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Everything posted by csk_1975

  1. Yes the First Home Owner Grant is $7000 of "free" money given to anyone who buys a first home. http://www.firsthome.gov.au/. It has recently been doubled to $14000 and state governments are also are topping it up with extra bonus money! There are also other goverment (taxpayer) incentives which skew the market, such as negative gearing. When (not if) there is an upswing in unemployment in Australia then house prices will likely tumble and there will be terrible dislocation in the market. It is amazing how many recently unemployed people working at mines have several investment properties. The carnage in world commodity markets have made many mines uneconomic thus they are being mothballed/closed. These people seem to have no savings to buffer themselves between unemployment and foreclosure. I rented a place last year for $350/week (short term rental) that was on the market for $895,000. 1 year later it has been reduced to $850,000. This was a 3 bedroom apartment in an area which simply can't support prices of more than $300,000 based on the local economy. It was simply a speculators market driven by Sydney investors. Where I live now, many places seem to be being withdrawn from sale and placed on the rental market. Housing starts are way down so many builders will not have a job once their current projects are finished. And building has been a huge growth industry during the bubble. The Federal Government also recently gave $1000 per child to every low income family in Australia ($8 billion worth) which was meant to provide enough fiscal stimulus to support the economy - it seems to have dissappeared like a puff of dust. Of course the common wisdom here is that house prices never go down.
  2. Immigrants who will keep the property bubble inflated in the place you move to - anyway thats what the property bulls would have you believe as all this new immigration and a limited house supply is the reason why house prices will never fall.
  3. If this is the same EA you sent this letter to then maybe they just thought it polite to inform you of the outcome?
  4. IP banned? If you really want to access the site why dont you just use a proxy? I am sure you can find a suitable one using google http://www.google.com/search?hl=en&q=anony...nG=Search&meta=
  5. Any doubts about whether the US is in the grips of a property mania can finally be laid to rest. Read on for the complete insanity of the "frothy" market in the badlands of Texas. (Bit of a shame about the deluded Violet Hernandez but...) Badlands is now hot property and here are a few auctions... This one looks nice Another gorgeous Texas Ranch Please note image does not depict actual asset!!! WTF?
  6. Dont mean to hijack the thread but lately I've come to realise this is one of the benefits(?) of crazy housing bubbles. Land which was not on the market is now being sold as the owners think they can get rich quick. I know that destroying a greenbelt in the expectation of short term profits is really short sighted and shouldn't be applauded, but places which maybe would never have been on the market are now available. Of course they are insanely priced but you never know what the future holds. In my case I've had my eye on an area that I wouldn't mind living in but I could never justify the current prices. Recently a large vacant block of land has come on the market that is exactly what I want - a mosquito infested swamp near the coast with lots of wildlife, good fishing and no neighbours, a place I actually used to visit regurlarly when I was living close by (I think the local council is selling it off). I'm pretty sure this particular piece of land would not have been on the market but for the housing bubble. Now if only it stays on the market for a couple of years so they'll accept my 50% offer... or an overleveraged distressed "investor" on sells it to me in a couple of years at 50% off its current price, I'll thank the housing bubble gods for delivering me my perfect property rather than continue to curse them.
  7. Just as much "fiat" as paper? If you could make gold out of lead then a convertible currency may be akin to a fiat currency but as you say gold is rare, inert and has very few practical uses - so it really doesn't equate to paper, does it? That is the intrinsic value of gold - it doesn't grow on trees. Sure digging gold out of the ground so you can store it back underground somewhere else protected by armed guards and then credit it with lots of value doesn't make a whole lot of sense, but creating money out of thin air by printing paper notes doesn't make a whole lot of sense either. Without some checks and balances fiat paper really is an experiment in faith and past experience shows that fiat currencies tend to get abused. At least with converible currencies its pretty obvious when they are being debased and the books are being cooked. Currently we seem to be experiencing a huge asset bubble fueled by debt and a corresponding huge increase in the supply of fiat dollars. What are the checks and balances in this system? I guess the future will show as most every economist seems to have a different opinion, but by all accounts the current trajectory is unsustainable. I dont think that gold is a panacea and convertible currencies necessarily a great thing - in fact they seem to have caused economic recessions/depressions in the 19th century - but having a reserve currency that is lorded over by a fed that takes the politically expedient path of inflate, inflate, inflate doesn't sound like such a good idea either. Would it have been possible for the money supply to have been inflated so much if the reserve banks hadn't started with such large amounts of gold in their safes? By dishoarding their gold they really have made it impossible to use gold as a reasonable measuring stick. Remember it was only a few short decades ago that the US$ was convertible.
  8. What Housing Bubble? July's record new-home sales show TIME was right all along: Residential real estate is booming By DANIEL KADLEC Posted Monday, Aug. 26, 2002 The article is several years out of date.
  9. oky doky, but you do understand the difference between inflation and hyperinflation? Hyperinflation is an economic abberation where price inflation is running at >50% per month and there is a commesurate dramatic increase in both the money supply and the velocity of money which leads to a complete crisis of confidence in the value of money. In a hyperinflationary environment there is no real wage inflation in fact your purchasing power decreases rapidly - but you are paid **much** more currency and any domestic debts that you incurred before the hyperinflationary period become meaningless and are wiped out. The key phrase here is domestic debts (like mortgages) which are denominated in the same currency as is becoming valueless. Foreign debts will kill you. Of course your life savings will be wiped out, you wont be able to buy food, there will be severe social dislocation and the economy will collapse - but your old debts will be retired if you take time out to go to the bank (which will have collapsed anyway) and deposit 300,000 pounds instead of burning it in your stove to try and keep warm (after 2 years of 50% per month hyperinflation 20 pounds = 336682 pounds). Anyway there's plenty of resources out there that discuss how hyper inflation has been used to destroy domestic debt by corrupt/insane governments written by others who have a lot better grasp and can offer clearer explanations that I can on these matters.
  10. No, hyperinflation will also erode your debt remarkably quickly - albeit with pretty drastic side effects and most probably only temporarily unless you are extremely fortunate:- "During the german hyperinflation holders of urban property seemed to benefit if their property was mortgaged; the inflation soon wiped out the mortgage debt. However, they received no income since rents were frozen. After the stabilization, heavy new taxes and the urgent need for cash forced most holders to remortgage their property, often more heavily than originally, so that their gains were illusory. Still, those who held real estate throughout managed to save the capital thus invested. However, those who sold during the inflation (often through desperate need for cash) fared poorly. Because it brought no income, real estate sold at extremely low real price levels during inflation." By all accounts hyperinflation is terrible.
  11. Hi, can you tell me the address or at the very least the suburb of the property? Thanks.
  12. Unless of course you have savings rather than debt, in which case inflation is a terrible thing as it just eats your savings away. If governments bail out people who have recklessly indebted themselves by destroying the savings of those who are prudent then there really is no reason to save. Everyone might as well join the leveraged debt financial nirvana crowd and be rich forever - its a very dangerous game to play.
  13. Last week a real estate agent in Adelaide told me that sales had slowed to a halt and there are no buyers. They had sold two properties quiet quickly at the asking price in the past three weeks but these were standouts most properties are sitting on the market for months unsold and without offers or inspections. I think the "Adelaide is still rising" line trotted out by the press and various VIs isnt the reality of the Adelaide property market - sounds like its already turned.
  14. Ggnao how well has gold work for you? I bought a fair chunk of physical and it hasnt performed very well for me in AU$ as its been pretty well flat (in US$ its gone from the 285 and 325 I bought at to the present 430). But if Id have purchased AU$ instead and got 5% savings a/c interest Id be better off and could purchase more gold now. The only thing I can see going for physical gold is that it is a store of wealth, is very liquid, its not anyone elses liability. But its not a great performer and doesnt seem to appreciate much, anyway it hasnt for a long time - the attraction seems to be its constantcy not its appreciation. Maybe gold miners are a better bet? I actually was going to get some 1000oz COMEX silver contracts for physical delivery in Dec 2002 and that would have made some return in other than US$.
  15. CrashIsUnderWay I'm just wondering why you would buy multiple properties if/when prices crash. Many pundits seem to suggest that low inflation will cause the property market to stagnate for many years to come (and "property investing" will be a dirty word for a whole generation if there is a severe HPC) Do you think better yields will drive the attractiveness of property investment if there is very little or no capital appreciation? Have you crunched the numbers to see what yields are required if you get depreciation and also if IRs rise and your lending costs increase?
  16. For a fan site some of the pictures are pretty sad.
  17. Yeah gold bugs are crazy doom and gloomers and all seem to be prophecising financial armageddon and a new "golden" age for the metal of kings. I guess an 18 year bear market does that to you. I actually got a kilo of the stuff at USD285 and its only been a reasonable hedge against USD weakness, a really poorly performing asset.
  18. Property Ladder? I'm not in the UK and since I first saw that term on this site its bothered me (yeah I know its the title of a TV program and a colloquialism for the path to riches that is the UK property market). Then it struck me - "ladder" in the context of making big money - is from MLM schemes. "Get on the ladder, recruit others and move up a rung and soon you'll have climbed to the top of ladder and be making big $$$$$$$$$$$$". I thought MLMs were pretty much ponzi schemes.
  19. Asset bubbles don't work very well in slowing economies. They feed on momentum and need to continue inflating otherwise they'll collapse. When assets are ridiculously over valued thats a bubble. Housing has long term averages and the deviation from these averages is really the only measure of whether an asset bubble currently exists. Being fixated on low interest rates is trying to fit the circumstance of the last crash to the current dynamic. Compare the current savings rates and percentage debt/income burden of the average household against that in '89 and you'll have a clearer picture of where the next train wreck is coming from. But maybe this time it really is different and we've crossed the threshold into asset bubble nirvana. I think it was John Law who so ably demonstrated that asset bubbles can stay inflated for ever.
  20. Optimism in the face of a falling market is a good thing (if you like falling markets). Its this hope that sucks in the last of the weak hands and causes them to foolishly lose their money. These people will flee at the first sign of real distress. It goes something like this:- Greed->Hope->Fear->Capitulation. Then again - maybe its different this time.
  21. Thanks for the tips. I'm looking at a Japanese investment for my children and have a >10 year investment horizon. My feeling is that property is likely to rise as its fallen so very far and the Japanese economy just doesn't seem to be that bad - whether or not it will is another story of course and I'd also like to have a property in Tokyo that we can make use at some time in the future. I never realised that places which are too big were viewed badly - learn something new everyday, but I think that I'd also view a place with bullet holes in the doors with suspiscion and wouldn't choose to live there. Good ideas about repossesions (I didn't think there'd still be a stream of these coming onto the market) and fixer uppers. I'll have to do some serious research and see how the numbers stack up. DIYing fixer uppers in Tokyo hadn't really crossed my mind but it may be an interesting diversion for a while and a way to secure a property at a good price that can get reasonable rental returns.
  22. Dont discount the negative effect that lack of house price appreciation will have on consumer spending, a large increase of which has been driven by house price appreciation and equity withdrawal. The debt burden as a percent of household income is higher than its ever been. Low interest rates wont save the day, they've only increased the purchasing power of consumers and so driven up prices and increased debt. Without the several percentage points of increased consumer spending this wealth effect has added to GDP many economies would now be in recession. Stagnation will affect consumer spending.
  23. But the situation is a little different from a couple of years ago. Then speculation was rampant as the market was going up. Like most manias its more the case of trying to make money by selling to a bigger fool than anything that fundamentaly increases the value of the asset that drives prices up to their final peak. And price stagnation all but kills speculation. I'd guess that most of the people buying for speculation in the current market are quiet weak and will be driven out at the first sign of reasonable falls or when the realisation dawns that there really is no hope of real returns on the asset that is costing them significant money to "own". There really is no direction but down with the current market dynamics. It may go sideways for some time, but what stimulus is there to drive it up? Lower interest rates? Lower saving rates? Easier credit? More debt? I think not - these forces are spent and soon the inevitable will occur. PS I like the dancing spiderman. WTF?
  24. laurejon I might not agree with the way you say things. but you are definetely on the money when you say a crash isn't here and we'll all know about it when it is. Housing is such a large part of the nation's wealth and the economy's well being that a housing led downturn will cause severe recession. But the current debt burden, lack of house price appreciation and extreme unaffordability of housing only points to down. Boom/busts are just the way of the world and how business cycles work. When its silly money like shares its not so bad, but when the bust is in housing which is the store of wealth for the average family then watch out. The crash will impact on all facets of our financial lifes. In the short term crashed prices won't make housing much more affordable for the average joe, as they'll likely be unemployed and unable to secure a mortgage from lenders who will now have strict lending standards. Of course once the economy recovers and housing stabilises some years down the road, housing will be more affordable, but the idea of looking at a 40-50% fall in prices and thinking you'll be looking at those prices through the eyes of low unemployment, easy credit and general community optimism is most probably a touch unrealistic. A house price crash will hurt everyone.
  25. Thanks for the thoughts on Japanese property. A 25% depreciation in 18 months sounds terrible - I didn't think that Osaka was going down anything like that. Wonder if it was a bad purchase or some other factors were involved. Anyway that certainly is cause to review how smart investing in Japanese property actually is. I assume the rental market is pretty strong since the buying market is so moribund. Do you have any idea of the average yields? I know even tiny flats are horribly expensive in Tokyo but the rents are also very high. I've actually lately had the hare-brained idea of purchasing vacant land and converting it into a carpark - if the value of the house is such a small fraction of the total value this may actually not be such a crazy idea, but then again the planning approvals/rates/insurance are most probably so horrendous that it doesn't bear thinking about and is completely unrealistic. I keep hearing that buying property when its all doom and gloom is the smartest time to buy. But its really hard to bring myself to part with so much hard earned cash (I'd have to buy outright as it is hard to get a mortgage in Japan) when it feels like I might well be chasing a death spiral all to the way to the ground! I'm pretty sure that there will be some stimulus which triggers the next property boom but I can't imagine when or what it could be, sounds like more doom and gloom and reason to buy? PS I am thinking of purchasing in Japan not because its so down, but because I have future (10-15 years) financial needs in Japan.
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