Will the UK Recover From Financial Decline ?

[Sydney]

I think property in Oz is in a different category compared to the UK. Oz has the highest rate of immigration and growing population in the deveoped world. As someone pointed out there will always be a demand for properties in good areas and as always the other suburbs follow. The vast majority of Aussies have been into property ownership since the war. Vast ownership in the UK really came about when Thatcher allowed the purchase of council houses. I know there was home ownership previous but it wasn't near the levels of today. For that reason alone I don't think we'll see much of a crash in Australian property. As for the pound, it's a great time to be going home.

Someone asked about buying pounds now for travel next year. Ozforex gives better rates than the big four banks and you can order money for TT transfer 3 months in advance at today's rate. Their rate is often 1p more than the banks.

[Guest Gunner]

I was basing my quote on the perth area which was still a little exagerated ( see link) however if you go back 10 years you could of still got a house for approx $150 - 200,000 which for most people at the time was less than what they made in equity on their 3 bed terrace council house here in the uk and could afford to buy a nice house outright over in oz and live very comfortably mortgage free, which is great for them. My point was that the same people might think twice if they were to move today where they could expect to pay in excess of $400,000 which would not only take away all their equity money they made but then would have to take out a mortgage that would probably be 3* the amount they were paying in the uk.

 

Perth Median Price Chart - reiwa.com.au

The average house price in UK for Oct 1999 was 95,000 pounds Exchange rate was 0.56 average for oct 99. Therefore they would have needed a lot of equity on their 3 bed council house to buy the $150 - $200K house in perth in fact almost 100%.

FXHistory - Historical Currency Exchange Rates

 

Graphs > Average house price - HousePriceCrash.co.uk

 

I dont mean to be pedantic but I do like facts, however i do agree with your basic premise that house prices are now so high in Australia coupled with weak exchange rates that many potential migrants may re-think a move to Australia.

[Guest The Ropey HOFF]

Hi everyone,

 

at least if you buy a 450,000 dollar house in OZ it is like buying a 450,000 pounds house in the UK, we found the houses in Baldivis and Secret Harbour WA, to be houses you can only dream about in the UK. You can get double for your money in Oz than in the UK and we all know the exchange rate will soon return to normal.

 

JIM.

[Guest kyeandgem]

The average house price in UK for Oct 1999 was 95,000 pounds Exchange rate was 0.56 average for oct 99. Therefore they would have needed a lot of equity on their 3 bed council house to buy the $150 - $200K house in perth in fact almost 100%.

FXHistory - Historical Currency Exchange Rates

 

Graphs > Average house price - HousePriceCrash.co.uk

 

I dont mean to be pedantic but I do like facts, however i do agree with your basic premise that house prices are now so high in Australia coupled with weak exchange rates that many potential migrants may re-think a move to Australia.

 

OK fair enough facts are facts,

 

but that doesnt change the fact that I know of a lot of people some personally and some on forums like this one where they have migrated to oz and bought a house outright with the proceeds of their overly inflated council house they bought some 20 plus years ago.

 

I guess timing was everything, some people are just more lucky than others.

[Guest LukeSkywalker]

Hi everyone,

 

at least if you buy a 450,000 dollar house in OZ it is like buying a 450,000 pounds house in the UK, we found the houses in Baldivis and Secret Harbour WA, to be houses you can only dream about in the UK. You can get double for your money in Oz than in the UK and we all know the exchange rate will soon return to normal.

 

JIM.

 

There is no particular reason the exchange rate will return to "normal". I think it will go to $2:£1 in the next 12-18 months, but maybe no higher for 3-5 years. The problem with comparing houses is that it depends what you want for your money.

 

Secret Harbour is about 40 miles as the crow flies from Perth isn't it? So I would never describe it a "prime" real estate. It isn't. The houses may be nice, and "big" of course, but as I say it depends what you want a house for. If I wanted a giant house, I could get a massive one in Wales for £450k, probably with a lot of land. But I have no interest in Wales. Likewise for $650k in Melbourne I can get a great flat within 1km of CBD. BUT for £650K I can also get a stunning flat close to central London. Its just all relative. As for the double your money - that of course only applies if you have a lot of cash to take and you get $2:£1.

 

The facts though if you are having any form of mortgage are clear:

 

Average house : salary in Australia os over 7. Highest in the world. Bar none.

 

That will end in problems. Only prime real estate will not suffer from a correction that will last several years. Same as everywhere.

[Guest Gunner]

OK fair enough facts are facts,

 

but that doesnt change the fact that I know of a lot of people some personally and some on forums like this one where they have migrated to oz and bought a house outright with the proceeds of their overly inflated council house they bought some 20 plus years ago.

 

I guess timing was everything, some people are just more lucky than others.

Timing is everything! Aint that a fact

[Guest Doaldsons]

yes but we are not in 1999 now . facts are houses here are over priced even more than uk the quaity of house u get is poor. Big house means big heating bills yes heating you still need that in Aus.and in Summer u have to keep them cool at 2009 prices

[janieco]

There is no particular reason the exchange rate will return to "normal". I think it will go to $2:£1 in the next 12-18 months, but maybe no higher for 3-5 years. The problem with comparing houses is that it depends what you want for your money.

 

Secret Harbour is about 40 miles as the crow flies from Perth isn't it? So I would never describe it a "prime" real estate. It isn't. The houses may be nice, and "big" of course, but as I say it depends what you want a house for. If I wanted a giant house, I could get a massive one in Wales for £450k, probably with a lot of land. But I have no interest in Wales. Likewise for $650k in Melbourne I can get a great flat within 1km of CBD. BUT for £650K I can also get a stunning flat close to central London. Its just all relative. As for the double your money - that of course only applies if you have a lot of cash to take and you get $2:£1.

 

The facts though if you are having any form of mortgage are clear:

 

Average house : salary in Australia os over 7. Highest in the world. Bar none.

 

That will end in problems. Only prime real estate will not suffer from a correction that will last several years. Same as everywhere.

Thanks for another informative post, hopefully some people will realise that the streets in Oz are not paved with gold, think some dollie daydreamers are in for a rude awakening:wideeyed:

[Guest treesea]

I agree with you in many ways. BUT when property bubbles burst, they only ever burst in poorer areas. Top quality real estate rarely drops at all and if it does not for long. This is true in the UK, US etc. and it will also be true in Australia. The problem is that real estate bubbles drive peope to pay crazy money for houses in areas that woudl otherwise never have those prices. In Melbourne recently I saw a house further out than Berwick that was $1.4m. Nice house. Nice pool. But honestly, thats insane money for that type of place. In the end I purchased a 3 double bedroomed flat in St Kilda Rd and paid $600k for it. 1930s art deco building. Rented out for $650/pw and entirely tax deductible as an investment unit. There is still "value" (odd word) in property, but only for (a) the long term (b) not highly leveraged © excellent areas. In a recession (the clear outcome of a property bubble bursting) the wealthy will still have money and will buy in nice areas only. The Aussie property bubble will last for maybe another 12 months (they always last longer than one can imagine). But after that - all bets are off. A lot of "hot" (overseas) money has come into Australia (exactly what happened in the US/UK bubbles). Locals are priced out. I fear it will end in disaster for people that have large mortgages and limited cash. It wont be pretty.

 

I don't really see what is going to burst the bubble. People all need somewhere to live and Australia's population is like Britain's - ever climbing at a rate of knots. What has ruined property prices here is that the banks went into "rapid decline" (would have been bust but the English-muggins-taxpayer rode to the rescue again....and again....on his trusty white steed), decided to only lend money to people who had at least 20% deposit (new for here in recent years, but Australia has been like that, i.e. have at least 20% deposit or pay the bank's mortgage insurance, for years). They also realised that liar loans (self cert mortgages) were just that, so perhaps they should steer away from that kind of lending. Australia never went down that track in the first place - it's always been notoriously hard for the self employed to borrow funds in Australia.

 

Also in the UK, people with mortgages have been losing their jobs hand over fist and continue to do so. Sure, the government (or rather Mr Muggins, bless him/her and his trusty white steed) will pick up the interest portion of the mortgage once you have been unemployed for 13 weeks and are down to the last £16K of your liquid assets, but I'm pretty sure this puts a huge dampener on the housing market over here.

 

Most Australians have probably held onto their jobs in what was for them, compared to the UK, a very mild recession. Even if your mortgage is $3,000 a month, does it really matter if you're earning $100K a year and don't expect to lose your job any time soon?

[andromeda9]

if you transfer as soon as,the interest rate with St George bank now stands at 61/4 interest per year rolling for 3 years ,think it might just get a little better by the time you get here,check it out

[andromeda9]

Well as we are in the process of packing, getting quotes for shipping etc., it's constantly on my mind. There is just no way that I can transfer funds at these rates. To me having to wait so long to sell the house has effected my whole financial standing. The house was up for sale just when the credit crunch came to bear therefore I have lost nearly 50K on the sale. On top of that the rate that i was anticipating was somewhere around 2.5. Fat chance for at least 18 months to 2 years methinks.

However the train is rolling and we cannot look back now, luckily I'm still working and I will be able to park the house money somewhere for a while in the hope that it recovers. Just means renting instead of buying for a bit.

 

have written to you just a mo ago but cant find where its gone,so here i go again S Georges bank now pay 6 1/2 % on capital rolling over for three years, maybe even with the low rate of exchange you might be better off in the long run putting your money there ,few more sums to check it out,best of luck

[andromeda9]

 

have written to you just a mo ago but cant find where its gone,so here i go again S Georges bank now pay 6 1/2 % on capital rolling over for three years, maybe even with the low rate of exchange you might be better off in the long run putting your money there ,few more sums to check it out,best of luck

sorry 6 1/4 % is correct at the moment ,just saw my last post,look it up on google best wishes

[Guest LukeSkywalker]

I don't really see what is going to burst the bubble. People all need somewhere to live and Australia's population is like Britain's - ever climbing at a rate of knots. What has ruined property prices here is that the banks went into "rapid decline" (would have been bust but the English-muggins-taxpayer rode to the rescue again....and again....on his trusty white steed), decided to only lend money to people who had at least 20% deposit (new for here in recent years, but Australia has been like that, i.e. have at least 20% deposit or pay the bank's mortgage insurance, for years). They also realised that liar loans (self cert mortgages) were just that, so perhaps they should steer away from that kind of lending. Australia never went down that track in the first place - it's always been notoriously hard for the self employed to borrow funds in Australia.

 

Also in the UK, people with mortgages have been losing their jobs hand over fist and continue to do so. Sure, the government (or rather Mr Muggins, bless him/her and his trusty white steed) will pick up the interest portion of the mortgage once you have been unemployed for 13 weeks and are down to the last £16K of your liquid assets, but I'm pretty sure this puts a huge dampener on the housing market over here.

 

Most Australians have probably held onto their jobs in what was for them, compared to the UK, a very mild recession. Even if your mortgage is $3,000 a month, does it really matter if you're earning $100K a year and don't expect to lose your job any time soon?

 

What bursts a bubble is when it is no loner affordable. I seem to remember in 2007 reading articles that the US property boom would never end .... affordability is the key. Will house prices plunge? Not sure. In good areas no. They never do. In poor areas, yes. They always do. New people do need houses, but again they must be able to afford them. Its just my theory .... could well be wrong.

[kernow43]

What bursts a bubble is when it is no loner affordable. I seem to remember in 2007 reading articles that the US property boom would never end .... affordability is the key. Will house prices plunge? Not sure. In good areas no. They never do. In poor areas, yes. They always do. New people do need houses, but again they must be able to afford them. Its just my theory .... could well be wrong.

 

In fact, the rating agencies have so far given the UK the benefit of the doubt, even though its position is the worst of any developed economy. Standard & Poor’s says that the outlook for the UK is negative , while the AAA ratings of Australia, Austria, Canada, Denmark, Finland, France, Germany, Netherlands, Norway, US, Sweden, Switzerland and Singapore are all still stable. So if the UK is downgraded from their AAA it will add a lot ore woe to their problems.

“in light of the challenges to strengthen the tax base and contain public expenditures, the UK government debt burden could approach 100% of GDP by 2013 and remain near that level thereafter.

From todays Telegraph

[Guest treesea]

What bursts a bubble is when it is no loner affordable. I seem to remember in 2007 reading articles that the US property boom would never end .... affordability is the key. Will house prices plunge? Not sure. In good areas no. They never do. In poor areas, yes. They always do. New people do need houses, but again they must be able to afford them. Its just my theory .... could well be wrong.

 

Housing prices did fall for a while in the UK but they seem to be going back up again now. And that's in spite of so many losing, and continuing to lose, their jobs. In that regard, Britain is very much like Australia - we "import" so many people each year and simply don't build enough houses to meet the new demand. I agree, a lot of people migrating to Australia probably won't be able to buy a house outright, and may not even have enough money as deposit to qualify for a mortgage over there, or enough salary, come to that. But then, there is something to be said for renting in the first instance rather than buying, if only to have a cheap way of working out if you actually like the area.

[KIRK AND CO]

If you have sold house in uk & have a large equatie say £300,000 plus your age is in the late 40s do you want to sadle yourself with extra morgage ?. I am now thinking about the freedom it will give me to just rent.If you get fedup with an area you dont have to moan about it just move.

[johnd]

I don't really see what is going to burst the bubble. People all need somewhere to live and Australia's population is like Britain's - ever climbing at a rate of knots. What has ruined property prices here is that the banks went into "rapid decline" (would have been bust but the English-muggins-taxpayer rode to the rescue again....and again....on his trusty white steed), decided to only lend money to people who had at least 20% deposit (new for here in recent years, but Australia has been like that, i.e. have at least 20% deposit or pay the bank's mortgage insurance, for years). They also realised that liar loans (self cert mortgages) were just that, so perhaps they should steer away from that kind of lending. Australia never went down that track in the first place - it's always been notoriously hard for the self employed to borrow funds in Australia.

 

Also in the UK, people with mortgages have been losing their jobs hand over fist and continue to do so. Sure, the government (or rather Mr Muggins, bless him/her and his trusty white steed) will pick up the interest portion of the mortgage once you have been unemployed for 13 weeks and are down to the last £16K of your liquid assets, but I'm pretty sure this puts a huge dampener on the housing market over here.

 

Most Australians have probably held onto their jobs in what was for them, compared to the UK, a very mild recession. Even if your mortgage is $3,000 a month, does it really matter if you're earning $100K a year and don't expect to lose your job any time soon?

 

in a word ...............f***ing crap!!!. we live in the illawarra, nsw, and it was smashed by the recession, especially in heavy industry. i lost my 'permanent' job and i have found it tough since, on the other hand on a recent trip back to the uk no-one had lost their jobs in my old rugby club, (which has a great diversity of trades/proffessions). we have decided to come back to the uk for other reasons , but do not think oz has been un-affected, certain places have felt it less but other areas have had it harder then the uk.

[KIRK AND CO]

in a word ...............f***ing crap!!!. we live in the illawarra, nsw, and it was smashed by the recession, especially in heavy industry. i lost my 'permanent' job and i have found it tough since, on the other hand on a recent trip back to the uk no-one had lost their jobs in my old rugby club, (which has a great diversity of trades/proffessions). we have decided to come back to the uk for other reasons , but do not think oz has been un-affected, certain places have felt it less but other areas have had it harder then the uk.

I am only moving to oz because i can afford to if I had little money noway would i go. UK is noway down & out business wise for me has never been better jobs in surrounding area increasing, houses inprice increasing, retail expanding, major companys enouncing major frofits ect. The uk is going to show a lot of people who read these comical papers how deluded they have been.

[Guest treesea]

in a word ...............f***ing crap!!!. we live in the illawarra, nsw, and it was smashed by the recession, especially in heavy industry. i lost my 'permanent' job and i have found it tough since, on the other hand on a recent trip back to the uk no-one had lost their jobs in my old rugby club, (which has a great diversity of trades/proffessions). we have decided to come back to the uk for other reasons , but do not think oz has been un-affected, certain places have felt it less but other areas have had it harder then the uk.

 

Sure, some parts of Australia won't have fared too well in the recession. I lost my job in the 1990-1992 recession in Melbourne, and ended up finally getting a contract. But it was a good 18 months after that before I got another permanent job. And in Britain, the vast majority of people have held onto their jobs. But there seems to be this steady erosion of pay and conditions here. Things like people being put onto three or four days weeks, or there's a pay freeze. And more subtle things, like someone leaving but not being replaced, so the remaining workers all end up working harder, with no increase in remuneration. Or jobs that were until recently permanent jobs now being advertised as zero hour contract jobs. So a higher hourly rate, but no sick pay, and no guarantee of hours from week to week.

[johnd]

Sure, some parts of Australia won't have fared too well in the recession. I lost my job in the 1990-1992 recession in Melbourne, and ended up finally getting a contract. But it was a good 18 months after that before I got another permanent job. And in Britain, the vast majority of people have held onto their jobs. But there seems to be this steady erosion of pay and conditions here. Things like people being put onto three or four days weeks, or there's a pay freeze. And more subtle things, like someone leaving but not being replaced, so the remaining workers all end up working harder, with no increase in remuneration. Or jobs that were until recently permanent jobs now being advertised as zero hour contract jobs. So a higher hourly rate, but no sick pay, and no guarantee of hours from week to week.

 

errrmm...thats exactly what is happening in oz!!!!. erosion of pay and conditions, all big companies think the same way!. i believe that because john howard was not voted into goverment in the last election, and consequently his 'work choices' laws were thrown out, that a lot of oz companies have used the global reccession to their advantage. for example my 'permenant' job was with a household steel manufacturer, the union was quite strong and there were certain things the firm could and could not do, they tried to impliment things but were 90% unsuccessful. now the global crisis, half the workforce gone overnight and they have just re-advertised the positions, i'm not going back!, 12 month contracts only, no more permenant jobs for new starters. this is what the union wanted to stop but it is now in place. my wife works for the biggest dept store in oz, since the 'global crisis' they have 'not replaced' 20+ staff and my wife's job has become harder and harder.

i feel that professional jobs,doctors,nurses etc, will always get good conditions here as there simply is not enough of them. unfortunatley for trades people like me , middle managers, like my wife, un-skilled and semi-skilled trades, the future here could get worse. they already work far more hours than uk equivalents, or should i say you are expected to work more overtime!.

i have been a contractor for most of my life and have had really bad jobs in the uk, terrible conditions,pay ,no hols or sick pay. so the labour party bringing in hols for everyone and the minimum wage is a good thing. i am no longer a fan of labour , but one thing to bear in mind about oz is, that while in the uk we all complain about europe interfering with our day to day lives, a lot of it is to bring us into line with them and last i looked the dutch, germans and french have a better quality of live than your average 'blue collar' brit. in oz they are directly competing with asia, who we all know is the sweatshop of the world. what will oz do if the carbon emission scheme is introduced, or when the coal and ore is no longer needed/priced to low/runs out. people often say in uk ,"we dont make anything anymore", do you think they do in oz?, ha,ha, ...everything is made overseas and its for the most part expensive. end of rant.

[janieco]

errrmm...thats exactly what is happening in oz!!!!. erosion of pay and conditions, all big companies think the same way!. i believe that because john howard was not voted into goverment in the last election, and consequently his 'work choices' laws were thrown out, that a lot of oz companies have used the global reccession to their advantage. for example my 'permenant' job was with a household steel manufacturer, the union was quite strong and there were certain things the firm could and could not do, they tried to impliment things but were 90% unsuccessful. now the global crisis, half the workforce gone overnight and they have just re-advertised the positions, i'm not going back!, 12 month contracts only, no more permenant jobs for new starters. this is what the union wanted to stop but it is now in place. my wife works for the biggest dept store in oz, since the 'global crisis' they have 'not replaced' 20+ staff and my wife's job has become harder and harder.

i feel that professional jobs,doctors,nurses etc, will always get good conditions here as there simply is not enough of them. unfortunatley for trades people like me , middle managers, like my wife, un-skilled and semi-skilled trades, the future here could get worse. they already work far more hours than uk equivalents, or should i say you are expected to work more overtime!.

i have been a contractor for most of my life and have had really bad jobs in the uk, terrible conditions,pay ,no hols or sick pay. so the labour party bringing in hols for everyone and the minimum wage is a good thing. i am no longer a fan of labour , but one thing to bear in mind about oz is, that while in the uk we all complain about europe interfering with our day to day lives, a lot of it is to bring us into line with them and last i looked the dutch, germans and french have a better quality of live than your average 'blue collar' brit. in oz they are directly competing with asia, who we all know is the sweatshop of the world. what will oz do if the carbon emission scheme is introduced, or when the coal and ore is no longer needed/priced to low/runs out. people often say in uk ,"we dont make anything anymore", do you think they do in oz?, ha,ha, ...everything is made overseas and its for the most part expensive. end of rant.

How right you are johnd, i 110% agree with you. I never fail to be amazed at the ignorance of so many people in oz who walk around with their eyes and ears closed except of course when Mr Rudd opens his gob to say we are all doing great and that oz is a world leader in blah blah .....what a shock some are in for, i give it 2 years before the proverbial hits the fan.

[Guest Doaldsons]

How right you are johnd, i 110% agree with you. I never fail to be amazed at the ignorance of so many people in oz who walk around with their eyes and ears closed except of course when Mr Rudd opens his gob to say we are all doing great and that oz is a world leader in blah blah .....what a shock some are in for, i give it 2 years before the proverbial hits the fan.

well it seems there are some of us out there who know that australia buble will burst and when it does it will be ugly

[pablo]

I am only moving to oz because i can afford to if I had little money noway would i go. UK is noway down & out business wise for me has never been better jobs in surrounding area increasing, houses inprice increasing, retail expanding, major companys enouncing major frofits ect. The uk is going to show a lot of people who read these comical papers how deluded they have been.

Ive just come back from BAE wharton,blackburn, went to start on site today for a bricklaying contractor on pricework( per metre ),so after a ####### 2 hour safety induction:mad:,the site agent took us to see the work,a massive hanger type building, the prices worked out at 50pence a block,pointed both sides!!!! i cant even remember working for prices that low and ive been in the building trade 30 years! UNBELIEVABLE!!!!!!

anyway i asked him if he was" having a laff?" he said "no,in fact we've just put the prices up 50 pence a metre"!!!!!!!!!!!! anyway i told him to "work it",and that the price was a joke!

back home now,still very low on money,but no way am i going to swallow my pride and work for those prices!if people do then they are condoning/perpetuating the situation!

I just wish all these great financial profits etc that you talk of would work their way over to the construction industry,which is after all one of the biggest indicators of how well a country is doing?!

I have NEVER known things to be this bad,EVER!!!

I guess i must live in a parralel world to some of the other forum members and have simply been dreaming about the thousands and thousands getting laid off daily!

[Mongrel]

Hang on ,unions hated Howards work choices and were glad when they were canned

 

quote

 

It took very little time for the federal government’s lies about Work Choices to be exposed. Many workers were sacked on the day Work Choices came into operation, immediately revealing that the new law’s sole purpose was to screw workers. As each day passes, more injustices against workers are revealed, making it clear that the laws are giving bosses greater confidence to wield the hatchet.

[fish.01]

People seem to be so sure of their views...must know more about it than the professionals as they can't all agree....maybe we should be listening to you lot....hope you are well studied on the topic not just reading opinions that agree with your already made up mind?