- Joined
- 5 June 2006
- Posts
- 533
- Reactions
- 1
... or potentially more capital vaporised than money printed, so deflation, which Ive seen at least one economist say is the case.
Personally I think falling spending alone will kill inflation.
What about inflation...I would think that the pumping of countless billions would cause prices to rise but this capital is only replacing capital that was vapourised
Just a little reminder for those that compare Australia's high cost of property relative to the world market
I've really never understood this. The whole point in investing is to make money. I just can't compute it.Investors will be ruing the ammount of negative gearing they have acheived on their investments as all prices drop leaving them down bigtime.
Lol.Just a little reminder for those that compare Australia's high cost of property relative to the world market:
House prices have already effectively fallen 30% throughout the Australian market relative to the American market in the past month and 20% against the Euro market in the same period.
Ch7 to night Kochie tells us they will job loss 300-500 K House, prices to go down no recession,
AFAIK there are some peculiarities when looking to buy here if you aren't a citizen or permanent resident, that make it prohibitive for foreigners to even make a meaningful dent.
You do make money by negative gearing on property if you are paying a high rate of tax. The negativity on the investment property offsets your tax bill.I've really never understood this. The whole point in investing is to make money. I just can't compute it.
I noticed the guy Kochie was interviewing said we will see house prices in Australia go down by as much as in the US. Kochie said "why?". Reply was "because we have much higher household debt compared to the Americans (in relation to household earnings I would gather).
Interesting times ahead for the property market.
You do make money by negative gearing on property if you are paying a high rate of tax. The negativity on the investment property offsets your tax bill.
I understand that. But it's not actively making you more than what you could get by other means with the same money, is it?
You do make money by negative gearing on property if you are paying a high rate of tax. The negativity on the investment property offsets your tax bill.
Just a little reminder for those that compare Australia's high cost of property relative to the world market:
House prices have already effectively fallen 30% throughout the Australian market relative to the American market in the past month and 20% against the Euro market in the same period.
In theory what you're saying makes perfect sense.And historically and fundamentally, this asset should never rise faster than wage/inflation growth because it is not a "value-adding" asset, unlike production factories, mines, etc. Of course, people tend to treat it much more valuable than mines/factories for reasons like there is more demand than supply of available land. And then you consider the irony of Australia is one of the most sparse populated land in the world....
Property market takes another hammering
October 13, 2008
PANIC on Wall Street and world sharemarkets has quickly spilled into property, spooking buyers and sellers, pushing Melbourne's weekend auction clearance rate down 4%.
In some suburbs less than half the houses and units listed for auction found a buyer.
Real estate agents reported that conversations at public auctions and open-for-inspections were dominated by the collapse of the Australian sharemarket on Friday and fears of worse to come this week.
The jitters easily overshadowed the 1% interest rate cut by the Reserve Bank on Tuesday, and turned many auctions into lonely affairs.
The clearance rate for metropolitan Melbourne fell to 62% while many private negotiations after the hammer fell failed.
"What we are seeing is a stalemate," Eric Cohen, of Eric Cohen Real Estate, McKinnon, said.
"Buyers are certainly worried about the sharemarket and they are happy to wait even longer now before buying into property. And not only are they not buying, they are also not even looking, not turning up to open for inspections."
Clearance rates in the inner city, inner east and the west fell below 50%. In the inner east, the rate dropped to 37% against 53% for the previous weekend.
ANZ chief economist Saul Eslake said he believed prices would only fall significantly if owners began panic selling.
"But the more common reaction among vendors who are not selling because they have to is not to sell, and remain in the property for longer," he said.
"Turnover drops, perhaps sharply; real estate agents' incomes decline, and state governments experience shortfalls in revenue from stamp duty."
In theory what you're saying makes perfect sense.
In practice, despite the sparcity of our nation we have one of the most urbanised settlement patterns on the planet, and these cities are based on a single transport hub/CBD, where proximity to this hub is at a premium. Given the rising pressure of transportation costs (both personal & goods) and time taken to travel to/from employers, this proximity will (IMO) continue to attract a premium in excess of inflation over a longer timeframe.
That is the biggest flaw there. How is it possible for house prices to attract a premium in excess of inflation over a long time frame? How long are you projecting? 100 years? You should be fully aware of your recency biases in that past performance is no indicator of future return. Just because the average return of properties from 1980 to 2008 is approximately 6-7% p.a., it does not automatically mean that the next 30ish years will produce the same return.
I don't think I need to explain the reason why house prices CANNOT increase above wage/inflation rate over a long time frame due to the affordability issue. If this continue to occur indefinitely, an average priced house will eventually require a repayment of more than 100% of an average income earner. Some people seem to think this is possible forever by making assumptions that perhaps we will have sustainable lower interest over the long term or multi-generational mortgage loan.
By the way, I agree your point with how our cities are urbanised based on a central business hub with surrounding suburbs. This type of "unsustainable" living pattern will have to cease one day and one day people will have to start getting used to living in apartments and not mansions with a big background. The reason why we are still following such a pattern is because of political and social reasons, that is, everybody love to own a big nice house with a backyard.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?