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Old Nov 29th 2010, 7:01 am   #46
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Default Re: The Great Australian Property Swindle

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I was reading an interesting article recently disproving the dual income driving up house prices theory, on Zerohedge or Money Morning. I'll have to dig it out.

As far as I'm concerned the thing that has driven house prices in Australia is three things, 1) Easy credit 2) Negative gearing 3) Government first home buyer bribes.

Arguments about supply/demand (of houses as opposed to easy credit), housing shortages and a constant stream of migrants are a combination of bullshit and/or minor factors in the bubble in house prices that has occurred.
4) The expectation of getting rich, just by owning property (i.e. the greater fool theory).
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Old Nov 29th 2010, 7:04 am   #47
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Default Re: The Great Australian Property Swindle

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4) The expectation of getting rich, just by owning property (i.e. the greater fool theory).
But this expectation would be harmless were it not for the financial reasons that let it out of its box.
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Old Nov 29th 2010, 7:06 am   #48
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Default Re: The Great Australian Property Swindle

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4) The expectation of getting rich, just by owning property (i.e. the greater fool theory).
I think housing might be an example of the greater fool rather than wholly encapsulating the concept. Ponzis in general are 'greater fool' markets.
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Old Nov 29th 2010, 8:10 am   #49
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Default Re: The Great Australian Property Swindle

I think the main problem has been buy to let. Now the average joe can own 1 to 30+ dwellings which has reduced the supply and pushed up prices.

Until we heavily tax these greedy bastards for owning more than 2 dwellings then the housing market will not return to sensible levels.

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Old Nov 29th 2010, 8:16 am   #50
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Default Re: The Great Australian Property Swindle

I think the best thing you can do, and really the only thing within your power anyway, is to stay out of the market. These guys are relying on capital gain and if people realise that it's cheaper to rent then they will have no one to sucker. At this stage of the game it's a prudent decision regardless of whether it's an effective protest / market corrective measure.
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Old Nov 29th 2010, 8:30 am   #51
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Default Re: The Great Australian Property Swindle

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Unknown to you.
When I read emotionally charged reports by unknown authors with graphs that have no depth in terms of statistics, and written by armchair economists....I guarantee it's a clown with a view

Bit like on here really, including moi

difference being I don't spout with a "white paper"

he's prolly paid to publish it anyway to make himself look big

I do agree with your other comments though re negative gearing, lending power and FHOG all being drivers of the Aussie housing market
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Old Nov 29th 2010, 9:34 am   #52
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Lightbulb Re: The Great Australian Property Swindle

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Interesting, but depressing read.

http://www.dailyreckoning.com.au/rep...ty-swindle.pdf

The bubble is starting to burst.

Article written in September 2009; property still booming in November 2010. Is the bubble bursting in slow motion, perhaps?
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Old Nov 29th 2010, 9:49 am   #53
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Default Re: The Great Australian Property Swindle

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Article written in September 2009; property still booming in November 2010. Is the bubble bursting in slow motion, perhaps?
Lol, I bought a house in the UK in 2005 despite talk of the bubble bursting... but i split up with the guy I bought it with and moved out pretty quickly. There had been talking about it bursting since around 2001

The property bubble burst here in the UK probably 2008, but prices haven't plummeted too much - people just aren't buying at the moment and probably won't be for another 12-24 months.

They'll pick up again, but anyone who was looking for a quick buck from buying property at the peak will be feeling sore over the current market... but then a lot of them are simply renting the properties out until the market picks up again rather than making a loss.

There will probably be talk of the bubble bursting in Oz for another couple of years before it happens - it's difficult to say without knowing more about the state of the economy there.

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Old Nov 29th 2010, 10:11 am   #54
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Default Re: The Great Australian Property Swindle

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They'll pick up again, but anyone who was looking for a quick buck from buying property at the peak will be feeling sore over the current market... but then a lot of them are simply renting the properties out until the market picks up again rather than making a loss.
How fortunate that all of these properties are cashflow positive and there is no cost to hold them.
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Old Nov 29th 2010, 10:22 am   #55
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Judging by the number of distressed mortgages I would say quite a lot.
How many distressed mortgages are there, in comparison to total mortgages ?
 
Old Nov 29th 2010, 10:23 am   #56
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How fortunate that all of these properties are cashflow positive and there is no cost to hold them.
A lot of them are technically cashflow negative, but at no cost once depreciation etc is taken into account.
 
Old Nov 29th 2010, 10:30 am   #57
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How many distressed mortgages are there, in comparison to total mortgages ?
It would be difficult to put a number on for many reasons, some of them intentional.
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Old Nov 29th 2010, 10:34 am   #58
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Default Re: The Great Australian Property Swindle

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Originally Posted by Vash the Stampede View Post
Article written in September 2009; property still booming in November 2010. Is the bubble bursting in slow motion, perhaps?
And some quotes from the article are:
If the Australian job market implodes, as many commentators are suggesting
it will in 2009/10 thanks to the slump in the Aussie resources sector and slowing retail sales, things could get sticky for new homeowners, very quickly.


“With unemployment currently at just over 5 per cent, many economists are forecasting it will peak at 8-9 per cent in 2010, which will lead to a “bloodbath” in the property market as thousands of mortgagors default on their loans.”
However the article ended with:
consider what a swift rise in interest rates would do to your disposable income before committing yourself to a huge loan you might not be able to afford to service.
That is something we would all agree with.

The article also quotes: "the median Australian income of $60,658 a year". That is worth comparing to the average first home mortgage in Australia of $284,512. 4.7 times.
 
Old Nov 29th 2010, 10:35 am   #59
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It would be difficult to put a number on for many reasons, some of them intentional.
So it is an unknown number, that we cannot use to rely on, or make statements based on.
 
Old Nov 29th 2010, 10:47 am   #60
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So it is an unknown number, that we cannot use to rely on, or make statements based on.
No, we know enough. Your question was quite specific.
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