Here is what happened as I see it. For decades and decades Australians went to work and had little debt because they had learned a painfull lesson from the great depression. That lesson was that debt is toxic in a downturn. Many bought houses and a few bought investment properties, but it was a very small percentage. As the decades passed wages declined relative to houses etc so mothers were forced to enter the workforce so a family could maintain its standard of living and afford a home.
Not that way at all. the couples of the fifties and sixties were influenced by WW2 not by the depression. Credit was hard to get and buying a home wasn't at all easy. what they did have though was very low interest rates, quite like they are right now. They also had full employment courtesy of the boomers who all needed food, clothing, books, cars, and everything else that children and adolescents need. Surviving in business in those times was pretty easy with a population that was exploding.
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When it became obvious that the super was not going to ever live up to it's million dollar promises, because interest rates fell and fell, people gambled on the stock market, and more went into investment property. When the stock market collapsed in 2000 more people sought retirement security in property, and the government and banks encouraged this, because the nation was basically living on borrowed money by this stage and we needed to borrow a lot just to keep the wheels turning. As you well know, buying property generates a lot of debt, much of which can be spent through the economy.
Super wasn't introduced until 1992. People couldn't get finance for second homes until Keating changed the financial system. In 1992 interest rates were sky high but they fell a few years later. Housing went boom because rates were lower than they had been for decades.
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Property began to rise faster than general inflation because the demand was expanding with all the new interest in property investment. Up and Up it went, and money was made more and more accessable with IO loans, low doc, etc. After the gfc people really got scared and bid houses up even more as they took advantage of equity loans to buy IP's to secure their retirement. The prices went up in many cities even while prices were collapsing across much of the rest of the industrialized world.
Yes credit was suddenly easy to access, but credit without demand won't drive prices up. In the early nineties developer contributions were introduced, and then in 2000 the GST was brought in. Those issues alone probably add $100K to every house in Australia. It's here now and no one will take it off.
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Now we have millions of people across Australia, husbands and wives and singles, all dependent on property prices and yields for their retirement security. All expecting to retire and have the rest of Australia pay for it out of their diminishing future incomes. So many things can go wrong with this plan they are not worth listing.
No many just want to retire in their family home, as generations before them have done, and they will collect the aged pension, as generations before them have done. Most people who are retired had very little benefit from the super scheme that initially had very small contributions. Do the math.
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Good luck.
Circumstance rather than luck determines the result.
Any expressed market opinion is my own and is not to be taken as financial advice
I reinvest all spare yield in paying off my PPOR. At the moment the portfolio generates a couple of thousand a month above costs, but in 10-15 years it will generate perahps $15k per month above costs, if rents rise in line with CPI at about 2.5% p.a. Once my PPOR is paid off I'll smash down the IP loans with the yield over a 5-10 year period.
Haha aren't you bankrupt?
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.
I choose the button that says all the above. I also would point out every bull that posted here would be at greatest risk of financial martydom when things go bad. So thanks for the replies.
I choose the button that says all the above. I also would point out every bull that posted here would be at greatest risk of financial martydom when things go bad. So thanks for the replies.
In fairness shouldn't you now take a stab at listing all of the positives that come with lifting real estate values, such as home owners with equity have the ability to start a small business by using the equity built up in their home.
That could be interesting, give us your best shot.
Any expressed market opinion is my own and is not to be taken as financial advice
The higher the price of houses go, the less we have in our pockets for anything else. Those with mortgages pray to the Gods on the first Tuesday of every month for rates to go lower. They then sweat it out for the next month and so on for the following 20 years of their loans.
Those that are squirreling all their $$ dollars away to save for a house, pray for the opposite.
But no one has any money left over.
This is killing the economy. Retail is taking a hammering, putting 35K out of work in the last 3 months. That’s staggering!
With retail our largest employer taking a hit, will have the cyclic effect of the higher the cost of housing, the higher the unemployment level will go.
This will eventually lead to a house price demise. With unemployment in our biggest sector keep taking hits, the effects on spending and house buying will be likewise…and so on it will go.
One day the government will wake up and see a correlation that links the cost of housing to spending habits of consumers and hence employment, but by then it will be too late. The ship will have sailed and bubble will have popped.
I think 1, 3, 4 and 6 are all very good reasons, but haven't voted because I can't decide on one as having the biggest negative impact.
I think anybody who votes for bears complaining is a moron, has their head in the sand, and is a liar. (If they really hate listening to bears complaining why do they come to this forum every single day?)
One day the government will wake up and see a correlation that links the cost of housing to spending habits of consumers and hence employment, but by then it will be too late. The ship will have sailed and bubble will have popped.
When house prices go up, so does consumer spending, so the correlation is the inverse of what you suggest. Bear in mind that two thirds of households own, or are in the process of buying, so the wealth effect gives a boost the the majority, not the minority.
Collecting desperation. Ex-Bp Golly April 2 2015. "I see with a slight overshoot -70% [fall in Sydney house prices] as being well within possibility"
I also would point out every bull that posted here would be at greatest risk of financial martydom when things go bad.
And the same has been true for the bears when things have been going good Many have right royally fucked themselves over by sticking their heads in the sand, crying lalala and refusing to play the game.
Guest
24 Sep 2013, 09:13 AM
Those with mortgages pray to the Gods on the first Tuesday of every month for rates to go lower. They then sweat it out for the next month and so on for the following 20 years of their loans.
Do they? Do they really? Some might - many do not.
stinkbug
24 Sep 2013, 10:30 AM
People who have no money left over are often in this situation because they are poor financial managers.
Ignore posts by The Whole Truth · View Post · End Ignoring The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
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