, but their lives are not over and they can get things back together if they have the character to get up again.

A financial failure solely due to a house purchase is something that I haven't seen in about 30 years in finance, but certainly failure does happen. Apart from the two reasons I gave above taking on additional commitments like Credit Cards, or Car and Boat loans can become an issue for many, but they come after the home loan as a rule.

If a household swaps rental payments for mortgage payments on a house they can afford then the risk is really not high no matter how you want to spin that John.

I have to laugh when I see people blog advising people to pursue a business opportunity rather than buy a house because it's "safer" - Its hilarious and sad at the same time because I know the truth. Nothing wrong with having a go in business, but the odds are you will fail.


Quote:
 
That you could even equate the scale of what Sergey and Larry built to some boneheaded shmuck who sets out to enrich themselves via the roof they live under just shows how clueless you are.


I didn't equate building an internet giant with buying a house - you did. Over the years I've written a shitload of business loans including many loans for farmers and graziers. The little scenario in my mind amuses me because when Google started no one in banking would have understood what was an entirely new business model. Maybe you weren't around in the days of bulletin boards and early dial up internet when it took all night to download a small file, if you weren't kicked off during the night.

To a banker back then they may as well have been talking Swahili, and it's like that with every new untried business model. It's a tough sell. Bankers are not equity investors, they are lenders. People don't seem to appreciate the difference.
Edited by peter fraser, 29 Jan 2015, 10:52 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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John Frum
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TheTruth
29 Jan 2015, 10:33 PM
This is why you are pissing and moaning though so he's right currently, those who purchased 30 years ago are very wealthy because of it.
Good for them.

Quote:
 
But instead of using what's happened in the past to guide you,


Ireland, Spain, Japan, U.S subprime, dot com, tulips :z:

Quote:
 

you think you are smarter than the market, you think your genius will guide you to riches through predicting a never seen before event.

The floor is littered with guys who thought they were too clever, I suspect you'll end up like the rest.


I'm making good money contracting in financial services.

Doing something clever, like helping to build a Google or Facebook is just not an option here, because people won't throw any money at something like that - they, like you, think the easy way to riches is through buying property - and as a result companies like that don't have the money to pay people like me decent wages.

So for me, the more you throw into it the housing bubble, the wealthier I'll get through daily rate increases. That's 'real' money - not the imagined riches most property investors live off.

I will continue to do this until the bubble pops.

This is not a new strategy. During the financial crisis there were several people buying up credit default swaps as a bet against CDO defaults - all while people were laughing at them because the housing market was 'rock solid', 'fundamentals', 'this time it's different' etc etc. Renters were laughed at.

Then it all blew up, and these people made loads of wonga.



TheTruth
29 Jan 2015, 10:44 PM
Don't you work in IT? I hope you speak Punjabi.

In my capacity I work with a lot of 457 Indians in various consultancies - they're definitely making great strides within the industry, but can often have trouble interpreting business requirements, so there'll always be a place for someone who can articulate problems as well as solve them.

I'm sure in a few decades it will be a concern, but it certainly won't be as dramatic a reversal of fortune as we're seeing in the mining industry.
Edited by John Frum, 29 Jan 2015, 11:14 PM.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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Sydneyite
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John Frum
29 Jan 2015, 11:05 PM
Doing something clever, like helping to build a Google or Facebook is just not an option here, because people won't throw any money at something like that - they, like you, think the easy way to riches is through buying property - and as a result companies like that don't have the money to pay people like me decent wages.
This is complete rubbish. You clearly do not know the half of what has gone on in the Sydney hi-tech industry over the past 20 years (and still is going on). It's nowhere near the scale of silicon valley, but it is here, and growing right now. I personally know several people who have made fortunes (ie 7 figure sums or more) in this space - including having sold technology / enterprises to the likes of Google etc. In fact did you know Google employ something like 500 people at least in their Sydney engineering center? Do you think they are all paid peanuts??? :re:

Quote:
 
So you paid your mortgage off in 5 years with crippling interest rates and still had time to party and get drunk and forget to turn up to work? Sorry, but that just sounds far fetched. I have no doubt it may be possible, but in general it's extremely unlikely.
I always turned up to work - partying was mainly on the weekends. :oo: PS - you would be surprised how easy it is to pay off a mortgage once you start to get the principle down (reducing the interest component significantly) plus have your income increase - my income nearly tripled over that period in the 90s, plus like a said, people were paying me rent as well.
Edited by Sydneyite, 30 Jan 2015, 12:00 AM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Veritas
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Sydneyite
29 Jan 2015, 11:54 PM
This is complete rubbish. You clearly do not know the half of what has gone on in the Sydney hi-tech industry over the past 20 years (and still is going on). It's nowhere near the scale of silicon valley, but it is here, and growing right now. I personally know several people who have made fortunes (ie 7 figure sums or more) in this space - including having sold technology / enterprises to the likes of Google etc. In fact did you know Google employ something like 500 people at least in their Sydney engineering center? Do you think they are all paid peanuts??? :re:


I always turned up to work - partying was mainly on the weekends. :oo: PS - you would be surprised how easy it is to pay off a mortgage once you start to get the principle down (reducing the interest component significantly) plus have your income increase - my income nearly tripled over that period in the 90s, plus like a said, people were paying me rent as well.
So lets get this straight:

1. You bought a house at just the right time (did you get help with the deposit? please be honest)
2. this coincided with the end of the last recession Australia had (23 years ago) and the start of its largest housing price boom in history.
3. You were fortunate enough to be in a line of work that saw your salary treble in less than a decade.
4. You then met a bird who also had a good job and her own house, joint forces, and bought a bigger, better house.


And from this vantage point, having been blessed with extraordinary good luck, you poo poo housing affordability concerns in Sydney and adopt "If I did it so can you" attitude?

Seems to me you should reflect more on just how lucky you have been and how unlikely it is for the tide that lifted your boat to repeat the same feat in the immediate future.
Edited by Veritas, 30 Jan 2015, 01:29 AM.
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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skamy
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Veritas
29 Jan 2015, 06:32 PM


Alternatively, you might find that central banks follow the lead of Ireland with tough limits on lending to discourage property speculation and its associated ills.
Veritas are you really so naive as to believe this - do you know nothing of banking in Ireland?
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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A Lurker
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Veritas
30 Jan 2015, 01:26 AM
So lets get this straight:

1. You bought a house at just the right time (did you get help with the deposit? please be honest)
2. this coincided with the end of the last recession Australia had (23 years ago) and the start of its largest housing price boom in history.
3. You were fortunate enough to be in a line of work that saw your salary treble in less than a decade.
4. You then met a bird who also had a good job and her own house, joint forces, and bought a bigger, better house.


And from this vantage point, having been blessed with extraordinary good luck, you poo poo housing affordability concerns in Sydney and adopt "If I did it so can you" attitude?

Seems to me you should reflect more on just how lucky you have been and how unlikely it is for the tide that lifted your boat to repeat the same feat in the immediate future.
Sydneyite is in a good space but his story is far from unique. Sure it is not a battler story but it is not unusual.

From previous discussions I believe that him and I are of a similar age (gen X) and earning space. He is a bit ahead of me with property (on the paying down debt side). This is mostly because I am an immigrant and arrived here in 2001 with less than AUD$10k.

I bought my first place in Sydney in 2004 with >90% borrowed money.
I sold that and bought my next and current place in 2007.
I renovated my current place in 2008.
(So long as I don't move again) the current place will be paid off next year. Current interest payments are about 1/3 of what it would cost to rent the same house.
At the time of each purchase and the renovation people told me I was crazy and paying too much.

I've had no family guarantor or help with a deposit.

A number of my friends here (of the same age and broad career paths) are mortgage free. In our broad group, we have 1 hold out renter and he exchanged on a purchase in the last week. He has had years working overseas and a non-linear career path (and not as focused on property as some) so is starting further back but he is getting a good well located property.
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