If the recession bites do you think housing will plummet?
Mar 9th 2009, 12:14 am
#106
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Re: If the recession bites do you think housing will plummet?
And the young couples buying houses now, will be happy later on if their property devalues, and they are left in negative equity. ?
Mar 9th 2009, 12:37 am
#107
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Re: If the recession bites do you think housing will plummet?
What did that person who sold for 529k do with the money? Buy somewhere more expensive and pay more stamp duty?
Mar 9th 2009, 12:52 am
#108
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Re: If the recession bites do you think housing will plummet?
Only if they are forced to sell their house. If they choose to sell to "move up the ladder" they will be better off as their next house will have dropped too, less stamp duty too.
Mar 9th 2009, 12:54 am
#109
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Mar 9th 2009, 1:38 am
#110
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Re: If the recession bites do you think housing will plummet?
They would also find it difficult to move house until prices rise again, as they would not be able to pay of the first mortage to change over to the next one:
eg:
Original house $500k, mortgage $400k
prices drop to, say, $250k.
If they wish to upgrade to a $300k house, the bank will only re-lend $240k at 80%. They would be short of $160k to repay the old mortage.
Upgrading to a $400k house, and the bank will only re-lend $320k at 80%. They would still be short of $80k.
I think a lot of people would be very unhappy, except of course for the non-property owners at the time. (or should I say non-mortgage holders)
Personally I would love to see prices drop back to the 2003 situation and with 10% interest rates, but then, we are all in different situations
Mar 9th 2009, 1:45 am
#111
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Re: If the recession bites do you think housing will plummet?
I think that's exactly what will happen. I think interest rates will begin to climb again as inflation takes hold.
Mar 9th 2009, 1:51 am
#112
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Re: If the recession bites do you think housing will plummet?
Although on my other board, with all the city bods, they are shocked about US Government bonds or something being fixed at 3.75 pct for the next 5 years, which is apparently unprecdented.
I suspect it has some major relevance which I'm trying to understand.
I may just ask them outright if I get the urge to push the buy button.
Mar 9th 2009, 1:52 am
#113
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Re: If the recession bites do you think housing will plummet?
Mar 9th 2009, 2:39 am
#114
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Re: If the recession bites do you think housing will plummet?
Young couples buying new places now are subsidised by $24,000 and in some states zero stamp duty. Is that sustainable? Will KRudd maintain the higher FHOG in May or will the reality of a budget in a deteriorating economy take effect. The buyers sense or lack of and happiness is irrelevant to what happens now.
What did that person who sold for 529k do with the money? Buy somewhere more expensive and pay more stamp duty?
What did that person who sold for 529k do with the money? Buy somewhere more expensive and pay more stamp duty?
Mar 9th 2009, 2:43 am
#115
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Joined: Sep 2002
Location: Ilukapool. WA
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Re: If the recession bites do you think housing will plummet?
True, the grant just pushes the price of a house by $24k.
Mar 9th 2009, 2:48 am
#116
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Re: If the recession bites do you think housing will plummet?
Mar 9th 2009, 2:53 am
#117
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Re: If the recession bites do you think housing will plummet?
At the moment economists are more worried about deflation hence the lack of raised eyebrows when the bank of England announced the printing presses were starting. Deflation is what happened in Japan after a similiar crash at the end of the eighties. I need to read more to see what the real negatives are as Japan had negligible growth during that period of deflation. Some commentators are using the Japan experience for lessons today. BTW property prices there kept on dropping despite 0.5% interest rates.
Mar 9th 2009, 2:57 am
#118
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
It was originally introduced to negate the effects of GST when it was first introduced. It then helped produce a house price spike and no politician has dared reverse it since.
Mar 9th 2009, 2:58 am
#119
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Re: If the recession bites do you think housing will plummet?
We plan on selling our house around Oct-Nov of 2010 (18 months away). I'm not too bothered about our house price dropping as long as other houses drop at a similar rate. That's the key for me anyway, so I pay attention and watch what's happening in the local area.
The big problem for us would be if our area plummeted and the other areas don't. I don't see that happening though, I'm expecting an average drop compared to most other areas. Hard to say though!
The big problem for us would be if our area plummeted and the other areas don't. I don't see that happening though, I'm expecting an average drop compared to most other areas. Hard to say though!
Mar 9th 2009, 3:36 am
#120
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Re: If the recession bites do you think housing will plummet?
At the moment economists are more worried about deflation hence the lack of raised eyebrows when the bank of England announced the printing presses were starting. Deflation is what happened in Japan after a similiar crash at the end of the eighties. I need to read more to see what the real negatives are as Japan had negligible growth during that period of deflation. Some commentators are using the Japan experience for lessons today. BTW property prices there kept on dropping despite 0.5% interest rates.