If the recession bites do you think housing will plummet?
Mar 15th 2009, 10:26 am
#211
Has left the building
Joined: Mar 2007
Posts: 4,079
Re: If the recession bites do you think housing will plummet?
Australia needs some hard truths - mainly that people have had to very good due to both State and Federal returns from the mining boom. The choice is to raise taxes to a level that sustains Australia without mining revenues or lower expectations of public services and opportunity. You can't afford to have both in the current economic climate.
and FBT allowances on heavy mileage
Mar 15th 2009, 8:38 pm
#212
Lost in BE Cyberspace
Joined: Mar 2003
Posts: 9,397
Re: If the recession bites do you think housing will plummet?
Anybody who believes Oz will not be very severely hit by the recession is living in a fools paradise.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.
Absolutely correct.
Mar 15th 2009, 8:41 pm
#213
Lost in BE Cyberspace
Joined: Mar 2003
Posts: 9,397
Re: If the recession bites do you think housing will plummet?
Like the rest of the world Australia will pick up when the global banking system has worked through the bad debts. Luckily the banking system here has been more responsible and currently has less bad debt to consume. Unfortunately the high current account defecit and the dependence on overseas finance is coming home to roost.
The other factor is that Australia is more dependent on Asia than the US and Europe. Right now Asia is hit hard. Is Asia's recovery dependent on the US or can it generate a larger internal economy to replace lost US and European exports?
The other factor is that Australia is more dependent on Asia than the US and Europe. Right now Asia is hit hard. Is Asia's recovery dependent on the US or can it generate a larger internal economy to replace lost US and European exports?
That's going to be when inflation has effectively matched the *real* money in circulation with the *virtual* cash that never existed. How many years this will take is anyone's guess but it will be a hard time for those who rely on a return on their savings, that's for sure.
Mar 15th 2009, 9:38 pm
#214
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
It depends on how much pain is allowed to happen quickly and how much governments decide not to borrow their way through this. Sorry to point out the obvious but the giveaway money happening right now has to be paid back in the form of higher taxes or budget cuts.
The big banking giveaway is just delaying what we have to go through. Maybe controlled dismantling of the bad banks is what is needed. No institution should ever be allowed to become too big to fail again.
The big banking giveaway is just delaying what we have to go through. Maybe controlled dismantling of the bad banks is what is needed. No institution should ever be allowed to become too big to fail again.
"Worked through the bad debts"?
That's going to be when inflation has effectively matched the *real* money in circulation with the *virtual* cash that never existed. How many years this will take is anyone's guess but it will be a hard time for those who rely on a return on their savings, that's for sure.
That's going to be when inflation has effectively matched the *real* money in circulation with the *virtual* cash that never existed. How many years this will take is anyone's guess but it will be a hard time for those who rely on a return on their savings, that's for sure.
Mar 15th 2009, 9:50 pm
#215
Lost in BE Cyberspace
Joined: Feb 2005
Posts: 15,526
Re: If the recession bites do you think housing will plummet?
I've thought of another factor, that is fairly unique to Australia, that could well stop people losing their houses. People are allowed to dip into their superannuation savings in cases of financial hardship, the possibility of losing a house would definitely be one of the criteria for dipping and actually taking the whole lot of the superannuation savings.
Most people with 15 years of work under their belt, should have at least 130,000 bucks in Superannuation
Most people with 15 years of work under their belt, should have at least 130,000 bucks in Superannuation
Last edited by ozzieeagle; Mar 15th 2009 at 9:52 pm.
Mar 15th 2009, 9:52 pm
#216
Lost in BE Cyberspace
Joined: Mar 2003
Posts: 9,397
Re: If the recession bites do you think housing will plummet?
I've thought of another factor, that is fairly unique to Australia, that could well stop people losing their houses. People are allowed to dip into their superannuation savings in cases of financial hardship, the possibility of losing a house would definitely be one of the criteria for dipping and actually taking the whole lot of the superannuation savings.
Mar 15th 2009, 11:34 pm
#217
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
The savings rate that super generates is a massive safety net for the country. BTW The tax implications of dipping into super are massive.
I've thought of another factor, that is fairly unique to Australia, that could well stop people losing their houses. People are allowed to dip into their superannuation savings in cases of financial hardship, the possibility of losing a house would definitely be one of the criteria for dipping and actually taking the whole lot of the superannuation savings.
Most people with 15 years of work under their belt, should have at least 130,000 bucks in Superannuation
Most people with 15 years of work under their belt, should have at least 130,000 bucks in Superannuation
Mar 16th 2009, 2:38 am
#218
Guest
Posts: n/a
Re: If the recession bites do you think housing will plummet?
Get rid of negative gearing "again", (1985) and landlords will have to find a way to make renting profitable "again", and that may mean raising rents "again'.
Would the ALP then bring back negative gearing, "again" (1987) ?
If rents do go up, then investors with money will buy properties again, and push house prices up again.
Sounds like that same circle again...
Would the ALP then bring back negative gearing, "again" (1987) ?
If rents do go up, then investors with money will buy properties again, and push house prices up again.
Sounds like that same circle again...
Mar 16th 2009, 2:46 am
#219
Demi-God
Joined: Oct 2008
Location: Far North Queensland
Posts: 2,812
Re: If the recession bites do you think housing will plummet?
Get rid of negative gearing "again", (1985) and landlords will have to find a way to make renting profitable "again", and that may mean raising rents "again'.
Would the ALP then bring back negative gearing, "again" (1987) ?
If rents do go up, then investors with money will buy properties again, and push house prices up again.
Sounds like that same circle again...
Would the ALP then bring back negative gearing, "again" (1987) ?
If rents do go up, then investors with money will buy properties again, and push house prices up again.
Sounds like that same circle again...
Mar 16th 2009, 3:28 am
#220
BE Enthusiast
Joined: Jan 2007
Location: Sydney
Posts: 372
Re: If the recession bites do you think housing will plummet?
Some interesting thoughts so far...
From my experience which involves 18 yrs of investing here in Oz, and operating as a buyers agent here in Sydney, the market at the moment is being propped up by the first home buyers. Naturally with record low rates and generous grants and stamp duty concessions, FHB's have never had it so good; hence the activity in the sub $500K price bracket.
Housing won't plunge as it has in the US due to a no of factors (discussed many times on this forum over different posts inc this one) the prime one being that we don't have an oversupply of housing. Our credit hasn't been handed out as easily, despite the job crisis we seem to be a bit better protected for now (but I expect that will change with rising unemployment) and the rental market is strong, enticing investors back in.
However, as FHB's create more rental supply, it's only normal for rents to ease as they did last time FHB's were out in droves (2000 when the grant was first introduced) and I would expect the lag period to catch up by this time next year.
The real price drops have been in the luxury property market- basically anything over $5m. I know of a few cases now where vendors are having to take severe forced losses due to the lack of buyers and unfortunate personal circumstances. There's certainly some tough times ahead but the median and under price brackets are pretty safe in most suburbs, in my humble opinion.
From my experience which involves 18 yrs of investing here in Oz, and operating as a buyers agent here in Sydney, the market at the moment is being propped up by the first home buyers. Naturally with record low rates and generous grants and stamp duty concessions, FHB's have never had it so good; hence the activity in the sub $500K price bracket.
Housing won't plunge as it has in the US due to a no of factors (discussed many times on this forum over different posts inc this one) the prime one being that we don't have an oversupply of housing. Our credit hasn't been handed out as easily, despite the job crisis we seem to be a bit better protected for now (but I expect that will change with rising unemployment) and the rental market is strong, enticing investors back in.
However, as FHB's create more rental supply, it's only normal for rents to ease as they did last time FHB's were out in droves (2000 when the grant was first introduced) and I would expect the lag period to catch up by this time next year.
The real price drops have been in the luxury property market- basically anything over $5m. I know of a few cases now where vendors are having to take severe forced losses due to the lack of buyers and unfortunate personal circumstances. There's certainly some tough times ahead but the median and under price brackets are pretty safe in most suburbs, in my humble opinion.
Mar 16th 2009, 3:36 am
#221
Demi-God
Joined: Oct 2008
Location: Far North Queensland
Posts: 2,812
Re: If the recession bites do you think housing will plummet?
Some interesting thoughts so far...
From my experience which involves 18 yrs of investing here in Oz, and operating as a buyers agent here in Sydney, the market at the moment is being propped up by the first home buyers. Naturally with record low rates and generous grants and stamp duty concessions, FHB's have never had it so good; hence the activity in the sub $500K price bracket.
Housing won't plunge as it has in the US due to a no of factors (discussed many times on this forum over different posts inc this one) the prime one being that we don't have an oversupply of housing. Our credit hasn't been handed out as easily, despite the job crisis we seem to be a bit better protected for now (but I expect that will change with rising unemployment) and the rental market is strong, enticing investors back in.
However, as FHB's create more rental supply, it's only normal for rents to ease as they did last time FHB's were out in droves (2000 when the grant was first introduced) and I would expect the lag period to catch up by this time next year.
The real price drops have been in the luxury property market- basically anything over $5m. I know of a few cases now where vendors are having to take severe forced losses due to the lack of buyers and unfortunate personal circumstances. There's certainly some tough times ahead but the median and under price brackets are pretty safe in most suburbs, in my humble opinion.
From my experience which involves 18 yrs of investing here in Oz, and operating as a buyers agent here in Sydney, the market at the moment is being propped up by the first home buyers. Naturally with record low rates and generous grants and stamp duty concessions, FHB's have never had it so good; hence the activity in the sub $500K price bracket.
Housing won't plunge as it has in the US due to a no of factors (discussed many times on this forum over different posts inc this one) the prime one being that we don't have an oversupply of housing. Our credit hasn't been handed out as easily, despite the job crisis we seem to be a bit better protected for now (but I expect that will change with rising unemployment) and the rental market is strong, enticing investors back in.
However, as FHB's create more rental supply, it's only normal for rents to ease as they did last time FHB's were out in droves (2000 when the grant was first introduced) and I would expect the lag period to catch up by this time next year.
The real price drops have been in the luxury property market- basically anything over $5m. I know of a few cases now where vendors are having to take severe forced losses due to the lack of buyers and unfortunate personal circumstances. There's certainly some tough times ahead but the median and under price brackets are pretty safe in most suburbs, in my humble opinion.
Mar 16th 2009, 5:34 am
#222
Lost in BE Cyberspace
Joined: Mar 2003
Posts: 9,397
Re: If the recession bites do you think housing will plummet?
Could you explain what "thinking" means, in the context of this government?
