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Re: Bottom of the property cycle reached ?
Originally Posted by Deutschmaster
(Post 7038559)
And the next arsey thing is how I'm trying to keep my savings in a bank out of harms way, but with interest rates falling that means I'm wondering whether the interest will be enough to offset the inflation which comes around from a bank printing too much money.:huh:
However I understand the pain of the drop in interest rates on income! It's down to about $60 for every $100 that it was last year. |
Re: Bottom of the property cycle reached ?
Originally Posted by Deutschmaster
(Post 7038559)
And the next arsey thing is how I'm trying to keep my savings in a bank out of harms way, but with interest rates falling that means I'm wondering whether the interest will be enough to offset the inflation which comes around from a bank printing too much money.:huh:
With tax on your interest you are already earning less than the rate of inflation. |
Re: Bottom of the property cycle reached ?
Originally Posted by Burbage
(Post 7038642)
No.
With tax on your interest you are already earning less than the rate of inflation. June 2007 Annual CPI was 2.1% and deposit interest rate was 6.05% or higher. December 2007 Annual CPI was 3% and deposit interest rate was 6.5% or higher. Now we are at 5% CPI, and only 4.5% deposit interest... Things sure have changed... |
Re: Bottom of the property cycle reached ?
Originally Posted by ABCDiamond
(Post 7038667)
Tax ?? Who pays tax ?
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Re: Bottom of the property cycle reached ?
Originally Posted by Burbage
(Post 7038642)
No.
With tax on your interest you are already earning less than the rate of inflation. |
Re: Bottom of the property cycle reached ?
Every area is different though, so how do we gage the country as a whole.
We have just had two other people putting in offers on our (now) new property and just as I arrived to sign there was a knock on the door from a lady down the road desperate to buy as her rentals coming up for renewal and needs to stay in the area.....Theres more sold than not where we live...for now at least... |
Re: Bottom of the property cycle reached ?
Originally Posted by Deutschmaster
(Post 7038559)
And the next arsey thing is how I'm trying to keep my savings in a bank out of harms way, but with interest rates falling that means I'm wondering whether the interest will be enough to offset the inflation which comes around from a bank printing too much money.:huh:
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Re: Bottom of the property cycle reached ?
Originally Posted by jad n rich
(Post 7037703)
Investors are hardly going to be in a rush to sell a rental property, pay capital gains tax on the proceeds, then get 3% minus tax on the funds in the bank, yes they might but most would hold out for a recovery. Many will see getting close to zero on their cash as much better than risking a possible minus 20% return on property. You're right that lots of people will avoid selling their houses, but it's the ones who have to and the ones that need to buy who will set prices. And that will depend to a large extent on the availability of credit. Some people are talking about local factors again, and mini cycles within the big one. I think these could become irrelevant, given the scale of what is happening in the overall economy. Rate cuts and artificial measures intended to prop up asset prices generally tend to fail, prolong the pain, or make things worse once debt deflation takes hold. |
Re: Bottom of the property cycle reached ?
A report to come out in Saturdays paper has quoted the Brisbane Real Estate market has dropped 4.3% in the last quarter.
However, they quoted that the lower end of the market has actually increased in value, but it is the higher end that has dropped, and with much fewer sales, and caused the overall drop. Exactly what I was saying earlier. |
Re: Bottom of the property cycle reached ?
Originally Posted by jad n rich
(Post 7035450)
One factor is savings interest rates, 3%/4% in the bank minus tax. Hardly an investment now is it. People will be comparing that to the 8% that was available even 2 months ago.
Lower mortgage rates please those with debt, on the other end of the scale investors, retires etc are now getting zippo return on their money. My guess is the housing market and to a lesser extent the share market will see a surge because of this factor. "Government guaranteed', too.... The government guarantees the banks. Who guarantees the government?...... |
Re: Bottom of the property cycle reached ?
Originally Posted by sr71
(Post 7038492)
The economic pain has not even started yet IMO. There is not an ounce of good news in the global economy, in fact it is looking extremely dire and much worse than many thought. The central banks and governments are fast running out of tools to manage the crisis and boost the economies - where do you go after interest rates are 0%?? How much money can you realistically print before it's worthless?
2009 should bring some significant collapses to many markets. So the answer of governments is to................... encourage spending? We sold all our shares four years ago and have resisted several "financial advisors" pushing us into property and equities since then. No, we are not particularly bright but sometimes you do have to look at reality in the face without the rose tinted specs. We are in for a terrible time. (Except, of course, in Oz: Oz is immune....) |
Re: Bottom of the property cycle reached ?
Originally Posted by Wol
(Post 7039487)
You can get a lot more than that, in the order of 6 - 7% in term deposits, and even on current accounts.
"Government guaranteed', too.... The government guarantees the banks. Who guarantees the government?...... |
Re: Bottom of the property cycle reached ?
Originally Posted by Deutschmaster
(Post 7046462)
The tax payer does. :sneaky:
(The red is deliberate.....) |
Re: Bottom of the property cycle reached ?
Stagnant is the main word for the Sydney market. Upper end has been hit hard but as someone else has pointed out getting meaningful median prices is hard.
Anywhere with plentiful supply should forget about the bottom of the market being reached, especially those without easy access to the city. That includes outer Sydney suburbs. Decent middle Sydney burbs with transport are just slow moving now with some discounting but quality is hard to come by. The economics of building also do not add up so something will give and with a lack of finance around it is easier to guess which area. The main factors to look out for are wage growth, unemployment and continuing availability of finance. Most indicators are that wage growth is down, permanent employment is down and finance is not available in the quantities is was before. Banks are also now requiring a proper valuation and applying stricter credit scoring. Another interesting report on the weekend was that Sydney rental vacancies are on the increase! Again it was the usual quality reporting of the local market so I would take it with a pinch of salt especially with the variation in suburbs. From what I understand the upper end of the market was the target of the report. The two factors hailed as differentiating Australia from the US/UK were the smaller finance industry and demand from China for commodities. Both have so far insulated Australia from the large job losses seen overseas. Finance is now shedding jobs but is less significant here. Chinese demand for commodities has slumped. Maybe the governments stimulus package will help but shipments are being delayed and stock piles are building up. Commodity exports are what delivered Australia a recent trade and government surplus. The prices and volumes of both have now dropped. This is affecting Perth badly and now that coking coal is impacted QLD and NSW will be hit. What we may see is an initial exhuberant boost to first time buyer property from the increases in FHOG and drop in rates. This is what happened when the FHOG was brought in and there was a similiar pattern after the 87 stock crash when rates went down. When employment dropped property dropped. |
Re: Bottom of the property cycle reached ?
The first suggestions in the UK about 6-8 months ago that it was far from the bottom was when the banks started insisting on 20-25% deposit MINIMUM to get a mortgage- i.e. this was the kind of price drop they were expecting and weren't prepared to risk their own money on it.
Last week the big 4 started doing the same in Australia. Who is going to save up $70-100,000 in the land of 'borrow-and-spend-and-then-borrow-some-more' ? |
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