http://www.jenman.com.au/NewsAlerts1.php?id=4

A four part report on the warning signs of a housing crash and how to protect yourself.

Written Oct 28 2001 - In my opinion will turn out to be a real good web page to point people to when they cry "why didn't anyone warn me?"

I like this qoute "It's a proven formula - low debt and careful living equals happiness. "

The most sensible written article i've read on this website, forget all the fancy graphs, yields, earnings multiples and whatever other financial ******** people peddle on here.
Spend what you can afford and no more, and you'll never go far wrong.

Everyone should read this link.......good stuff!

All the warning signs are here.

Is he the CTT of Aussie land.

If the Ashes were awarded for the most debt, we beat you Aussie bug**rs hands down every time.

They certainly are and 'Easter' Cadbury Cream Eggs on sale in the shops already is an important indicator ;-) of further woes to come in the retail sector.

Can't wait for B&Q's results.

Even McPrematureBurgerDeath are having to offer two for ones at the moment.

Actually, Charlie, as a % of income, the Ozzies are in even more debt than we are:


http://www.theage.com.au/news/National/Aus...3391893747.html




http://www.news.com.au/common/story_page/0...5E28477,00.html

I agree, read this stuff, there is a LOT of wisdom in it:

HOMEBUYERS

The right time to buy a family home is always when you find the right home. This may not mean the BEST home, it means the RIGHT home. And the right home is one you can SAFELY afford. Be aware of the risks of financial over-commitment.

You should CONSIDER lowering your price bracket. If you are looking for a home "up to $500,000" and you are risking your future, buy a cheaper home, even if it means you do not buy in your preferred area. This is safe and sound advice.

To protect yourself from interest rate rises, you should always ADD three percentage points to the cost of your loan to see if you can still afford the loan. If not, DON'T BUY. Interest rates will rise. They always do.

What will happen if you lose an income? If you are young and you have two incomes and you intend to live on one income and use the other for the mortgage, what if you have children? Most divorces begin with financial problems.

Think about your NEEDS instead of your wants. Most of today's needs did not exist thirty or forty years ago - when people were happier. The happiest people are NOT those who have the most, but those who need the least. Don't make the classic mistake of spending money you can't afford in order to impress people you don't like. Too many people do that.

As the psychologist, David Meyer, said…

"More than ever, we have big houses and broken homes, high incomes and low morale, secured rights and diminished civility. We excel at making a living, but often fail at making a life."

One study showed that most couples are so busy trying to pay off their debts that they spend an average of 12 minutes a day talking to each other. Debt is often worse than poverty. Watch out for debt, it's very seductive.

Thousands of people get up early and drive to work in a nice car which they are paying off, so they can earn a big income to pay a big mortgage on a big home that is left empty all day because they have to go to work to pay for it. Something is not right.

Your personal financial and emotional safety should be your major priority.

If you buy a home you can afford, it won't matter what happens to the real estate market. You will be safe. And you will be thankful for this advice. If things go well, you can buy a more expensive home later. When you can EASILY afford it.

It's a proven formula - low debt and careful living equals happiness

I think this is called the rat race.

So we are not the best at anything then?
Now know why TTRTR left there.

House worth A$200k, mortgage A$175k.

Well that`s a new one, debt is now an asset is it? It must be all that sun down under.

And they laugh at the twerlies who speak of the good old days.

it's also a proven formula to ignore scare mongers!!!!!!!


when was this written 2001???? I would dread to think how many much this would have cost me if i'd listened to such baloney back then?


how can you be so chuffed with this article when it is sooooo wrong?

AT 5.5 times income in the UK, you guys/girls don't realise how good you've got it right now.

The average australian wage before Overtime and before bonuses is $50k. I don't know to many people on that sort of money. which suggests

1) there are a few people earning mega bucks

or

2) I run with the wrong crowd

then again it could be a little from colomn A and colom B

Sorry BBB

I disagree with your "proven formula to ignore scare mongers". If nothing else you can listen to what they say, evaluate it objectively, then if you feel the need, take action to counter their scare

Yes it was written in 2001.

"I would dread to think how many much this would have cost me if i'd listened to such baloney back then?"

You have only got the money if it is in your pocket. The rides not over yet.

I am chuffed with this article as it comes with what I believe is sound advice. I can't see how the aticle is sooooo wrong.

GCS15

I am an ex-pat living in San Diego, California where the market is beginning to sink after a 8 year run up. I have become somewhat of an expert on market crashes and currently contribute to the Wall Street Journal's Real estate Forum online. Jenman's stuff is good but I have found some practical warning signs that may apply back home also. 1st. The rhetoric coming out of the vested interests becomes more bullish in spite of statistical data showing a downturn. 2. Each piece of bad news about house prices is explained away by "seasonal fluctuations." 3. The vested interests publish a lot of year-over-year data to show that the market is still climbing. 4. A load of "good news" reports about rising prices follow each credible report that the market is in trouble. 5. New construction building sites begin to hire "sign twirlers" to entice motorists to drive in (perhaps a US only thing), 6. Stockbrokers who know what is going on issue warnings based on the fundamentals--there are a lot of these coming out of Wall Street at present (http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh80667_2005-01-06_18-05-57_n06443521_newsml)
7. Al Greenspan says things like: "there is no bubble but some local markets have exhibited distortions that have deviated from the fundamentals." The link cited explains how the market was warned months ago that interest rates were headed up. 8. Vested interests say higher interest rates are good for house prices. 9. Your neighbour can't sell their house for the price they expected. 10. FTB's are thin on the ground. 11. Rental value does not cover the capital outlay of the purchase--seems Anthony and Sherry may have this problem? More BTL's on the market. 12. EAs/Realtors exhibit that telltale "look" of people who are facing hard times--sad hollow expressions, nervous smiles, sweaty hands, shuffling papers and faking telephone calls when you enter their offices. 13. Obvious things like increasing inventories of unsold properties, time on market increasing, increased hiring by law firms specializing in foreclosures and bankruptcies. 14. Muscle relaxant sales increase--bought by market timers who got out in time and can't wipe the smile off their faces.

A really great article. I particuarly liked this bit:

"If the people who gave real estate investment advice were accountable for their advice, there would be less people giving advice. Most real estate "experts" are not experts. They are unscrupulous salespeople earning fat commissions selling dud "investments"."

In the UK we have been bedevilled by these so-called "experts". Not just in property but in the whole financial sector. Think about the dot com boom, mis-selling of pensions, endowment mortgages. I'm afraid the whole financial sector is rotten with misanthropes, out to make a quick buck. Because it is driven by obscene bonus payments, given as rewards for conning people out of their hard earned money, it will always attract the unscrupulous.

Very often though the "experts" are preaching to the converted. For some reason most people seem to like rising house prices. If you are a home owner I guess it makes you feel good. Your main asset seems (at least on paper) to be worth more and you can always use MEW to finance the new car/bathroom/holiday etc. This is of course an illusion as the money still has to be paid back. Also, if prices are rising homeowners wanting to trade up to a larger house also lose out while the FTB's have no chance.

Bears are always going to find it tough to get their message across since the majority of the public don't want to hear what they have to say (even when you know it makes sense).

As with previous crashes, many people do not see it coming until far too late. Why is it that people are so gullible? Greed??

This last bubble has been caused by a confluence of factors and greed is certainly one of them, if not the principle one. When we look back I think we will blame low interest rates causing (people to buy more house than they need or can afford (when the rates start to rise). The speculators and "flippers" were out for the fast buck and only the ones who get caught when the market turns will be the losers. But, sad to say, there are quite a few victims in the bubble markets. The poor sods who have had to pay a fortune just to find a house to live in. It makes me sad to see people here in Southern California priced out of owning a home or unable to afford the one they bought--especially if it was all they could do given the prevailing prices. It is possible Al Greenspan carries a great deal of the blame as it was his low interest rate policies (to avoid a recession that should have happened after 911) that fuelled the bubbles. Then again, it may just be the economic cycle. California has seen boom-bust cycles ever since the gold rush of 1849 where the lust for quick wealth drove prices through the roof. That bubble burst and it was not until the big agricultural boom in the central valley of California that brought another recovery--and another bust. The beat goes on. . . . .

[quote=zzg113,Jan 8 2005, 10:19 AM]
Actually, Charlie, as a % of income, the Ozzies are in even more debt than we are:


The Problem with Australia is that it has had the biggest realestate boom ever. A vast amount of people have borrowed extraordinary amounts of money. On average People have borrowed more money than they can pay off. It is common belief that house prices never go down in Australia. The problem now, is that a Mortgage will cost twice as much to rent the same place. and with inflation quite low in Australia there is no short term pressure on wages.

It will be interesting to see, when interest rates go up how many investors will be forced to sell.

The general present feeling i get from talking with alot of RE agents in Australia is one of desperation!

My brother-in-law and his wife bought a house in Melbourne by somehow dipping into their superannuation (pension) fund!

Dangerous. A number of people have been caught out on this one. The taxman hammers people who do this.

This must be quite hard to get away with in Southern California, cos it doesn't HAVE any seasons!

Uforia, I agree to an extent that for many people a low risk approach is the right option, but not by any means a life - model for everyone.

There are those who like to 'extend' themselves in order to establish a financially rewarding position, and this is just as valid an approach. Such people aim to be financially independant (ie choose whether to continue working or not) as quickly as possible.


There will always be some financial casualties from mortgage over - extension, but there are many winners also.

BTW, all other borrowing forms such as credit cards should be avoided, and saving encouraged.

Dogbox,

Problem is the people that do that when everybody else is doing the same tend to get taken to the cleaners. Usually the muppets that attend investment seminars and such like or buy the latet fad book, they are the ones left holding the chips.

Hello (first time poster here)

I have spent the last 5 years living and working in Dublin where houses are too expensive compared to income so I couldnt afford to buy and on returning back to the UK I have found I am again in the same boat, the advantages in the UK is the 100% mortgages for me, a FTB.

I love this forum and the comments made, and just out of curiosity I went onto rightmove co uk and looked for property available in M1 and ½ mile around and to my delight I found 800 properties available in such a small area. The majority of which I assume are the greedy BTL landlords who want to get out.

Is this a sign or has there always been this amount of property on the market in Manchester town centre?

Welcome to the forum lenny.

The increase in the number of new house on the market is starting to show on rightmove.

Note in the search options on rightmove you can filter it too see how many were added in the last 24hours, 3 days e.t.c

Have a look and let the forum know what you think.

Almost certainly.



It's a sign. Until a few years ago there WAS no residential property in central Manchester, so from 0 to 800 in a couple of years is pretty meteoric.

Reply JPJH

Thanks. I never noticed before you could find out how quickly property had come onto the market with rightmove co uk. This is what I found for Manchester (M1 and ½ around)

Last 24 hours - 6 properties
Last 3 days - 11 properties
last 7 days - 25 properties
last 14 days - 31 properties

In the area I am looking to buy which is not M1 (too expensive) there has been 23 properties added in the last 14 days.

As I spent 5 years renting in Dublin I have no savings, does anybody know of a good bank/building society who can help me with a 100% mortgage?

Cheers

Do you really think that's a good idea in the current house price climate?

No, after reading the posts on this website I wouldnt dream of buying right now. But if things improve at the end of the year I would like to buy something modest.

I have to say I am naive when it comes to the best mortgages and interest rates, etc., there seems to be so many which I know is a good thing but its also confusing especially if you dont have a deposit to put down. So if anybody is kind enough to point me in the right direction of the good/bad banks I would be so grateful.

Does this not illustrate the fact that people outside of this forum want a place to live and will not be able to put it off forever, regardless of what is said here. Surely this may provide a level of demand to allow for the so called soft landing.

Secondly i think there are a lot of people on here that are very extreme in theier views on the crash and actaully sound a bit obessessed, especially some of the personal comments that are made, i think this detracts from the usefullness of the board as a forum and will make it easier for interested parties such as Kirsty A to say that its a load of rubbish.

My area PO21

Last 24 hours - 23 properties
Last 3 days - 91 properties
last 7 days - over 100 properties

Edinburgh - ESPC update on Mondays. This morning 3470 properties, now 3833

STR, this is one guy. I think you're building this assertion on slim evidence there.





This was equally true in the last crash. Why did it not prevent the crash then?

Thats the trouble with anecdotal evidence, but im sure there are many peopl who have been waiting for ages tro buy and will jump in when prices drop just a little but, it is very tempting.

Wasnt there high interest rates then when people couldnt afford to pay their mortgages, this time wont people sit tight, after all they might choose not to move if the prices arent right.

Buy or cry, the recent price drops are reversing now and a momentum is building.

Sorry, no empiricle evidence or economic indication theories, just what Im hearing from local E/As. Also all of a sudden the for sale boards are at last being replaced with sold.

Also, news is spreading to JO public that the biggest ever tax give - away is soon to be reality when the 'private property in pensions' investments are roled - out.

IF YOU ARE CONSIDERING B2L FOR THE FIRST TIME, YOUD BETTER MOP - UP THE LAST REMAINING XMAS BARGAINS NOW. ITS NO GOOD CRYING IN 5 YEARS TIME ABOUT GREEDY B2L HAVING HOOVERED - UP PROPERTY SUPPLY.

And we all know what reliable and honest folk EA's are.




See Financial Planner's comments on the new SIPP rules which show that they will have little or no effect.

The way down is not a smooth,straight line,
ask any stock--market investor about dead-cat bounces!!!!

these serve a purpose,to fool unsuspecting types the downtrend is over and it's time to buy again......with disastrous consequences.

given the low liquidity of property to shares I suspect these "bounces" may have a 2-3 month skew on figures(rather than a week or two with stocks)

you need to be a very good technical analyst to see the signs.

speaking of technicals,has anybody found a relative strength chart for housing?

'Goog technical analyists' - there must be shed - loads of these theorists beavering away in investment houses and fund managers, yet most get it wrong most of the time which is why the returns on packaged investments have been so poor for so long.

The last place I would seek investment advice is from a technical analyist.

All sail and no wind.

OK folks,
has any one got a RSI chart for housing?

I'm in good company,Tom Hougaard at cityindex has called this one too.
...just for the record he also gave very accurate 50% retracement forecast in dow a few years back.

Regarding low interest rates:

http://realtytimes.com/rtcpages/20050110_mtgwarning.htm

Time to pay the Piper?

Statistical Analysts are useful people. They study the raw data and present it, hopefully without spin. I am an amateur "SA" and use the data to show the current trend in our market here in Southern California: down. Year-over-year: still up.

TA's are about as unbiased as you can get!

most work for spreadbetting firms,who,coincidentally want to provide the best returns for their firms.

if it looks like a dead cert,they give crappy odds or very poor returns.

precisely what cityindex/IG and a few others have done WRT shorting property.