Guest Andy Posted June 4, 2011 Share Posted June 4, 2011 Anyone naive enough to think falling property prices are a good thing, or to be encouraged, quite frankly needs their head examined. Why would they need their head examined? I hope property prices fall at the right time so my children have some hope of getting on the ladder, prices got to stupid levels here in England around 2007-08 and have fallen a bit since but you cannot maintain those sky high prices because nobody would ever be able to start at the bottom and if nobody is buying at the bottom then eventually the market will grind to a halt benefitting nobody imo. Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 I am sorry but i do not agree with that statement at all, there are plenty of professional people for instance, nurses, policemen, firemen whatever the list is endless who have bought a house and then fallen when they have been made redundant through no fault of there own, you could never predict that you may lose your job, the majority of people have a mortgage to buy a house and naturally if they lose there job they would not be able to afford the mortgage but you cannot go through life not buying things because you may lose your job as the world would grind to a halt. Firstly - you can take out redundancy protection insurance. Secondly - many redundancies pay out quite well if you have been with the company for a while - and if you've only just started a job - then you shouldn't be buying a house. Thirdly - has no one ever heard of savings? We have no debt other than our mortgage, and we have a years salary in savings - just in case I get made redundant. Fourthly - if people obided by these simple rules, house prices wouldn't boom and then bust - putting people in -ve equity. Lastly - just because the banks are willing to lend - it doesn't mean you have to. There are pushers of all things everywhere - but it's your choice as to whether you subscribe. And it's these peoples own fault if they get into trouble. Link to comment Share on other sites More sharing options...
Guest Andy Posted June 4, 2011 Share Posted June 4, 2011 Firstly - you can take out redundancy protection insurance. Secondly - many redundancies pay out quite well if you have been with the company for a while - and if you've only just started a job - then you shouldn't be buying a house. Thirdly - has no one ever heard of savings? We have no debt other than our mortgage, and we have a years salary in savings - just in case I get made redundant. Fourthly - if people obided by these simple rules, house prices wouldn't boom and then bust - putting people in -ve equity. Lastly - just because the banks are willing to lend - it doesn't mean you have to. There are pushers of all things everywhere - but it's your choice as to whether you subscribe. And it's these peoples own fault if they get into trouble. 1- fair enough 2- fair enough again 3- good for you, but if you get made redundant and you dont get another job after a year, tough you should have allowed for at least 25 years savings:no: 4- millions of people clearly do not understand your simple rules. 5- Yes it is the individual's choice but the banks have to take their share of the responsibility also. Lending willy nilly to anyone and everyone for god knows how long and then shutting up shop and not lending at all is very unwise and also helps create a boom and bust economy. Link to comment Share on other sites More sharing options...
pablo Posted June 4, 2011 Share Posted June 4, 2011 Firstly - you can take out redundancy protection insurance. Secondly - many redundancies pay out quite well if you have been with the company for a while - and if you've only just started a job - then you shouldn't be buying a house. Thirdly - has no one ever heard of savings? We have no debt other than our mortgage, and we have a years salary in savings - just in case I get made redundant. Fourthly - if people obided by these simple rules, house prices wouldn't boom and then bust - putting people in -ve equity. Lastly - just because the banks are willing to lend - it doesn't mean you have to. There are pushers of all things everywhere - but it's your choice as to whether you subscribe. And it's these peoples own fault if they get into trouble. Redundancy protection costs a hell of a lot,not everybody can afford it,its also a grey area with regards to s/employment,not everybody is EMPLOYED,lots of people are s/employed with sporadic work so not able to save,in fact a lot these last 2 yrs would have used any savings to get by on,life isnt black and white,nor as simple as your rules Link to comment Share on other sites More sharing options...
Guest Andy Posted June 4, 2011 Share Posted June 4, 2011 Redundancy protection costs a hell of a lot,not everybody can afford it,its also a grey area with regards to s/employment,not everybody is EMPLOYED,lots of people are s/employed with sporadic work so not able to save,in fact a lot these last 2 yrs would have used any savings to get by on,life isnt black and white,nor as simple as your rules I was going to bring up the subject of redundancy protection and its affordability but i have never had it so am not really sure about the costs. Link to comment Share on other sites More sharing options...
pablo Posted June 4, 2011 Share Posted June 4, 2011 I was going to bring up the subject of redundancy protection and its affordability but i have never had it so am not really sure about the costs. I asked about it yonks ago for my first mortgage,it wasnt cheap but i suppose IF it does save you losing your hse then if you CAN afford it its worth it,however i was told that as long as i was entitled to UNEMPLOYMENT benefit thru lack of work the cover would kick in...after 3 months i think?but at the time S/employed people got social SOCIAL SECURITY if out of work,same dept but subtle difference,so i could have been paying it for yrs then when i claimed the subtle difference would have kicked in and the protection wouldnt have covered me,the girl in the Halifax agreed with me on this so never took it out. I agree with a lot of whats been posted btw,savings etc,dont buy unless you have plenty of savings etc,but human nature will allways mean people want to own their own home whether they have savings or not,im just saying that for a lot of people...s/employed included its not allways possible to structure your life in an ordered way,work comes in and then work doesnt come in,like i say,life isnt black and white,i had savings but they've more or less gone due to lack of work,and that can happen to anyone,its too easy to be judgemental about people,circumstances can change,and often do..for the worst Link to comment Share on other sites More sharing options...
lyndalelodge Posted June 4, 2011 Share Posted June 4, 2011 Re savings, by the time the average earner saves a years salary, house prices habe probably risen by 2 or 3 times their annual salary. It's a nice thought, but not really practical. Re mortgage insurance, it iften doesn't kick in for 3 months and often only lasts for a year and us almost always a rip off, hence the current massive legal issues!! Ultimately, average house prices are too high in relation to average salaries; end of story! Moral is that folk on an average salary will always struggle unless they get left some dosh by someone. Link to comment Share on other sites More sharing options...
ducktape Posted June 4, 2011 Share Posted June 4, 2011 I have a friend who can't understood why people need big houses, he has a wife and 2 kids they live in a two up two down. The kids share a room and he says that'll be the way it is till they leave home. He spends 15% of his net salary (about 20k) on his home inclusive of all his bills... He has no stress and money in his pocket and a happy family. He reckons the true value of a home is measured by the happiness and security it brings instead of its size and cost. I have trouble disagreeing with him... sorry I forgot the final detail if he lost his job he says his rather modest savings would keep his family fed, sheltered and clothed for 5 years... Link to comment Share on other sites More sharing options...
lyndalelodge Posted June 4, 2011 Share Posted June 4, 2011 sorry I forgot the final detail if he lost his job he says his rather modest savings would keep his family fed, sheltered and clothed for 5 years... I think your friend's absolutely correct, but he's not a usual example. Re Oz houses, how much does an average 2 up 2 down cost in the average suburb in the average city and could the average salary afford it? Where I live in Scotland it's questionable but a house (semi with garden)like that could be maybe £80k (av suburb), but a young couple/individual still needs to find an £8k deposit which isn't always easy. Could the av salary get a £72k mortgage? Maybe, but not easy at the moment with banks as they are. What about Oz, how much is an equivalent house in Brissie, or..... Is it 'affordable'? Link to comment Share on other sites More sharing options...
bunbury61 Posted June 4, 2011 Share Posted June 4, 2011 Okay, so it's clear now to anyone with half a brain out there that house prices in Australia are collapsing fast, with the data released yesterday highlighting massive falls in Perth and Brisbane especially but all around the country too! Sometimes it’s hard to believe this ponzi kept going for as long as it did. It should have popped last time but a round of unprecedented stimulus forced a last gasp of air into the bubble. All they did was kick the can down the road and now the collapse will be even worse. Posters have been predicting this outcome for some time, and now the scale of this coming collapse will surprise the majority of commentators, in the same way the GFC surprised most economists I'm a potential FHB (First Home Buyer) as are several family members and we can't help thinking this will be a scary thought for our politicians, and now that this (inevitable IMHO) crash is underway they'll be utterly desperate to avoid a UK or US style economic collapse led by the bursting of the housing bubble. What's worse, is that GDP has gone negative and we're only one quarter away from a technical recession. Get that, halfway to recession folks! This aint good news! (for housing bulls ha ha) :biggrin: I kind of suspect our government will panic and pressure the Reserve Bank to slash interest rates, and at the same time they'll unlease another barrage of stimulus spending, especially more grants and handouts to the bloated and inefficient housing sector. What does everyone else think? Will Labor make the same schoolboy errors all over again and pump up the housing bubble with more stimulus, or will they sit back let it all collapse this time and bring the country down with it? Awareness of the housing bubble is really seeping into the brains of the masses in Australia. The biggest driver of house prices is sentiment, when consumers are confident they’ll bid up prices to crazy levels irrespective of fundamentals, but now the tides turning, panic is setting in and they’ll all run for the exits at the same time, especially the speculators holding multiple investment properties. Even Kochie is in on the game, saying prices are crashing on morning television! Thoughts? BB. I cant believe some of the comments i have read further down the board .............never mind Australian house prices .....the euro is wobbling , and a break up is being discussed ......The U.S is in debt to the tune of $14.2 trillion ..............Australia has so far been somewhat immune , and watching from afar ...this is a global issue .....welcome aboard Link to comment Share on other sites More sharing options...
Av8r Posted June 4, 2011 Share Posted June 4, 2011 I say bring on the falling house prices and bring it fast. A house price crash is invariably the trigger to a deep and nasty recession. If you want falling house prices, you have to accept that they'll probably take down the wider economy with them. Perhaps that's a compromise you're happy with. But having just lived through my third recession, and seen first hand the misery that friends and family have endured, I struggle to see that it's remotely a price worth paying for a cheaper house. I hope it does fall and fall hard, crashes through the floor actually . Those who bought their house for a home then live in it and enjoy. Those who bought multiple homes for renting then I hope it destroys them all for life ! just like they destroyed the chances for many to get on the ladder as they funded a purchase by the value of their portfolio . After all the mess and repossessions that will come and a good fall then in years the next generation ( my children ) as yours can afford to own. I have fingers crossed that many of the multiple home owners will be financially destroyed and broke for life and I make no apologies in this. Well that's certainly an interesting perspective. Thing is though, it's not the multiple property owners that get hurt the worst. In fact in the UK crash, they've been the ones to make out like a bandit as rents have soared to record high levels and low rates have made their profit margins that much bigger. The people that got hurt the worst by the UK crash were the formerly priced out generation, now the locked out generation, unable to get mortgages without a stupidly high deposit, forced to be stuck in rentals for a decade enriching their landlord. And the young of course, as youth unemployment has soared to a million, hurting the very "children" you claim to be looking out for. I know a bloke in the UK that looked forward to falling house prices.... Until he lost his job from the associated recession and had to spend that hard saved deposit fund paying the bills for 18 months til he found a new one. On less money.... He's now further away than ever from buying, and is quite happy to admit he was dead wrong about wishing for a crash. It'd be great for houses to be more affordable, but only a fool or a masochist wishes for a crash. What sane people should be hoping for is a decade of stagnation whilst wages rise and house prices fall in "real" (inflation adjusted) terms. Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 The whole point of what I was trying to say is that house prices are so expensive because people have disregarded the risks and have thrown caution to the wind. It's effectively gambling. In the US it was gambling. We shouldn't be hoping for a crash - we should be hoping that reckless gambling hasn't driven up house prices in the first place. But it has - and we are were we are. Yes - banks, govts and regualtors have a lot to answer for. But it is our greed that has pushed prices to bursting point, and we only have ourselves to blame. How many people thought - "what happens if I get ill, or lose my job, or we have a baby or just whatever". Not many. People just thought, I'm going to get on the gravy train and make lots of dosh. Unfortunately - there is a price to pay for thinking this way. And just for the record, I was made redundant in 2009 when house prices in the UK were at rock bottom. I will also be facing it again in the not too distance future. But I wasn't over extended - so I got by. It was costly, but I had sufficient reserves that I wasn't forced to sell into a dud market, and I had enough to cover me until I found another job. Link to comment Share on other sites More sharing options...
pablo Posted June 4, 2011 Share Posted June 4, 2011 The whole point of what I was trying to say is that house prices are so expensive because people have disregarded the risks and have thrown caution to the wind. It's effectively gambling. In the US it was gambling. Yes - banks, govts and regualtors have a lot to answer for. But it is our greed that has pushed prices to bursting point, and we only have ourselves to blame. How many people thought - "what happens if I get ill, or lose my job, or we have a baby or just whatever". Not many. People just thought, I'm going to get on the gravy train and make lots of dosh. Unfortunately - there is a price to pay for thinking this way. And just for the record, I was made redundant in 2009 when house prices in the UK were at rock bottom. I will also be facing it again in the not too distance future. But I wasn't over extended - so I got by. It was costly, but I had sufficient reserves that I wasn't forced to sell into a dud market, and I had enough to cover me until I found another job.[/QUO Nobodies saying your wrong..in an ideal world,BUT if the only people who bought houses were the ones who had a years salary saved in the bank then there wouldnt be many houses sold,this sensible utopia you wish for doesnt exist anymore,its gone hasnt it?. I think its got a lot worse since the thatcher days,"me me me,must have, must have" is the mentality now,and it got a whole lot worse in the thatcher yrs. Link to comment Share on other sites More sharing options...
Av8r Posted June 4, 2011 Share Posted June 4, 2011 The whole point of what I was trying to say is that house prices are so expensive because people have disregarded the risks and have thrown caution to the wind. It's effectively gambling. In the US it was gambling. We shouldn't be hoping for a crash - we should be hoping that reckless gambling hasn't driven up house prices in the first place. But it has - and we are were we are. Not all price rises are a speculative bubble. The mistake most people make is to assume that any significant rises in price must mean that prices are in a speculative bubble, whereas in reality, a genuine shortage of supply can push prices up just as far. As I posted earlier, prices are now just 11% below peak in the UK, but 45% below peak in Ireland. Despite both nations using bank bailouts, low interest rates, and help for homeowners. The reason why is pretty clear. The UK has a shortage of housing, and Ireland does not. 17% of houses in the ROI are empty, just 3% in the UK. And given that renting a house is vastly more expensive than buying one over the long term, and that "markets can remain irrational for longer than the average person can remain solvent", you can hardly blame ordinary people for buying a home for their families, even when that home is more expensive than it used to be. That doesn't make them "reckless gamblers". Link to comment Share on other sites More sharing options...
ducktape Posted June 4, 2011 Share Posted June 4, 2011 Lyndalelodge your right he isn’t the norm but I wonder if this is the way we need to start thinking? Property prices are what they are because of easy credit; if you take easy credit away you have a problem… We are seeing the consequences of this right now. It’s obvious to me that people can’t handle easy credit, the problem is people don’t want to hear it because it isn’t in line with their modern thinking… Most people can’t afford the house they want, they can afford a house just not the one they want. So what are we to do? Do people now need to start realigning their expectations of what they can afford? Should easy credit be allowed? I don’t think Australia is immune to the financial problems the rest of the world is facing. Something has got to give at some point the aus dollar rate is killing tourism among other things like exporting, sure mining might be OK but it can’t prop up the whole of Australia for ever. However it is interesting to see how self supporting the country really is. But consider foreign investment it must be down with the dollar? London property is being propped up by foreign investment and don’t let anyone tell you any different, I m just about to sell a property and the estate agents here in london say 85% of their business is with foreign money. The success of any country can’t be based on one thing it is the countries whole financial structure that is important. Link to comment Share on other sites More sharing options...
Av8r Posted June 4, 2011 Share Posted June 4, 2011 Property prices are what they are because of easy credit; if you take easy credit away you have a problem…. 70% of mortgage funding in the UK was removed, prices fell by 20%, and then rapidly recovered half those losses to now sit just 11% below peak according to the Land Registry. Credit is still severely restricted, with mortgage approvals running at around a third of the numbers in 2007. So clearly it's not just "easy credit" that drives up prices or maintains them at high levels. Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 Nobodies saying your wrong..in an ideal world,BUT if the only people who bought houses were the ones who had a years salary saved in the bank then there wouldnt be many houses sold,this sensible utopia you wish for doesnt exist anymore,its gone hasnt it?. I think its got a lot worse since the thatcher days,"me me me,must have, must have" is the mentality now,and it got a whole lot worse in the thatcher yrs. If you create liquidity with no constraints - then the price of an asset will be bid up well beyond it's value. That's what has happened. After that damage has been done - there's no good way out as our governments are now discovering. The trick is too have controls that stop this infinite liquidity, and for people to act responsibly - but it's too late for that now. You are right that we have the now now now generation. And the now now now generation fell right into the bankers trap. It's a bitter pill to swallow - but the damage has been done. There were people sending out warnings, but they were all ignored. It doesn't matter what we want to happen. We are in a bad place - and we'll probably be here for quite some time. Australia has just joined us - please take the seat in the corner. Link to comment Share on other sites More sharing options...
pablo Posted June 4, 2011 Share Posted June 4, 2011 If you create liquidity with no constraints - then the price of an asset will be bid up well beyond it's value. That's what has happened. After that damage has been done - there's no good way out as our governments are now discovering. The trick is too have controls that stop this infinite liquidity, and for people to act responsibly - but it's too late for that now. You are right that we have the now now now generation. And the now now now generation fell right into the bankers trap. It's a bitter pill to swallow - but the damage has been done. There were people sending out warnings, but they were all ignored. It doesn't matter what we want to happen. We are in a bad place - and we'll probably be here for quite some time. Australia has just joined us - please take the seat in the corner. I hope that comment isnt addressed to me? Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 70% of mortgage funding in the UK was removed, prices fell by 20%, and then rapidly recovered half those losses to now sit just 11% below peak according to the Land Registry. Credit is still severely restricted, with mortgage approvals running at around a third of the numbers in 2007. So clearly it's not just "easy credit" that drives up prices or maintains them at high levels. If houses were shares they would have been shorted. But you can't short houses. You have to wait until distress till they fall. We're almost there in the UK and Oz. Link to comment Share on other sites More sharing options...
Av8r Posted June 4, 2011 Share Posted June 4, 2011 If you create liquidity with no constraints - then the price of an asset will be bid up well beyond it's value. . And if you remove that liquidity, and asset values only give up a small fraction of their gains, then it obviously wasn't the liquidity bidding up the prices to begin with but rather a fundamental imbalance between supply and demand. Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 I hope that comment isnt addressed to me? No it wasn't addresed to you - it was to Australia - they have so far avoided recession - but it could be catching up with us very fast. Link to comment Share on other sites More sharing options...
ducktape Posted June 4, 2011 Share Posted June 4, 2011 Agreed but easy credit allows the 'good times to roll' until you reach the peak, the fact we have a housing shortage means prices not to fall as far as some would like. We can't allow them to fall to far otherwise the problem just becomes larger. it's always about a number of factors not just one I realise that. Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 And if you remove that liquidity, and asset values only give up a small fraction of their gains, then it obviously wasn't the liquidity bidding up the prices to begin with but rather a fundamental imbalance between supply and demand. But you are assuming that housing is an efficient market - it is not by a long shot. It is driven by many things, emotion being one of them. I think value comes well down the list. Link to comment Share on other sites More sharing options...
Av8r Posted June 4, 2011 Share Posted June 4, 2011 If houses were shares they would have been shorted. But you can't short houses. You have to wait until distress till they fall. We're almost there in the UK and Oz. Well technically you can short houses.... Spread betting products are available based on the house price indices. Or you can Sell To Rent and buy back in when prices fall. But back to the point, the UK has already had it's crash, prices fell by more than they did in the 90's crash, they just recovered far quicker afterwards. As to whether Aus will crash, that remains to be seen. I'm not entirely convinced it will to be honest... although it's certainly looking soft at the moment, it has the same fundamental supply/demand imbalances that have held UK prices up at near peak levels whilst Ireland and the USA have plummeted. Although if China goes belly up, all bets are off. Link to comment Share on other sites More sharing options...
Av8r Posted June 4, 2011 Share Posted June 4, 2011 But you are assuming that housing is an efficient market - it is not by a long shot. It is driven by many things, emotion being one of them. I think value comes well down the list. Which is precisely why house prices are so sticky on the downside, absent truly awful wider economic conditions. For a significant crash to occur, on the scale of Ireland or America, you have to be looking at total meltdown in the wider economy and labour markets. Which is why it's rather shortsighted to think a crash would be a good thing. Link to comment Share on other sites More sharing options...
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