brendarover

Gold Coast Times: Sellers flood housing market

http://forum.globalhousepricecrash.c...c=43476&st=150

http://www.goldcoast.com.au/article/...oast-news.html

http://www.goldcoast.com.au/article/...oast-news.html

http://www.hotspotting.com.au/index....productId=1186

http://www.goldcoast.com.au/article/...al-estate.html


Looks like the Coast of Gold is in some trouble, was thinking of heading there aswell?

Any thoughts!

Catch

can't argue about this one

ABCDiamond

My first thought is that everyone is talking about how the first home buyers grant has pushed up property prices recently, and everyone is paying inflated prices.

Followed by the reports that say that prices have dropped in the last 3 months, again, ....

Vash the Stampede

I bet their mortgage was huge and their equity was negligible.

Moral of the story: do your research and don't buy a house you can't afford.

nigel and wendy

+1

the FHOG is denial,property ramping at its best.

prices have to come down to sustainable and affordable levels.

its happening all over the world so it has to happen in oz...........but i`m sure "hutch" will come along soon to this thread and "bull" it up a little

sonlymewalter

I don't think it's fair to presume these people didn't do their research or buy a house that at the time they were told they couldn't afford.

There are millions of people all over the western world in the same position. The largest majority were given incorrect investment advice by the very institutions who should have known better.

rockpeblar

According to the BBC, UK house prices to fall 28% from their peak value in summer 07. Hopefully Perth will fall by at least the same amount.

Vash the Stampede

I think it is. Watch Debtland, the Four Corners report on Australia's "rising sludge of debt". Then watch Mortgage Meltdown, the Four Corners documentary on the US subprime mortgage crisis.

The common thread? People buying houses that they couldn't even afford before the crash, let alone afterwards. People who bought overvalued houses because they thought they "deserved something better". People who weren't prepared to sit tight and save up over a few lean years for a house they'd have no problems paying off. People who wanted the instant gratification of instant credit.

Yes, many of them should never have been given a mortgage in the first place. But remember: personal responsibility begins at home. Nobody held a gun to these people's heads and forced them to take out a mortgage.

Yes, the largest majority were given incorrect advice by the very institutions that should have known better. But this does not absolve them of their own responsibility.

Just look at how small their margins were, for a start. Many of these people (if not most) were already overcommitted - particularly in the USA, where debt was piled onto credit piled onto debt balanced on a slender equity tightrope. We're talking about people with <10% deposit mortgages who could afford repayments at the honeymoon rate but didn't think ahead to the future. They were simply winging it.

In any case, the current plunge is mostly affecting houses priced at the top end of the scale. We're not talking about people who bought a modest house in a plain Jane suburb at ~$280k and then found that they couldn't meet the repayments.

For example, look at the guy in this news article; his investment property is in Darling Point (median price: $950k). He bought a house that he couldn't afford, and hoped that people who could afford it would rent from him. And they did... for a while. But now he's shafted.

Lesson learned, I guess!

IvanM

But the failures identified that have caused this recession are repetitions of history. Sure a level of personal responsibility is needed however mortgage saleman are incentivised on the size of mortgage they sell and not the appropriateness and risk of the deal.

People are highly financially illiterate but the responsilility you talk of requires knowledge of complex products, legal small print and an economics crystal ball. Add in a greedy pushy salemen and it is not hard to see that there is mis-selling.

There is now a universal view that stronger regulation is needed and finally the federal government has brought consumer credit under its wing as the states were inept.

IvanM

The Gold Coast also seems to attract undesirable con-men time and time again. Google property scam and gold coast and you will see what I mean. Raptis is a recent case.

sonlymewalter

Spot on

Whilst people need to understand what they are signing, they do afterall rely heavily on financial advisors to help them out. Instead people have been fleeced and sometimes misled into buying property at over inflated prices. At one time banks wanted to make sure they got their money back so wouldn't lend more than the borrower could afford, also they [the bank] made sure the house was worth the price paid. Instead banks & real estate agents got greedy and stopped caring thereby leaving borrowers in a vulnerable position buying houses they thought were worth far more than they actually were.

No one regulated the real estate agents or the banks, in fact they scammed the situation between them and left some people high and dry

Vash the Stampede

Agreed.

No, it doesn't require knowledge of complex products, legal small print and an economics crystal ball. It requires a basic understanding of how to manage a household budget, and that's all. I managed to do it, but only by changing my spendthrift ways and lowering my expectations to a property that I could comfortably afford. And hell, if I can do it then any idiot can.

Look, if you only put down a 5% deposit and your weekly/fortnightly/monthly repayments will be stretching your finances to the limit, it shouldn't take a genius to figure out that you will be in trouble when your interest rate reaches the end of the honeymoon period and your repayments increase.

Don't buy something you can't afford. Don't sign a contract you don't understand. Don't take advice from only one source. The average bloke correctly applies these principles to buying a car. They should be in the forefront of his mind when considering a property. It's not rocket science.

People have been buying houses on a wing and a prayer despite large amounts of personal debt. Look at some of the people in the Debtland documentary; they bought houses they could barely afford, then racked up credit cards and other personal debts along the way.

Like these people:
You can't tell me that those 300,000 households didn't know what they were getting into. Perhaps they didn't always understand the full extent of their debt; perhaps some of them were in denial; perhaps some of them didn't care. But from what I saw, too many of them were people who wanted a brand new made-to-order McMansion without the long years of hard slog and careful saving that their parents went through.

It's fashionable to knock the baby boomers these days, but I can only respect them for earning their wealth the hard way.

Yes, I agree. Fortunately the Australian government was already far more responsible than most of its foreign peers (and far less intertwined with their markets) which is why we haven't been hit as badly as places like the US and UK.

Catch

sounds like its all around the corner for Australia.Keep hearing everyone say "No its different here"

asprilla

But it is different here.

IvanM

I am not denying the idiocy of plenty of people but also the blind matter in which people take out a mortgage without thinking of the possibility that rates go up and the inability to unlock oneself from a mortgage, especially fixed rate deals. Rather than contacting a responsible advisor they contact mortgage brokers who will always give the answer they want to hear. In the belief the brokers are reputable they believe the salesman because that is what they want to believe. They also believe that housing only goes up which comforts them in their ways.

My point is that regulation is needed to rescue the financially illiterate and ignorant. The regulation is also needed to prevent the financially reckless from putting the economy at risk as had happened.

A case in point is QANTAS. Had the US hedgie got his fax off in time right now QANTAS would have $10billion in loans due to the private equity takeover. Right now QANTAS is capitalised at $5billion and would have been wrecked by the current crisis. A consortium of bankers would have raised a fortune in fees yet the tax payer would have taken on the wreckage. The QANTAS board wanted the takeover because they would have earned a huge sum (Geoff Dixon $50million).