House prices to keep falling for years

ROE said:

what it means is speculator with borrow money lose and the guys with real cash and no debt win ..they grow rich as the expense of the speculators....

Speculators creates the bubble they want in on the way up and when sh**t hit the fan they are out, panic starts, it drive price lower and lower

now even if they spec guys want to buy at cheap price they cant because banks wont lend them the cash knowing they have more debt than what their asset worth.

The guys with cash and no debt walk to the bank slowly and quietly borrow and casually offer bargain price and if they dont sell they dont buy knowing they got the upper hand.

Patient is a Virtue when thing run far ahead of itself all you have to do is Wait
House price double very X year and buy now before you price out forever are playing with people
impatient nature and it works on most people but not for the wise guys.

There are a lot of people out there that it's in their best interest the stock market and house price are crashing. They buy heavily in bear market knowing it may go another 10%-20% lower
but it's better than buy them during the bull with the possibility of going 50% - 70% lower

Click to expand...

hello,

oh yeah guns everywhere on ASF and the community with their money box money,

the minute you mention "low Income earner" around here you are pretty much shot down, I think that gives a fair indication of where people are at

thankyou
robots

I see those low income "experts" are at it again Robi !

Should get these bludgers out of the office and onto the construction site I agree !

DEBT-FREE property hunters will snap up bargains across Sydney's mortgage belt and north shore in 2009, but those who are forced to sell will be left bleeding.

Experts predict house prices will continue to fall next year regardless of sliding interest rates and extensions to the first-home buyer's grant.

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http://www.news.com.au/story/0,,24829984-1242,00.html

hello,

they havent done to well on the "I predict prices will continue to fall" mantra,

look at St Kilda Sept08 q, up 14.7%, they havent been falling

so tell me Number, 4.5% return on property, why are you interested in it apart from the tall poppy syndrome?

thankyou
robots

look at St Kilda Sept08 q, up 14.7%, they havent been falling

Click to expand...

This claim isnt true, St Kilda was down ..... unless you have a link to say otherwise ?

hello,

remember Numbercruncher its St Kilda, not St kilda West or St Kilda East

just plain old St Kilda, awesome stuff

all the shonk exchange pro's down 50% for the year and St Kilda up 14.7% in just one quarter,

although probably not a big deal for the money box crew, like $1000 down to $500 not a big issue really,

utopia, this is paradise

i know i know i have to wait it takes 6 or 12 mths after shonk market collapse

thankyou
robots

robots said:

hello,

they havent done to well on the "I predict prices will continue to fall" mantra,

look at St Kilda Sept08 q, up 14.7%, they havent been falling

so tell me Number, 4.5% return on property, why are you interested in it apart from the tall poppy syndrome?

thankyou
robots

Click to expand...

Stupid argument, it like saying the stock market is falling and a handful of stock goes up... but property double every 7 years so she be right.

most people dont see their property fall until they sale it because it's not quoted everyday like stock price...a few percent here this year a few percent next year next thing you know it's down 20%....

you got 100 dollars, this year you take away 3 dollars, cant see much movement there, take another 3 dollar next year still not much, comes 5 years down the track and you look back **** i'm down 15 bucks now I'm start ****ting in my pants.

robots said:

hello,

oh yeah guns everywhere on ASF and the community with their money box money,

the minute you mention "low Income earner" around here you are pretty much shot down, I think that gives a fair indication of where people are at

thankyou
robots

Click to expand...

where is the word low income earner mentioned any where in my post?
I feel your pain man, just be a man and accept the fact, I do psychology and I see lot of people like you, you need help

ROE said:

you got 100 dollars, this year you take away 3 dollars, cant see much movement there, take another 3 dollar next year still not much, comes 5 years down the track and you look back **** i'm down 15 bucks now I'm start ****ting in my pants.

Click to expand...

Who cares if you made 500 dollars(or 500 thousand ) over the few years before.

The use of the house hasnt changed, I still like it and it does what I bought it for.

If tenanted, they still pay the same rent, no evidence of them dropping.

Down a bit in value this year, pfft, big deal, it'll more than likely come back in a few years, and if I'm not selling now, what does it matter.


Now try doing that with a car (or any consumer product), buy it, lose money as soon as its off the floor, and in ten years give it away

New Zealand now feeling the pain

1 in 5 owes bank more than house is worth
By ADRIAN CHANG - Sunday Star Times | Sunday, 21 December 2008


Falling house prices mean one in five homeowners with a mortgage now owes the bank more than their house is worth.

And with a grim economic outlook for 2009 thousands of people are set to lose their jobs and house prices are expected to keep tumbling experts say a cocktail for financial ruin is brewing.

A Lincoln University study has for the first time revealed the extent of the "negative equity" situation when a house is worth less than the mortgage on it. Property studies professor Chris Eves found rapidly declining house prices in the past year meant that 100,000-130,000 households are now in the negative equity zone one in five of the estimated 500,000 New Zealand households with mortgages.

Eves says people who bought homes during the 2006-07 property boom, and have 75%-plus mortgages, fall within the zone of negative equity risk. House prices have fallen 10% in the past year and many commentators are picking a further 30% drop.

To reach his conclusions, Eves tracked houses sold in Christchurch in 2006-07, and their resale values in 2008. Using his findings and data from mortgage lenders he extrapolated to conclude that of the 220,000 houses sold nationwide in the same period, 130,000 had mortgages of 75% or higher big enough to be at risk of negative equity.

While negative equity is less of a worry if you can sit tight in your house, those forced to sell in the current depressed market could face huge losses. Eves says an unwilling seller could lose 30% or more of the price they originally paid for a house.

He recalls a divorcing couple in Christchurch who had to sell the home they had bought in 2006 for $530,000. It sold last month for $420,000. Another house bought for $1,325,000 in April last year was sold in January 2008 for $865,000.

David Tripe, director of Massey University's centre for banking studies, says banks are generally content to allow householders to live with negative equity, as long as mortgage payments are being made.

But with unemployment set to swell in the next year, tens of thousands now face financial strife.

"It's my impression that we're going to see a significant rise in unemployment in the short term, because the vague hope that the Christmas period would solve everyone's problems isn't going to eventuate," says Tripe.

This makes negative equity borrowers especially vulnerable.

"If unemployment suddenly went up to 10%, or finance companies started calling in loans, then these people [with large mortgages] would certainly be in a negative equity position, and we would see banks pushing sales," says Eves.

Unemployment sits at 4.2%, or 94,000, but the worst-case Treasury scenario has another 110,000 people losing their jobs in the next 18 months.

To make things worse, some analysts expect house prices to remain low for at least five years, extending the period of negative equity risk well into the future.

The negative equity trap has a further knock-on effect on the troubled economy Tripe says it will dent consumer confidence and spending.

"Negative equity or not, lower house prices will make people think, `oh, I'm not as wealthy as I used to be, so I'd better spend less'."

Banking expert and principal of mortgage brokers Squirrel Financial Services, John Bolton, says people feeling the financial crunch should try to ride it out if they can as property values will eventually pick up again.

"You only lose money if you sell... You've got to take a long-term view and as long as you're not forced to sell, things should come right again.

"To an extent, price drops don't reflect the real value of something; they just reflect the value at that point in time."

IF YOU'RE IN STRIFE
* Most lenders offer repayment holidays of up to 90 days enough to build up your reserves so weekly outgoings are not as great.
* Convert to an interest-only mortgage until your situation improves. This will reduce your repayments.
* Extend the term of your mortgage. This should be seen as only a short-term solution.
* Look at how you might increase your income seek additional part-time work, take in a boarder or set up a small business from home.
* Look at ways of reducing your outgoings is there anything in your budget that you can do without?
* Selling luxury items or household goods that you don't need is preferable to selling your house. If you have a late-model car, swap it for a cheaper model and put the money towards paying off your mortgage.

http://www.stuff.co.nz/4799888a13.html

Hahaha! I love that advice!!

IF YOU'RE IN STRIFE

* Most lenders offer repayment holidays of up to 90 days enough to build up your reserves so weekly outgoings are not as great.

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Or to pack your belongings, beat a hasty retreat to a "safe" place and leave the key in the door on the way out. Beats going bankrupt - as long as they can't find you.

* Convert to an interest-only mortgage until your situation improves. This will reduce your repayments.

Click to expand...

LOL. Generally will also cost you a HEAP off the bat in penalties to convert PLUS significantly blow out the total amount to be repaid over the term of the loan. Great for when IR's jump up again in the not-so-distant future!

* Extend the term of your mortgage. This should be seen as only a short-term solution.

Click to expand...

Same result as above. If ya gotta do it, do it - but again this could cost big bickies over the extended term of the loan - especially if/when rates explode upwards again (and they will eventually).

* Look at how you might increase your income seek additional part-time work, take in a boarder or set up a small business from home.

Click to expand...

LOL. Love this one. In a time when unemployment is blowing out, they say "go find another job" as if it is easy as pie. Good luck is all I can say. Take in a boarder? Maybe some of your fellow un-employed miners? Set up a small business from home? Who the hell is going to risk keeping their house on the chances of setting up a successful small business from home? Chances are likely 1 in 100 for those that try to. Will the bank loan them the money to set up a small business when they are in arrears? LOL

* Look at ways of reducing your outgoings is there anything in your budget that you can do without?

Click to expand...

Finally a half decent commonsense tip. Cut out the ciggies, alcohol, nightly Big Mac Meals, restaurant feasts - yep - can save a fair packet there.

* Selling luxury items or household goods that you don't need is preferable to selling your house. If you have a late-model car, swap it for a cheaper model and put the money towards paying off your mortgage.

Click to expand...

Hahaha! How much do they think car yards pay you for a trade-down these days? Maybe if I wanted to trade a 2008 Maserati on a 2003 Holden Barina I might get some small change.

If you are in strife and followed some of this "expert" advice, you might end up in the dog house, let alone your own house.

arco said:

Falling house prices mean one in five homeowners with a mortgage now owes the bank more than their house is worth.

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And 4 in 5 dont

Aussiejeff said:

LOL. Generally will also cost you a HEAP off the bat in penalties to convert PLUS significantly blow out the total amount to be repaid over the term of the loan. Great for when IR's jump up again in the not-so-distant future!

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Really, none of the ones I have charge, but it does cost a phone call each time I change it around

is that a significant blow out for you?

Not all roses in California

The median price of a California home has gone from a peak in May of 2007 of $484,000 to the current price of $258,000. That is a stunning drop of 46 percent in slightly over a year.

Lancelot said:

Really, none of the ones I have charge, but it does cost a phone call each time I change it around

is that a significant blow out for you?

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I'm personally mortgage free so I dont know what Aussie banks are doing, but I did notice in the NZHerald that banks there are making a killing out people converting

'Merciless' banks fail customers
4:00AM Sunday Dec 21, 2008
Andrea Milner

Alan Bollard's advice to banks has gone unheeded. Photo / Mark Mitchell

Banks have come under fire for not heeding Reserve Bank Governor Alan Bollard and sharing struggling borrowers' pain. While falling interest rates - driven by Bollard's enthusiastic cuts to the official cash rate - offer respite to stretched homeowners, most have to break long-term fixed loans to benefit.

They face hefty charges for the privilege, which often negate the potential interest saving.

Veteran investor Olly Newland says he is scandalised by the fees banks charge struggling homeowners seeking to move from fixed to lower floating rates. He says it's an outrage that banks making multi-million dollar profits prefer to drive people to the wall than give them a break.

"They're just merciless - and they're supposed to share the pain."

Kiwibank's Bruce Thompson says break costs are a transfer of actual costs from the bank to the customer who is seeking to break the contract. Not passing on the costs is a direct loss to the bank.

"The bank takes out its own contract to finance the loan and if you break your contract, then the bank contract must also be paid out."


Bollard told banks earlier this month to pass on lower interest rates and easier conditions to customers, observing that profit margins have stayed high "and indeed grown".

Banks have the means to stem more defaults, says Newland, but instead they remain rapacious.

BNZ's Blair Vernon says with petrol prices falling, people's ability to service their fixed rate should improve if their budget accounted for the fixed rate at the time they took the loan.

But Newland says when people return from holiday next year, those stuck on high interest rates "hanging on with their fingertips" will capitulate to the prospect of persevering another year and sell up. This will add to further property price falls before the market flattens again.

Values will spike briefly in three to six months on the back of low interest rates, says market commentator Kieran Trass: "A whole lot of people go out and buy property because they can afford to when interest rates drop, but this is a passing wave." By the end of next year values will again weaken.

The other market fundamentals are still unfavourable: prices are high relative to incomes, migration inflows are modest and job security now carries a degree of uncertainty, says Tuffley.

Westpac chief economist Brendan O'Donovan says a second consecutive year of house price decline is not something New Zealand has experienced since at least the 1950s.

But the United States has led the world into this house price bust, and their pace of house price decline accelerated from -5 per cent in the first year to -17 per cent in the second. To suggest New Zealand will behave differently would be "boldly optimistic".

Quotable Value's figures show a national housing market reversal of 6.8 per cent this year, but O'Donovan thinks prices have actually fallen around 8 per cent and he expects another 5 per cent fall next year.

"This has been one of the toughest years on record," says Massey University's analyst Bob Hargreaves.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10549106

arco said:

I'm personally mortgage free so I dont know what Aussie banks are doing, but I did notice in the NZHerald that banks there are making a killing out people converting

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Fixed loans cost money to convert and so they should, they SIGNED a CONTRACT to fix over X number of years.

Borrowers needed the security of a fixed rate when they were going up and they got it, and the bank lost money during this period.

Now customers complain that it will cost them to BREAK the contract when they want to save money on the way down as well.


But if they hadnt fixed, the cost of going IO to P&I is free and the cost of a phone call.

This phone call can give many hundreds of dollars/ mth in cashflow back to the loan holder during tough times

ROE said:

where is the word low income earner mentioned any where in my post?
I feel your pain man, just be a man and accept the fact, I do psychology and I see lot of people like you, you need help

Click to expand...

hello,

i accepted the fact that St Kilda went up 14.7% last Sept08 quarter, and i accepted the fact i have mental issues and just get on with life man,

you cop it sweet, no big deal life rolls on

i wont be announcing a "holiday" and then returning, we in for the next 20, 30, 40+ years solid

thankyou
robots

Attention Robots:

Hi,

I was just perusing "Your Investment Property", a magazine I find quite good.

It publishes quarterly property price guide in the rear section.

seperate entries for houses and units, for each state.

Data supplied by RP Data

It showed St Kilda units up 14.8% for the YEAR, not the QUARTER, cant remember what the quarter figure showed, but it wasnt 14.8%.

Maybe I am confused by the comment under your Avatar?

Still a very nice result for you though, especially compared to the sharemarket.

for my IP suburb showed +2.2% pa, and -0.2% for quarter.

As a bye-the-way, I was wandering thru a nearby suburb to mine (Charlestown, NSW) that is presently undergoing substantial unit and commercial construction ( 3 construction tower cranes).

I couldnt help thinking I wouldnt want to be an investor trying to tenant these new tower blocks.

a 4th one has had construction completely stopped, due to the Chinese owners not paying the sub-contractors.

In fact I think we could see decimation of commercial property prices/returns when current leases are up for renewal

hello,

is that right? up 14.8% for St KIlda units for the year, WOW +14.8% thats fantastic

sorry i will adjust my signature appropriately as its 14.7% for houses in St Kilda for the Sept08 Q,

well pointed out

thankyou
robots

NZ is now worse than USA about 1 in 7 are underwater. Wonder where OZ home owners will end up?

Aussiejeff said:

Hahaha! I love that advice!!



Or to pack your belongings, beat a hasty retreat to a "safe" place and leave the key in the door on the way out. Beats going bankrupt - as long as they can't find you.




LOL. Generally will also cost you a HEAP off the bat in penalties to convert PLUS significantly blow out the total amount to be repaid over the term of the loan. Great for when IR's jump up again in the not-so-distant future!




Same result as above. If ya gotta do it, do it - but again this could cost big bickies over the extended term of the loan - especially if/when rates explode upwards again (and they will eventually).




LOL. Love this one. In a time when unemployment is blowing out, they say "go find another job" as if it is easy as pie. Good luck is all I can say. Take in a boarder? Maybe some of your fellow un-employed miners? Set up a small business from home? Who the hell is going to risk keeping their house on the chances of setting up a successful small business from home? Chances are likely 1 in 100 for those that try to. Will the bank loan them the money to set up a small business when they are in arrears? LOL




Finally a half decent commonsense tip. Cut out the ciggies, alcohol, nightly Big Mac Meals, restaurant feasts - yep - can save a fair packet there.




Hahaha! How much do they think car yards pay you for a trade-down these days? Maybe if I wanted to trade a 2008 Maserati on a 2003 Holden Barina I might get some small change.

If you are in strife and followed some of this "expert" advice, you might end up in the dog house, let alone your own house.

Click to expand...

They should rename that site http://www.stuffed.co.nz/ lol