What's your prediction on the Australian Dollar?

[drsmithy]

Says the man who who lives in a country thats over 18 trillion in debt and with no way of paying it back.

There's more debt in the world than anyone can ever pay back. It's a "feature" of the monetary system.

The US is probably one of the few countries that can weather a worldwide economic shock. Certainly far better than Australia could ever hope to.

 

[drsmithy]

If negative gearing gets cut there will be consequences but those are hard to predict.
First the NSW and Victorian stamp duty collections could drop dramatically. Those two States are feasting on a temporary market bull run that may go into a savage reverse. A burst bubble is possible and that could wipe out lots of market confidence. Knocking market confidence has always been a risky thing.

On the upside, the FIRE industry would be decimated and huge amounts of effort and money currently being wasted paying enormous mortgage could potentially be redirected to something useful and productive.

The states have been too reliant on stamp duties for too long. They will suffer when the inevitable correction comes, but they could pre-empt that by moving to more efficient and equitable forms of taxation like land taxes.

 

[drsmithy]

For Sydney and Melbourne homes the first home buyers could get back into the market if the prices for houses halved. There just are not enough first home buyers who can borrow around a million dollars unless the parents are helping out.

Half a million dollars is an utterly absurd amount for a "first home buyer" to be committing to. Heck, it's an absurd amount for >90% of the population to be committing to.

Sydney and Melbourne houses need to get down (in aggregate) to something like 20% of current values, as do many of the mining towns. Most of the rest of the country only needs to halve. Then we'll have something like an affordable housing market that isn't dragging down the whole economy with unproductive waste.

 

[drsmithy]

Yep lets make suburbs in the middle of nowhere (in same cases on prime agricultural land) with minimally infrastructure so developers can get rich quick.

How are developers going to get rich ? Why would anyone buy houses out there ? Why would farmers sell "prime agricultural land" cheaply ?

You could give every family in the country a quarter acre block and it would add up to around 1/8th of Tasmania's land mass. The mere suggestion this country has to make sacrifices [like prime agricultural land] to put its population in dirt cheap housing is ridiculous on its face.

 

[whatmeworry]

How are developers going to get rich ? Why would anyone buy houses out there ? Why would farmers sell "prime agricultural land" cheaply ?

You could give every family in the country a quarter acre block and it would add up to around 1/8th of Tasmania's land mass. The mere suggestion this country has to make sacrifices [like prime agricultural land] to put its population in dirt cheap housing is ridiculous on its face.

Because it has been rezoned from farming to residential . Look at the south eastern suburbs of Melbourne and some western suburbs. Liberal supporters complain about Eddie Obeid, yet the Liberal/National party has a thousand Obeid's. Just look how many LNP ministers are negative gearing. In which world do we allow the Treasurer to rent from his wife and gain benefit?

 

[drross]

Stop foreign ownership first.

I cannot believe apartment buildings are built in Australia and Australian citizens/residents cannot buy any of those apartments.

in west end/ south brisbane there are some that aren't even being marketed in australia( or so the rumour goes)

 

[amaroo]

Half a million dollars is an utterly absurd amount for a "first home buyer" to be committing to. Heck, it's an absurd amount for >90% of the population to be committing to.

Sydney and Melbourne houses need to get down (in aggregate) to something like 20% of current values, as do many of the mining towns. Most of the rest of the country only needs to halve. Then we'll have something like an affordable housing market that isn't dragging down the whole economy with unproductive waste.

Dunno, I paid the best part of $200K for my first home ~ 25 years ago .... $500K looks cheap!

 

[whatmeworry]

Dunno, I paid the best part of $200K for my first home ~ 25 years ago .... $500K looks cheap!

Next down neighbour ~15 years ago paid 280k for her home, yet last year other next door neighbour paid ~900k.

Both New Neighbour not liked.

 

[cove]

Our next generation of home buyers to live in the home are being saddled with huge debts that will prove to be difficult to repay. We were able to repay our home loan in about 5 years as the prices were so modest in the seventies.
The purchasing power of an Australian dollar is falling fast.

 

[moa999]

Negative gearing I suspect will reduce sales and prices a small bit.

Only a massive period of high interest rates and unemployment will cause a big shock to house prices -- and then inflation kicks in.

I remember in the 80s my folks invested in MtDruitt (no exactly an ideal suburb) buying apartments for 20k - sold few years later at 60k

 

[cove]

Stronger employment figures on Friday night in the U.S. will put the $AUD under some pressure this week.

 

[Foreigner]

I bloody well hope so.

 

[cove]

So Foreigner you want it down along with others who have their superannuation in U.S. assets. All I would like is a stable currency.

 

[drsmithy]

Dunno, I paid the best part of $200K for my first home ~ 25 years ago .... $500K looks cheap!

If that was in Sydney then proportionally that house today is worth a bit under a million (Sydney median in 1990 was a bit under $200k). So, yes, $500k is cheap in comparison. If it was Melbourne (median ca. $130k in 1990) then that was a quite expensive house then and would likely be proportionally so today - so, again, $500k would be cheap in comparison.

But Sydney property prices in particular have been outrageous since the '80s, if not longer. It's not a good benchmark to use as "normal".

 

[cove]

The falling $AUD has already helped the manufacturing side of our business.

 

[Alanslegal]

Blame the Chinese, blame negative gearing, blame ISIS, blame the easy targets, blame everyone else except ourselves Well that's what the media and maybe some parts of the community likes to think but at the end of the day, any Dummies Guide to Economics book will tell you that price purely comes down to supply and demand - it's that simple We have a combination of factors that are pushing demand up crazily right now (record low interest rates, Fear Of Missing Out factor, greed, negative gearing, keeping up with the Jones' etc) whilst on the supply side - it is pretty stagnant. Existing dwellings on the market are ridiculously low (where I live for example I see on average a new property listed one every couple of weeks, that's nothing really) so no wonder why demand far exceeds supply availability, new stock and off the plan properties (close to good schools, universities, transportation) are being bought by the Chinese, and governments on all levels unwilling to make it easier / loosen building regulations etc to make it easier for developments (supply) to increase. For now, I guess we all go on this price rollercoaster ride - weeeeeeeeeeeeeeee!!

 

[amaroo]

If that was in Sydney then proportionally that house today is worth a bit under a million (Sydney median in 1990 was a bit under $200k). So, yes, $500k is cheap in comparison. If it was Melbourne (median ca. $130k in 1990) then that was a quite expensive house then and would likely be proportionally so today - so, again, $500k would be cheap in comparison.

But Sydney property prices in particular have been outrageous since the '80s, if not longer. It's not a good benchmark to use as "normal".

It was a shoe box sized unit in Mosman.

Average wage 1990 = $555
Average wage 2014 = $1,128

Then there was the Int rates...

1990 = IIRC >15%
2015 = Bugger all

$1m still looks cheap.

 

[cove]

$1million at 7% in the future is probably how you should think as the future is likely to expose the folks who planned on bugger all interest rates forever.
I did get someone to fix half at 4% and go variable on the other half on a recent mortgage so if interest rates surge it is half as bad.

 

[amaroo]

$1million at 7% in the future is probably how you should think as the future is likely to expose the folks who planned on bugger all interest rates forever.
I did get someone to fix half at 4% and go variable on the other half on a recent mortgage so if interest rates surge it is half as bad.

When Int rates move, it will be a horrific for some. It was the same when they climbed years ago ... same story, different cast .. same ending.

 

[Foreigner]

So Foreigner you want it down along with others who have their superannuation in U.S. assets. All I would like is a stable currency.

Business profits in my case are in USD so when converted to AUD, the lower rate helps heaps.