Welcome Guest [Log In] [Register]


Reply
Real After Tax Term Deposit Returns for Australian Savers are Negative; Savers Punished. Debtors Rewarded. Tax and Inflation Work for Borrowers and Against Savers.
Topic Started: 6 Mar 2012, 11:00 AM (20,816 Views)
Shadow
Member Avatar
Evil Mouzealot Specufestor

Shadow
7 Mar 2012, 08:55 AM
we had saved a deposit of several hundred thousand dollars (around 40% of the property value)
I'll also admit that in retrospect saving such a large deposit was not the best route to take. We arrived in Australia in 2000 not planning to stay here forever - we were just doing the touring backpacker thing for a couple of years, then heading back to Ireland. I didn't even look at houses until 2003 when we made the decision to stay here permanently. But in 2003 Sydney house prices looked a little peaky, and that's when I discovered how much prices had actually risen in the three years since we moved to Australia. So we held off buying until late 2005 by which time prices had fallen back quite a bit from their 2003 peak.

But financially, we'd have been better off not saving anything for those first five years in Australia, and just buying in 2000 when we arrived in Sydney. But we didn't know we were going to stay here at that point in time. Buying a house was the last thing on our minds. We had no idea what was happening in the property market.
Edited by Shadow, 7 Mar 2012, 09:03 AM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
stinkbug
Member Avatar


I find it interesting that this is such a contentious thread. Real returns from term deposits are stuff all, everyone knows that. The argument, I guess, comes down to whether people think it's better to have money parked in cash or in other asset classes. For those who believe that a major property crash is imminent, cash seems logical, but for those who believe their investments are performing acceptably, and that the risk of loss is managed, cash seems crazy.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

Profile "REPLY WITH QUOTE" Go to top
 
Trojan
Default APF Avatar


stinkbug
7 Mar 2012, 09:44 AM
I find it interesting that this is such a contentious thread. Real returns from term deposits are stuff all, everyone knows that. The argument, I guess, comes down to whether people think it's better to have money parked in cash or in other asset classes. For those who believe that a major property crash is imminent, cash seems logical, but for those who believe their investments are performing acceptably, and that the risk of loss is managed, cash seems crazy.
To be fair, everyone has a different risk profile.
My father in law is retired and puts all his money in term deposits only.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
Profile "REPLY WITH QUOTE" Go to top
 
Catweasel
Member Avatar


stinkbug
7 Mar 2012, 09:44 AM
I find it interesting that this is such a contentious thread. Real returns from term deposits are stuff all, everyone knows that. The argument, I guess, comes down to whether people think it's better to have money parked in cash or in other asset classes. For those who believe that a major property crash is imminent, cash seems logical, but for those who believe their investments are performing acceptably, and that the risk of loss is managed, cash seems crazy.
Catweasel say it only a contentious if mouse think with heart not head. And if the start by mouzealot, high likely that flame war high on list of a priority. On another paw, narrative of mouzealot have some the merit when the do talk about medium term.... of a past. Much like it would see in a glossy brochure of white shoe. Of course, risk profile is the one a largely ignore in a brochure as it the kryptonite of mouzealot, white shoe, and expert a world over.
Profile "REPLY WITH QUOTE" Go to top
 
stinkbug
Member Avatar


Trojan
7 Mar 2012, 10:27 AM
To be fair, everyone has a different risk profile.
My father in law is retired and puts all his money in term deposits only.
Fair enough, my parents did the same. The problem arose when they realised that spending all the interest meant their (modest) wealth was being eroded over time.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

Profile "REPLY WITH QUOTE" Go to top
 
Admin
Member Avatar
Administrator

Quote:
 
End near for high-interest savings accounts?

Gareth Hutchens
March 22, 2012 - 2:27PM

The days of high-interest online saver accounts could be numbered, with new global banking standards expected to make the popular deposit products too expensive for Australia’s banks, a senior Reserve Bank official says.

The fastest growing form of savings account in recent years, online saver accounts such as those offered by National Australia Bank’s UBank or ING Direct offer customers a range of incentives, including interest rates of 6 per cent or more.

They have often been used as the battleground in the deposit pricing war as banks attempt to outdo each other in raising funds.

The online accounts generally have no fees or a minimum balance requirement, but typically cannot be used to make payments other than to transfer funds to and from a transaction account. For banks they are cheaper to run than traditional deposit accounts.

But RBA assistant governor Guy Debelle said they could lose their lustre once new global liquidity standards - known as Basel III - are introduced in three years time.

‘‘They will not be particularly attractive from a banks’ point of view once those liquidity standards take effect from the beginning of 2015,’’ Dr Debelle said this morning.

‘‘That does not seem to have affected the pricing of these products yet, but it will be interesting to see how that evolves both in terms of pricing and product design as we approach that date.’’

Online savings accounts can be closed at a moment's notice and their money withdrawn without penalty. The money in term deposits, on the other hand, cannot be withdrawn as quickly, which makes them more attractive to banks.

When it comes to the new international standards for bank funding, and whether banks will be liquid enough and well enough capitalised in future, traditional term deposits will therefore be more valuable than savings accounts.

Read more: http://www.smh.com.au/business/end-near-for-highinterest-savings-accounts-20120322-1vlw0.html#ixzz1pqH5CIdB
Follow OzPropertyForum on Twitter | Like APF on Facebook | Circle APF on Google+
Profile "REPLY WITH QUOTE" Go to top
 
Rastus2
Member Avatar


Shadow
7 Mar 2012, 09:02 AM
I'll also admit that in retrospect saving such a large deposit was not the best route to take. We arrived in Australia in 2000 not planning to stay here forever - we were just doing the touring backpacker thing for a couple of years, then heading back to Ireland. I didn't even look at houses until 2003 when we made the decision to stay here permanently. But in 2003 Sydney house prices looked a little peaky, and that's when I discovered how much prices had actually risen in the three years since we moved to Australia. So we held off buying until late 2005 by which time prices had fallen back quite a bit from their 2003 peak.

But financially, we'd have been better off not saving anything for those first five years in Australia, and just buying in 2000 when we arrived in Sydney. But we didn't know we were going to stay here at that point in time. Buying a house was the last thing on our minds. We had no idea what was happening in the property market.
Shadow:

You mentioned this before... in 2003 you decided prices were 'peaky''... and waited till 2005.
I wonder.

What factors did you use to decide they were 'peaky' ?

Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
Profile "REPLY WITH QUOTE" Go to top
 
Shadow
Member Avatar
Evil Mouzealot Specufestor

Rastus2
22 Mar 2012, 10:29 PM
Shadow:

You mentioned this before... in 2003 you decided prices were 'peaky''... and waited till 2005.
I wonder.

What factors did you use to decide they were 'peaky' ?
Two things mainly... I looked at how much prices had risen in the last few years, and I looked at the rental vacancy rates.

Sydney rental vacancy rates in 2003/2004 were close to 5%. Today they are close to 1%. There was an over-supply of property in 2003.

And Sydney house prices had risen by about 60% in the three years from 2001 through 2003. That didn't seem to be sustainable.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
Rastus2
Member Avatar


Shadow
22 Mar 2012, 10:45 PM
Two things mainly... I looked at how much prices had risen in the last few years, and I looked at the rental vacancy rates.

Sydney rental vacancy rates in 2003/2004 were close to 5%. Today they are close to 1%. There was an over-supply of property in 2003.

And Sydney house prices had risen by about 60% in the three years from 2001 through 2003. That didn't seem to be sustainable.
Thanks.

I agree on the vacancy rates.. well actually, if I wanted to nit-pick, I would say they peaked @ 4.5% as opposed to 5%..
Also, they had already come down a long way in late 2005 (when you bought)...

Posted Image


Posted Image
However the price rises is a funny one... many bulls (including yourself) have mocked bears for claiming that large price rises were a sign of prices not being sustainable.
In 2003 the property bulls of Sydney would have cited you a mad bear for thinking prices would not continue upwards...

Do you not see the irony of this last fact ?


edit: Looking at the same rationale ... vacancy rates in 1995 to 2000 were very low (historically)... prices in Sydney went up about 50% over the 5 years.

From 2000 to 2004, vacancy rates shot up to your historic 4.5%... yet prices also rose another 50% in just 4 years !

This does not make sense if your theory is correct.. vacancy rates go down.. prices go up... vacancy rates go up.. prices go up.
Edited by Rastus2, 22 Mar 2012, 11:20 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
Profile "REPLY WITH QUOTE" Go to top
 
Shadow
Member Avatar
Evil Mouzealot Specufestor

Duplicate post.
Edited by Shadow, 22 Mar 2012, 11:34 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Create your own social network with a free forum.
Learn More · Register Now
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply



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.

For more information go to Limitations on Exclusive Rights: Fair Use

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