Oz Federal Election 2013 - Discussion and Comments

[medhead]

It would most definitely put me into poverty. I will be downsizing and if your plan comes into being I will have a mortgage on a house but no house. ergo, the Bank will call in money on an asset I no longer own. Where does the money come from for that, and then, where will I live?

Do you guys actually own houses or are just pontificating. House prices have been stagnant for years!

Define "for years". In case you missed it house prices have been out of control over the last 10 or so years and have recently stopped growing or have slightly contracted.

I'm not sure how you can possible sell a house and keep the mortgage on the house. The banks generally don't allow secured loans to become unsecured.

 

[Mak404matt]

Looks like he's sunk 4.5% in a couple of hours - Newspoll has the Coalition cruising and Rudd losing.

Honeymoon's over, warm up the next one.

Newspoll has never predicted an ALP win, however it also uses the smallest sample size of all the major polls.

Today's essential poll:

 

[Pushka]

Define "for years". In case you missed it house prices have been out of control over the last 10 or so years and have recently stopped growing or have slightly contracted.

I'm not sure how you can possible sell a house and keep the mortgage on the house. The banks generally don't allow secured loans to become unsecured.

Yes, I know, that is my whole point. If the housing market price collapsed then people would be left to pay for a mortgage on sale. That could cost more than the sold asset. And didn't have the cash to pay it out. In order to get that debt forgiven they would need to declare bankruptcy. But some here just don't get that.

Years? I'd say four or five. I know my Council rates show there hasn't been much movement in this period although this year might be different. In case I missed it? I am betting I have had a mortgage while you were still in nappies.

This is the site I trust most:
http://www.abc.net.au/news/federal-election-2013/calculator/?poll=newspoll5

 

[medhead]

Yes, I know, that is my whole point. If the housing market price collapsed then people would be left to pay for a mortgage on sale. That could cost more than the sold asset. And didn't have the cash to pay it out. In order to get that debt forgiven they would need to declare bankruptcy. But some here just don't get that.

Years? I'd say four or five. I know my Council rates show there hasn't been much movement in this period although this year might be different. In case I missed it? I am betting I have had a mortgage while you were still in nappies.

The point that was made is it only becomes a problem if they sell.

I'm not sure how you having a mortgage in the 1970s is relevant. But here is a graph of the house price index since the late 1980s. See that big bubble from the early 2000s, in case you can't read the numbers (due to poor picture quality) it is about a 300% increase. For you to say prices have been stagnant suggest you've missed that little blip on the radar. (Despite having a mortgage, it seems)

View attachment 17288

Btw that bubble also covers when I've had a mortgage or 3.

 

[drron]

Define "for years". In case you missed it house prices have been out of control over the last 10 or so years and have recently stopped growing or have slightly contracted.

I'm not sure how you can possible sell a house and keep the mortgage on the house. The banks generally don't allow secured loans to become unsecured.

Well they have been stagnant in Tasmania for years.:shock:
then of course a lot of greens dont have that much spare cash.

 

[Pukka]

This is the site I trust most:
http://www.abc.net.au/news/federal-election-2013/calculator/?poll=newspoll5

View attachment 17286

That would do nicely

 

[straitman]

Define "for years". In case you missed it house prices have been out of control over the last 10 or so years and have recently stopped growing or have slightly contracted.

I'm not sure how you can possible sell a house and keep the mortgage on the house. The banks generally don't allow secured loans to become unsecured.

My house in Cairns is now worth slightly more (about 5%) more than what I paid 10 years ago. During that period it rose quickly for 5 years (+60%) and then dropped even quicker about 5 years ago and has been totally stagnant for that 5 years.

From my perspective that is close enough to the definition of stagnant 'for years' that you are looking for.

FWIW the house we live in in Sale Victoria is now worth more than we paid for it 5 years ago but only by roughly the amour of improvements we have done. That is also stagnant IMHO.

 

[Pushka]

The point that was made is it only becomes a problem if they sell.

I'm not sure how you having a mortgage in the 1970s is relevant.

View attachment 17288

Btw that bubble also covers when I've had a mortgage or 3.

It means I know just a little about mortgages. Historical prices. From experience.

You assume that everyone can sit on the house and not sell. This totally ignores people's stages in life; redundancy; illness, etc. Not everyone is in the hunky dory life is beautiful phase you appear to live in.

You assume that this graph relates to everyone's property. It does not and is heavily weighted for the Eastern States and WA. It does NOT apply to Adelaide. And Tasmania it seems. (And at a guess, most country areas of Australia except near the mines. But in 12 months time even they will have issues)

Quite simply, you just make too many assumptions. Period.

 

[amaroo]

Define "for years". In case you missed it house prices have been out of control over the last 10 or so years and have recently stopped growing or have slightly contracted.

Prices for many areas outside of the capital cities peaked mid 2000......that's close enough to 10 years ago.

Seems like yesterday.......

 

[medhead]

I guess the idea that an index of house prices represents the average change across the whole of Australia is a bit difficult for some to grasp. What happens in specific markets of course will vary. Cairns in particular is a very unique case. But in the whole all markets will broadly follow the trend.

It means I know just a little about mortgages. Historical prices. From experience.

And my experience of mortgages means I know just a little bit about them as well. As such your nappy comment is irrelevant.

You assume that everyone can sit on the house and not sell. This totally ignores people's stages in life; redundancy; illness, etc. Not everyone is in the hunky dory life is beautiful phase you appear to live in.

You assume that this graph relates to everyone's property. It does not and is heavily weighted for the Eastern States and WA. It does NOT apply to Adelaide. And Tasmania it seems. (And at a guess, most country areas of Australia except near the mines. But in 12 months time even they will have issues)

Quite simply, you just make too many assumptions. Period.

Actually, you'll find that I've made no assumptions. Simply pointing out that a simply statement of fact was made. Falling houses prices only affect people's when they sell. Neither the person posting that statement, nor I, have made any comment about whether people have to sell or otherwise. The only assumption going on around here is you reading too much into a simple statement of fact.

Btw, the index does cover all house price data in Australia. Hence it does apply across the country as a gross measure of what houses prices are doing. I'll leave it up to you to check the abs index for Adelaide. But a massive jump followed by a short period of stability/contraction is hardly stagnation.

 

[medhead]

Prices for many areas outside of the capital cities peaked mid 2000......that's close enough to 10 years ago.

Seems like yesterday.......

Your joking aren't you. Peaked in 2000. Funny how the property I purchased outside a capital city increase by 200% between 2002 and 2012. Funny peak that is the lowest price in the last 10 or so years.

 

[wmetz]

You cannot look at US and compared to Australia, as the problem in some of their major cities, was because of these cities relying on one major employment field. Detroit car manufacturing, Pittsburgh (surrounding areas) Steel and coal production. Even Las Vegas, as people had less money to gamble. So when these areas had their main employers hit hard in 2008, well no work and no money for local economy and housing market. Also, if you look at pictures they were showing of Detroit there was many empty building. Yet, if you look around Australian capital cities, we either demolished the empty shells or refurnished them into production apartments or office space. And therefore, doesn't create spaces in the city for crime etc to flourish.

While in Australia, nearly each capital city has no one major industrial employer. Lucky we got rid of our manufacturing years ago and buy cheap imports.

 

[medhead]

Here ya go: a crude graph of the house price index for Adelaide. Increasing until Dec-2010 then slight decease, moving sideways until Sep 2012. What's that? 2 years?

View attachment 17289

 

[Rebekkap]

Do you guys actually own houses or are just pontificating. House prices have been stagnant for years!

House prices have NOT been stagnant for years - Australian property bubble - Wikipedia, the free encyclopedia

If hard data's not convincing enough for you, I've owned two homes over the past ten years - the first had appreciated by over $100,000 when I sold it after around four years of owning it, the second I still own and has appreciated by more than that in the sixish years I've had it. Stagnant? I think not.

 

[Pushka]

House prices have NOT been stagnant for years - Australian property bubble - Wikipedia, the free encyclopedia

If hard data's not convincing enough for you, I've owned two homes over the past ten years - the first had appreciated by over $100,000 when I sold it after around four years of owning it, the second I still own and has appreciated by more than that in the sixish years I've had it. Stagnant? I think not.

Well, I can't read medheads axes as they are all blurred so I can't see scale or whether they are adjusted for inflation so the jury on hard data is certainly out. As for your examples, they do not reflect any trend in the broader market. If they occurred in Perth for instance they are meaningless. There have been more examples of a stagnant market than one of any strength. In fact seven years ago we sold a block of land that had appreciated over 50% in three years. Six months later its value had fallen to just over what we paid for it. But that too doesn't mean a fig.

Medhead criticised me for using Wikipedia in a discussion so I'll wait for a similar response to your post.

 

[amaroo]

Your joking aren't you. Peaked in 2000. Funny how the property I purchased outside a capital city increase by 200% between 2002 and 2012. Funny peak that is the lowest price in the last 10 or so years.

Take a look at the top end market of Noosa & the Gold Coast........some places in regional OZ that are situated near mining operations have returned very well.

200% increase on a very low base doesn't quite mean the same as the poor sucker that took a 50% haircut on something that was worth many millions

 

[drsmithy]

I rarely agree with drsmithy - but I think rather than house prices plummeting I would suggest that we need property prices to stagnate for quite a while so that property prices are not so out of step with the rest of the world, less borrowing would also free up money to be used/invested elsewhere in the economy whether by consumption or by investment in other places.

The problem with waiting is that - absent massive inflation - it's going to take decades for that to happen.

Housing is upwards of twice as much as it should be in much of the country. Probably upwards of three times in particularly overpriced parts of Sydney.

How long do you think it will take incomes to double ?

You are correct that the problem is mostly on the supply-side. Nearly all of the price bubble is in the land, which has become absurdly expensive due to constraints on use. I'm not going to make an argument in favour of unfettered development, but clearly the process needs to be a lot more liberal than it is.

A "normal" income is ca. $60k. Such people should be able to buy a "normal" house for somewhere in the ballpark of $180k.

Unwinding property bubbles is tough as there are a lot of stakeholders exposed or over-exposed to high property prices, such as existing homeowners, lots of government bureaucracies, banks and their shareholders etc

I've come to believe there's no way to "unwind" ours any longer. I wish it weren't so, but prices are too high, and the vested interests simply have too much influence. Just watch Kev (or probably Abbot, for that matter) do another home buyers grant if he gets in, or listen at the screaming whenever anyone suggests axing (or even somewhat restricting) negative gearing.

 

[drsmithy]

It would most definitely put me into poverty. I will be downsizing and if your plan comes into being I will have a mortgage on a house but no house. ergo, the Bank will call in money on an asset I no longer own. Where does the money come from for that, and then, where will I live?

If you've been in the market as long as you imply, why on Earth do you still have a huge mortgage ?

Do you guys actually own houses or are just pontificating. House prices have been stagnant for years!

They need to be stagnant for _decades_ to let incomes catch up (or we need some brutal 1980s-style inflation again). Housing hasn't been close to reasonably priced in large parts of the country since the 1990s.

 

[drsmithy]

Yes, I know, that is my whole point. If the housing market price collapsed then people would be left to pay for a mortgage on sale. That could cost more than the sold asset. And didn't have the cash to pay it out. In order to get that debt forgiven they would need to declare bankruptcy. But some here just don't get that.

What makes you think we don't "get it" ?

I "get it" just fine. I was living in Arizona when their market crashed. I know people whose house values dropped by over 50%. I know people who lost their homes.

Years? I'd say four or five. I know my Council rates show there hasn't been much movement in this period although this year might be different. In case I missed it?

Depends on where you are. Sydney peaked (in inflation-adjusted terms) around 2003. Brisbane around 2008. Melbourne's prices have actually receded a little.

But it's small bikkies when median multiples are commonly up around 6-9, and need to be more like 2-3.

I am betting I have had a mortgage while you were still in nappies.

In that case you've made a whole lot of money through nothing more than a genetic lottery.

 

[drsmithy]

It means I know just a little about mortgages. Historical prices. From experience.

You assume that everyone can sit on the house and not sell. This totally ignores people's stages in life; redundancy; illness, etc. Not everyone is in the hunky dory life is beautiful phase you appear to live in.

You assume that this graph relates to everyone's property. It does not and is heavily weighted for the Eastern States and WA. It does NOT apply to Adelaide. And Tasmania it seems. (And at a guess, most country areas of Australia except near the mines. But in 12 months time even they will have issues)

Quite simply, you just make too many assumptions. Period.

The bubble is nationwide. There's nowhere that real estate is cheap in the context of its location. Sure, that average $300k house and land package in the middle of nowhere might look cheap to someone selling a townhouse in inner-city Sydney, but when the median wage in the area is only $50k, it's probably twice as much as it should be.