the troubadour

The latest survey from Livewires among those working to some capacity in the financial industry, from managers to traders to advisors found the following .

Of the 80% that think interest rates will move...

8% consider the most likely move as up.

The rest 72% see a fall in rates more the likely outcome.

Financial advisors are least likely to agree rates will decline while managers think they will.

The majority see the Australian Dollar as between 70 and 70 cents to the US.

Any thoughts on this or the possible outcomes resulting.

It can be noted that the Russian rouble increased a whopping 70% yesterday from a 10% rate to a 17% rate in order to attempt to arrest a 50% fall in the currency.

the troubadour

Rate cut impact on housing anybody? Good or bad thing to loosen credit even more?

Buzzy--Bee

Good thing. For me.

BB

the troubadour

Wonder do you mean lower interest rates which is likely to set the housing purchase area on fire to reach ever more dizzying limits or the cheaper costs of entry to Australia due to lower dollar ?

Both have severe repercussions in my view.

the troubadour

AUD had four year low in today's news. The chance of a recession next year put at 40% by an economist.

Buzzy--Bee

Both will be good for me.

BB

Beoz

For those who do own high house prices is a good thing. So for BB its a winner. For those who would like to own its not.

For the sake of future housing it would not be an ideal thing to have a generation who don't own. One day the generation who do own will die off. What happens then?

Can't please everyone.

Buzzy--Bee

Agree, but in Germany the majority of people rent. So that model can work. Not saying it should here though.

BB

the troubadour

Short term thinking I'm afraid. Lowering interest rates will see an exculpation of house prices which will be totally unsustainable and facilitate an all mighty bubble burst. Prices are already way above affordability levels and cheap credit will allow/encourage many more into the market that can ill afford it and will be victims when interest rates do rise.

Will also make Australian property a better buy for overseas interests further pushing Australians out of the market.

The financial institutions and real estate industry is of course advocating such a move to keep the scheme afloat.

Bad for the nation and longer term bad for many owners that got in later in the game as well.

Australia really needs to lift its game past housing as a salvation and search out more intelligent means of growth to maintain anything like present living standards and just what that will be post boom is the sixty million dollar question.

Buzzy--Bee

Exactly the same rhetoric I heard when I bought my first property in 1989.

BB

the troubadour

It would require a complete change of mindset for Australia to come anywhere close to the German reality.

For starters Germany has rent protection laws which would hardly sit well on the shoulders of what must be said are often greedy, market focused , out for a quick buck and loathe to put much in Australian land lord.

The renter is king in Germany and besides having sound protection of tenure has the knowledge that rental charges can only be raised by minimal amounts, must be fair , all things a little alien in Australian present day context.
A reason no doubt Germans do not see a lot of sense being straddled with large mortgages and spend their money on other more enjoyable aspects of living.
Not forgetting of course, Germany has not been hammered by massive price rises. In fact Germany outside of some of the main cities has top rate houses, very well built for low prices.

I don't see any possibility of Australia joining Germany in that anytime soon.

Amazulu

yep

history repeating and basically it is what it is

the troubadour

The difference being the ratio of affordability was totally different. House prices were thus far cheaper and the market was not dictated by speculators both home grown and foreign.

the troubadour

Nope read below. Different times and different market. We were not in bubble territory in 89.

You may recall the late 80's house price fall/crash in London. I do. It couldn't happen there they were saying in early 80's as well.

Australia cannot secure any sort of future through continued housing growth and flipping of houses to the few than can afford it.

Swerv-o

This is true, but outside of superannuation, Australia offers very very few paths to tax efficient savings. It's very difficult to build wealth growth when the government is reaching in taking their share.

Term deposits, for example, after tax and inflation, very often leave you behind the game. Savings accounts are taxed at your marginal tax rate. There are very few [legal] avenues to develop effective wealth growth here. It's small wonder that people see property as a viable alternative.

Super is all well and good, but the government see this as something that they can tinker with and change at will, and your money is locked away until you reach preservation age, which can also be changed on government whim.

If they current mob drop the company tax rate by the proposed 1.5%, then insurance bonds will become a more interesting tax efficient investment, but your money is still locked away for at least 10 years...

Successive australian governments keep banging on about how we need to pay for our own retirements, but they don't provide us with a sensible tax environment to allow us to build the wealth we need. Hence people end up investing in property, as once it's paid off, it can still provide a healthy rental income while you're in old age.


S