Originally Posted by Tableland

The Australian Govt. does not guarantee any funds in private savings accounts unlike the US ($250,000), the UK (who can keep up? It was £50,000 last time I checked but now with part-nationalisation??). Greece, Ireland, Germany all gurantee 100%. As I predicted a few months ago, there were a couple of mouse-size squeaks coming from the vicinity of Swan & Rudd about this issue, but nothing solid.

Originally Posted by sooperlids

Good news for some who hope to be on their way next year.

Originally Posted by wardy2

I had heard there was talk of a $20.000 guarantee but still not enough for us if it was passed, NR is one of I think 2 banks giving the 100%, the rest are £50.000.

All I can do is keep my fingers crossed and hope for the best

cheers

Originally Posted by IvanM

Depends if you want a job when you get here.

Originally Posted by Tableland

You'll know when the Aussie economy is about to go down the pan because there will be an announcement about substantial savings guarantees beforehand. That's the indicator. Same thing happened in US and UK.

Originally Posted by Tableland

I thought this for a second, but now disagree.

1. The cut in rates is an emergency measure to stop, basically, the entire global banking system from collapsing, it is not about getting people to continue buying houses they can't afford.

(ME)

Not really,some banks are weak,some are strong.The strong are taking over the weak.The Japanese banks that made a mess of it in late 80,s early 90s,are now strong and buying stock in weak US banks (wonderful irony).A lot of banks were on their knees then including the big 4 in OZ.A lot of banks in OZ disappeared then,along with a lot of building societies.

A lot of financial institutions in the US disappeared,they called it the S and L crisis/scandal.Wells Fargo and B of A were on their knees and came back to be very big.

The story going around at the time when the japs had their huge property and stock bubble was that the OZ embassy in Tokyo was valued at more than the whole of California.So the govt sold it,don't know how accurate the story is.











2. The average house is now so over-valued that many people have to borrow ten times their salary to "buy" it. This cannot go on. If more people understood how compound interest worked it wouldn't happen of course, but they don't, so it does.


(ME)
This is nonsense.The two cities I have spent most time in are Perth and Adelaide.There are vast areas of both cities that you can pick up average houses for 350K or less. The average wage is a lot higher than 35K.There is still a link between average prices and average wages.

A mortgage is not compound interest,it is amortisation.As a rule of thumb however much you borrow muliply it by 3 and that is roughly how much you will pay back.Interest rates go lower work on 2.5 times,they go higher then work on 4 times.




3. The average house in the 1920s cost the equivalent of £15,000 today, so you can see from that how out of control things have got.


)ME)
So just doing a simple compound calculation at an average growth of 8% compounding over 81 yrs this gives a price of around 30 quid in the twenties.Which means around 1919 ,15 quid ,and so on.

I have an extensive investment library,around 1910 an average engineering worker in the UK earned 100 quid per year,the average house would have been around a fiver.Do you really think that the average wage was 20 X the price of a house.Compounding that average wage over 100yrs at a rate of 6%(orobably a bit high) gives an average wage today of around 26k (quid)








4. Reference the above points, I htikn even the most stupid of society now recognise houses are chronically unaffordbale and that a crash is on the way. Most people will be and should be very reluctant to buy now, and will simply "wait it out", which will force prices down

(ME)

Do you really think your points are valid.



5. Banks might have lowered their rates a little, but they still demand a massive deposit (in the UK at least). MOst people will take years to save this money, thus delaying the from buying and driving prices down.

(ME)


When I came to OZ I had to save the equivalent of a mortgage payment for 3 yrs with the R and I (now Bankwest).They would then lend me 3.5 times my savings and the savings would form the deposit.Argue amongst yourselves whether deregulation of the banking industry was a good thing or a bad thing.


Basically, I cannot see the housing stock being successfully reinflated, even though our insane governments are trying to do this to inflate their way out of their debt. I think, in the immortal words of GWB, this sucker is going down.

Originally Posted by Tableland

I thought this for a second, but now disagree.

1. The cut in rates is an emergency measure to stop, basically, the entire global banking system from collapsing, it is not about getting people to continue buying houses they can't afford.

2. The average house is now so over-valued that many people have to borrow ten times their salary to "buy" it. This cannot go on. If more people understood how compound interest worked it wouldn't happen of course, but they don't, so it does.

3. The average house in the 1920s cost the equivalent of £15,000 today, so you can see from that how out of control things have got.

4. Reference the above points, I htikn even the most stupid of society now recognise houses are chronically unaffordbale and that a crash is on the way. Most people will be and should be very reluctant to buy now, and will simply "wait it out", which will force prices down.

5. Banks might have lowered their rates a little, but they still demand a massive deposit (in the UK at least). MOst people will take years to save this money, thus delaying the from buying and driving prices down.

Basically, I cannot see the housing stock being successfully reinflated, even though our insane governments are trying to do this to inflate their way out of their debt. I think, in the immortal words of GWB, this sucker is going down.

Originally Posted by sooperlids

Under my mattress is about as safe as anywhere at the moment!

Originally Posted by Kalenge

The alternative to not buying your own home is of course renting.

Rents in Perth have been steadily rising, and as typical with a recession, will continue to rise very aggressively and beyond usual market value.

Staying in the rental market you'll be paying well over the top. It's actually a time to be considering buying property, and getting the timing right - wait too long and you'll lose out to investors taking cheap pickings to take advantage of the lucrative rental market which will ultimately start to push the prices back up.

Originally Posted by dpande

This of course assumes new renters will continue to appear via increased immigration .....if there aren't any jobs then this WILL dry up leading to rental vacancies.

Thanks to negative gearing, rent-to mortgage ratios are just beyond ridiculous at the moment- our rented house (if we were daft enough to buy just now) would have mortgage payments of around $6000 per month, rent is $2000. Think I will keep my money as cold hard cash for a couple of years yet, and pay part of the rent using the interest earned.

Originally Posted by dpande

This of course assumes new renters will continue to appear via increased immigration .....if there aren't any jobs then this WILL dry up leading to rental vacancies.

Originally Posted by chilliman

Looks like it'll be best to hang fire on buying when I get out & rent instead!?