What's your prediction on the Australian Dollar?

[drross]

brisbane (south brisbane, southbank, west end) huge amount of apartments going up for the same reason.. everyone wants their child to be able to go to State High

 

[eastwest101]

cove is right on pointing out the different push and pull factors on the AUD and on property prices. He is correct in pointing out that overseas buyers are buying in Australia not only for the educational and lifestyle benefits, but the relatively low soverign risk of investing in residential property in Australia, and the push factors of many Chinese to get their money out of China as soon as possible. I am sure there are others whom would know more but a large scale Chinese government "crackdown" on people whom have been successful and whom may not want to toe the party line or whom may see a property bubble about to pop in China want their money as far away from China as possible, but in a place that is useful and safe in the future. i.e. the AUD is not just being bought to purchase iron ore, coal and natural gas but also property.

You also have to look closely at various markets in Australia, Sydney is well and truly into a property bubble, Melbourne less so, and the rest of Australia is a very different and mixed story. From a pure economics point of view the price of property needs to come down as money increasingly becomes tied up in an unsustainable inter-generational ponzi scheme and diverts money from being invested elsewhere to fund expansion and investment in more productive parts of the economy. If prices continue to rise we can expect to see young people exiting Australia faster than people from overseas coming in, when we see that rational response to an irrational property market then we know that only 2 things could happen, government intervention to slow the property market either by expanding supply or restricting ownership and/or negative gearing or a massive property bubble busting (a large bubble busting can take up to 20 years to work through the economy as Japan found out). Actually there is one other lever that the Australian government still has - by increasing or decreasing immigration and the birth rate here in Australia to affect the nett demand for housing in Australia.

The interest rate differential between effective 0% interest rates in Europe, USA and Japan/Korea and what interest rates here are in Australia also make parking money in Australia quite attractive and hence the stubbornly high AUD while the rest of the developed world try to get themselves out of the GFC by turning on the printing presses. The RBA really can't do much about this except possibly reducing interest rates in Australia.

 

[PLANT]

Smsf is currently the main factor pushing/holding property prices.... Which impacts our dollar???

 

[cove]

I would be hoping that very few SMSFs are buying residential real estate as part of their investment portfolio. We have been selling more than buying as we grow older and want a simpler life. We now have no rented residential property (other than Social Housing)as the Government charges are like a wealth tax that run flat out.
With ASX listed securities you don't get hit up with water rates,shire rates and of course that nasty land tax.
With the Australian dollar so high it does make Australian residential real estate look ridiculous and that is sad for our first home buyers.

 

[amaroo]

Smsf is currently the main factor pushing/holding property prices.... Which impacts our dollar???

Commercial makes sense....particularly when you lease it to an entity that is yourself

Residential makes no sense at all IMHO.

 

[marki]

Commercial makes sense....particularly when you lease it to an entity that is yourself

Residential makes no sense at all IMHO.

Capital gains tAx here when you sell


Sent from my iPhone using AustFreqFly

 

[Awesom Andy]

Capital gains tAx here when you sell

Although you would have to pay CGT no matter what asset it is that you sell?

Given my current base, I've started to compare apartments in Sydney vs Singapore, and with prices dropping slightly in SIN, it seems that I would actually get better yield in SIN, for roughly the same outlay. However, negative gearing doesn't come into play here, with effective income tax rates being under 10% for the vast majority of the population. And I would never have to worry about currency, as the SGD is controlled and manipulated by the government.

 

[cove]

Just bought some US dollars at 0.9400 to put a floor under it for those wanting to buy at higher levels. I am still cycling money thru our US MasterCards as there is a true MasterCard exchange rate offered which I really love.

 

[marki]

Citibank Deutsche bank are saying predicting the Oz dollar is going up


Sent from my iPhone using AustFreqFly

 

[cove]

So the Reserve Bank wants it down, the travellers want it up and so we have a meeting of the minds....let's do lunch!

 

[Austff]

So the Reserve Bank wants it down, the travellers want it up and so we have a meeting of the minds....let's do lunch!

If travel is work related will lunch be deductable

 

[marki]

I did ..... Had lunch and guess what still the same


Sent from my iPad using AustFreqFly mobile app

 

[sumthinfornuthin]

You make a short term loss, with tax deductions, in the hope that the capital gain will be large enough to cover the net losses. The said gain would come from other investors pouring their money in, hoping of achieving the same. Sounds a bit like a ponzi scheme, doesn't it?

No one is ever going to convince me that buying CASH FLOW POSITIVE property is not a smarter way to go. Capital gain is fine until you sell and the ATO holds out its hand. I would rather have a higher rate of return to convert to other currencies as I travel along the way and less capital gain to realise at the one time. Just me, others would see differently.

 

[Foreigner]

I did ..... Had lunch and guess what still the same View attachment 31489


Sent from my iPad using AustFreqFly mobile app

Is that an app? Which one?

 

[Tortuga]

Is that an app? Which one?

https://itunes.apple.com/us/app/stock-market-hd-stocks-shares/id469405092?mt=8

 

[marki]

This one is stock pro and for the iPad it's Stock HD
Like?


Sent from my iPhone using AustFreqFly

 

[drsmithy]

No one is ever going to convince me that buying CASH FLOW POSITIVE property is not a smarter way to go. Capital gain is fine until you sell and the ATO holds out its hand. I would rather have a higher rate of return to convert to other currencies as I travel along the way and less capital gain to realise at the one time. Just me, others would see differently.

In fact, about 2/3 of property "investors" see it differently and feel losing money on their property every week while collecting the tax deductions and capital gains at a later date is a better strategy.

 

[drsmithy]

Capital gains tAx here when you sell

Not if you sell in the pension phase.

Hence the baby boomers and older Gen Xers piling into real estate with their SMSFs.

 

[marki]

Not if you sell in the pension phase.

Hence the baby boomers and older Gen Xers piling into real estate with their SMSFs.

Understood yes that certainly makes it palatable


Sent from my iPhone using AustFreqFly

 

[sumthinfornuthin]

In fact, about 2/3 of property "investors" see it differently and feel losing money on their property every week while collecting the tax deductions and capital gains at a later date is a better strategy.

However the problem is that there are only so many loss producing properties one can support, after a while you can't earn enough money.....cash flow positive just keeps on keeping on and ones portfolio just keeps on growing with the ability to service the loans...that's how I do it, not saying I'm right but I am comfortable with it. The tax rates unfortunately simply take too much of a big capital gain when all realised at once wheras cash flow can be managed effectively.