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Housing bubble? Where's your money?

Housing bubble? Where's your money?

Old Nov 10th 2013, 8:08 am
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Default Housing bubble? Where's your money?

I've just been reading a post on the alternate media, concerning the big four Aussie banks, which (if these figures are accurate), show that it would be foolish to leave all your hard-earned dosh in a deposit or savings account.

"Australia has added risks given the extent of its housing bubble. Demographia says the Australian housing market is the most expensive in the developed world, with property prices at 5.6x annual income, with 3x or below considered affordable. Meanwhile, The Economist magazine suggests Australia is the world's fourth most expensive housing market, with prices 44% overvalued versus rents and 24% versus wages (which are undoubtedly grossly inflated).

The risks to Australia from the inflated housing market are systemic also. Housing assets of A$4.9 trillion are 3.3x larger than Australia's GDP. Moreover, residential property represents more than 60% of the big four Australian banks total loan books. Given these banks have an average leverage of 20x (equity/assets), it would take less than a 10% fall in residential property prices for equity in these banks to be wiped out.

One word comes to mind: bail-outs!"

Full article is here: http://www.zerohedge.com/contributed...loodbath-ahead

And NZ seems to be pretty much in the same boat - not just because the four Aussie banks have most of the market in NZ, but also because of NZ's housing bubble: (see the graphic for the ratios).

As we all know, (or should,) laws came into effect in 2011 (pretty sure that's when NZ, UK, Aus all signed the same law,) which pretty much give the banks carte blanche to give investors / depositors a "haircut" if the bank loses too much money in their gambling activities. Under these new laws, once you deposit your money into a bank it's no longer yours - instead you have a credit claim against the bank. That means that you can only get 'your' money out if the bank has any left....

The floor is open for discussion! (Unless it's just too scary to consider?)

What ideas do you have for preserving your wealth, so that if the bubble bursts you can still keep the essentials - shelter, food, clothing, etc.?

(Keep it in general terms, not specifics. We don't want everyone and his brother tracking you down for the priceless art work you have stored away in the attic!!)
Attached Thumbnails Housing bubble? Where's your money?-australian-housing-assets-gdp4.gif  
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Old Nov 10th 2013, 6:20 pm
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Default Re: Housing bubble? Where's your money?

Provincial New Zealand. A small gain is better than a huge loss.
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Old Nov 10th 2013, 9:18 pm
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Default Re: Housing bubble? Where's your money?

Originally Posted by Snap Shot View Post
Provincial New Zealand. A small gain is better than a huge loss.
Is that a Mutual? I like the idea of Mutuals - local people using local money, and there's no madness like derivatives in the mix, so the risk is reduced, dramatically!!
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Old Nov 10th 2013, 10:00 pm
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Default Re: Housing bubble? Where's your money?

Originally Posted by downunderpom View Post
What ideas do you have for preserving your wealth, so that if the bubble bursts you can still keep the essentials - shelter, food, clothing, etc.?
Isn't this stuff just scaremongering based on the worst case scenario, except for Armaggedon?

These "haircuts" are a ridicuous notion that, whilst possible, would be very much a last resort - incredibly unlikely.

Greece and Ireland failed massively in so many ways, perhaps in part to the fact that the Greeks and the Irish were too clever for their own good at hiding money from the taxman!!

New Zealand population is growing, has been for some time and is projected to continue growning. Whilst this growth is helped by immigration, by and large us immigrants are moving here with good skills to contribute.

Yes you might have to take a step down or sideways on the career ladder, but chances are if you're here for the long haul your career will still grow.

A rising population should mean in time more good people doing good jobs and less unemployment.

Despite the Irish disaster, recovery was and is being made, no haircuts needed - despite there being questions about the motives of our politicians I really don't think we'll end up in a scenario where things will crash to this degree.

The more likely eventuality is that things bottom out, perhaps dip a little, and a few people get their fingers burned due to poor advice or just not being careful. A select few will have their lives ruined, but may have been on their way to ruin anyway.

In NZ we're heavily tied to Australia, it's not like Australia is going down the pan. It's all relative, they're just not doing quite as well as they were. It's hardly falling apart at the seams, it's still an incredibly wealthy country per head of capita.
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Old Nov 10th 2013, 11:13 pm
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Default Re: Housing bubble? Where's your money?

Originally Posted by downunderpom View Post

What ideas do you have for preserving your wealth, so that if the bubble bursts you can still keep the essentials - shelter, food, clothing, etc.?
Invest in keeping fit and healthy
Tackle debt first before investing
Consider income replacement insurance
Life insurance to protect dependants
Cash is king ( keep some In reserve )
Don't put all your financial eggs into one basket - diversify.
Build a network of close friends and family
Stay positive and try not to sweat the small stuff.
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Old Nov 10th 2013, 11:22 pm
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Default Re: Housing bubble? Where's your money?

Originally Posted by Hokey-pokey View Post
Invest in keeping fit and healthy
Tackle debt first before investing
Consider income replacement insurance
Life insurance to protect dependants
Cash is king ( keep some In reserve )
Don't put all your financial eggs into one basket - diversify.
Build a network of close friends and family
Stay positive and try not to sweat the small stuff.


This is a brilliant way of looking at it.
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Old Nov 10th 2013, 11:26 pm
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Default Re: Housing bubble? Where's your money?

Don't buy a house in NZ now.
Don't have all your money / investments in NZ or any other one country.
Have an eye on the NZ/AU market. First sign of trouble transfer money out of NZ. Do not hesitate.
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Old Nov 10th 2013, 11:33 pm
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Default Re: Housing bubble? Where's your money?

Originally Posted by Hokey-pokey View Post
Invest in keeping fit and healthy
Tackle debt first before investing
Consider income replacement insurance
Life insurance to protect dependants
Cash is king ( keep some In reserve )
Don't put all your financial eggs into one basket - diversify.
Build a network of close friends and family
Stay positive and try not to sweat the small stuff.


And never under estimate the power of thought. Negative thoughts attract negative results.
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Old Nov 10th 2013, 11:35 pm
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Default Re: Housing bubble? Where's your money?

Originally Posted by downunderpom View Post
Is that a Mutual? I like the idea of Mutuals - local people using local money, and there's no madness like derivatives in the mix, so the risk is reduced, dramatically!!
I can't do this anymore.

However, to explain: We purchased our house in the provinces of New Zealand. Wanganui-Manawatu district. We did not pay dearly for it and are not expecting an 'Auckland' level of profit when we sell it.

Which is why I remarked, 'I prefer a small gain to a huge loss'.

It's not even on the market.
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Old Nov 11th 2013, 12:04 am
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Default Re: Housing bubble? Where's your money?

Originally Posted by TommyLuck View Post
Isn't this stuff just scaremongering based on the worst case scenario, except for Armaggedon?

These "haircuts" are a ridicuous notion that, whilst possible, would be very much a last resort - incredibly unlikely.
One word - Cyprus. Before that I didn't believe it possible that banks would just help themselves to depositor's money. But they did. It's no longer 'incredibly unlikely', it's now history.

But if it helps you sleep at night....
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Old Nov 11th 2013, 12:06 am
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Default Re: Housing bubble? Where's your money?

Originally Posted by Hokey-pokey View Post
Invest in keeping fit and healthy
Tackle debt first before investing
Consider income replacement insurance
Life insurance to protect dependants
Cash is king ( keep some In reserve )
Don't put all your financial eggs into one basket - diversify.
Build a network of close friends and family
Stay positive and try not to sweat the small stuff.
Completely agree.
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Old Nov 11th 2013, 12:50 am
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Default Re: Housing bubble? Where's your money?

Originally Posted by downunderpom View Post
One word - Cyprus. Before that I didn't believe it possible that banks would just help themselves to depositor's money. But they did. It's no longer 'incredibly unlikely', it's now history.

But if it helps you sleep at night....
I'm not going to even bother comparing Cyprus and New Zealand. If I was, I'd discuss Cyprus financial and political link to Greece and then compare the relative nations Export Trade industries. More would flow from there.

You did note that I didn't dismiss this as impossible, anything is possible. But this is a mismatch on so many levels.

It remains incredibly unlikely.


What helps me sleep is regular exercise, a reasonable diet and a decent matress.
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Old Nov 11th 2013, 1:27 am
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Default Re: Housing bubble? Where's your money?



That helps me sleep. When you have nothing you can't loose anything!
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Old Nov 11th 2013, 2:27 am
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Default Re: Housing bubble? Where's your money?

It doesn't bare thinking about really. The prospect of losing all of your hard earned savings and having nothing to fall back on isn't something I think about on a daily basis. Or even a yearly basis for that matter. What else can a person feasibly do? Put wages under the mattress?

I would say wealth can be found in many ways, not just in monetary form. At least this prospect makes me feel better! I am not wealthy with money, but wealthy with health and happiness so bugger the banks and have a
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Old Nov 11th 2013, 2:49 am
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Default Re: Housing bubble? Where's your money?

Originally Posted by pippalonghorn View Post


That helps me sleep. When you have nothing you can't loose anything!


if it all goes tits up I cant do nowt about it so am not in the least bit concerned
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