What's your prediction on the Australian Dollar?

[Alanslegal]

*wears flame suit*
I think the biggest factor of housing prices the way it is is because of us, most of us, who hold investment residential properties. It is the "in" thing or the "cool" thing to be having multiple properties to be rented out and I know, everyone of my close circle of friends, own one or more investment Sydney properties. Negative gearing is a bonus but it's not the be-all-and-end-all because all the knowledgable people know that if you're property becomes positive geared, well it's time to buy another one. Rinse and repeat the process apparently. Despite what I think causes the rapid price rises, I can always blame someone else though, it's easier.

 

[andye]

The big issue is the differential in CGT for housing investment/speculation.

People will happily move millions of dollars from country to country to take advantage of a 0.25% difference in interest rate.

(just as FFers will go to major lengths to get a small percentage value in Ff points)

but our economy is set up to offer over 20% tax advantage for one asset class. This is a much better deal than setting up one's own business. The only thing that comes close is salary-sacrificing super which is capped

Fix the CGT differential and there would be no need to deal with negative gearing

 

[wandering_fred]

...
Fix the CGT differential and there would be no need to deal with negative gearing

Fix the CGT differential and there would be no investment in property
Just limit the interest/depreciation/expenses to income received. Loss carry-forward reduces eventual sale price.

Ask rural people about hobby farm exclusions...

Happy wandering

Fred

 

[moa999]

but our economy is set up to offer over 20% tax advantage for one asset class. This is a much better deal than setting up one's own business. The only thing that comes close is salary-sacrificing super which is capped

Fix the CGT differential and there would be no need to deal with negative gearing

Borrowing too buy other assets (eg shares) is also tax deductible... The only difference is that price is very transparent (hence margin calls) and in general leverage you can achieve is lower..

Property in Australia generally has abismal returns, high holding costs (council tax, strata levies, repairs and maintenance) and has only held its head above water due to price increases (which is driven by govt policy including land release and foreign investment).. Take away the capital gain and property looks horrid

 

[JohnK]

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

Not a rumour.

LoL you must be low doc loaning on those numbers.

Whatever size mortgage you want to nominate - I'd rather pay 5% interest rate than 15% or more.

With a 5% interest rate the capital is much higher. Disposable income is roughly the same which means you keep the mortgage longer.

My parents paid off a $25,000 loan in 3 years in 1974 on an ~8% interest rate on 2 factory wages and taking care of a 10 year old and 7 year old. Try doing that today on any size mortgage. Wish I had the sense to advise them in 1981 not to throw away ~$60,000 on a renovation. Could have bought another house and unit.

 

[whatmeworry]

Bond rates are going up around the world, probably pushing up interest rates.

Not to put too fine a point on it, there's a rout in bond markets that could yet cause financial convulsions and problems for the banks.
Another funding freeze, perish the thought, or a global rise in rates next year would do more harm to investors who are paying too much for Sydney and Melbourne properties than the "crazy" talk from the Reserve Bank or bubble warnings from Treasury.

http://www.smh.com.au/money/investing/end-game-as-the-global-bond-bubble-bursts-20150612-ghm20d.html

 

[whatmeworry]

Aussie dollar up again.

The Australian dollar broke through the US78¢ mark early on Friday morning AEST, compounding pressure on the Reserve Bank of Australia to cut interest rates again.
The local unit rose through Thursday trade, bolstered by a more dovish outlook from the US Federal Reserve on the timing of an interest rate rise this year.

Fresh headache for RBA as Australian dollar cracks US78¢

 

[Deleted member 6404]

Become ? Howard & Costello made it a structural problem.



Not going to happen until the baby boomers shuffle off.

You mean all dead ......lol well all I can say is suck it up we are all to blame for letting government's control the markets. For the world to prosper u need to get rid of the top hand full that control the strings till that happens the system will remain as is very sick.and I bet the baby boomers will be glade they won't see the wave of more Sh××t that's a coming

 

[whatmeworry]

The greatest generation gave us the most entitled generation.

 

[Deleted member 6404]

Yeah I guess just like the west have been propping the debt ridden US $ US only has 18 trillion debt drop in the ocean lol ...not

 

[drsmithy]

You mean all dead ......lol well all I can say is suck it up we are all to blame for letting government's control the markets.

You have that cough about face. These days it is markets (and corporations) control Governments.

The latest embodiment of which is coming soon to Australia in the guise of the TPP.

 

[medhead]

Whatever size mortgage you want to nominate - I'd rather pay 5% interest rate than 15% or more.

Interesting. Newspaper story highlighted the failure of this logic. When interest rates where 15% wages were increasing faster that the cost of borrowing. These days wages don't even keep up with inflation.

 

[amaroo]

Interesting. Newspaper story highlighted the failure of this logic. When interest rates where 15% wages were increasing faster that the cost of borrowing. These days wages don't even keep up with inflation.

Big difference between reading about something ... and actually experiencing it. lol

Inflation rate...

 

[robd]

I did an IFT on Thursday to a supplier, who is using a "Global Payment and Risk Management Solution" company receipting the funds. This company, then sent me an email offering their services to our company. The notable part of the email cited that they were booking FX rates (AUS-USD) currently at 0.84.

Not sure if it is prudent to reveal the name on the forum, but we will be arranging a meeting to investigate.

Wondering if this is ringing any bells for anyone? I'm guessing, most likely it's a vanilla option or the like, with premium fees payable.

 

[drross]

I did an IFT on Thursday to a supplier, who is using a "Global Payment and Risk Management Solution" company receipting the funds. This company, then sent me an email offering their services to our company. The notable part of the email cited that they were booking FX rates (AUS-USD) currently at 0.84.

Not sure if it is prudent to reveal the name on the forum, but we will be arranging a meeting to investigate.

Wondering if this is ringing any bells for anyone? I'm guessing, most likely it's a vanilla option or the like, with premium fees payable.

what time frame are you looking at?

 

[Deleted member 6404]

U could be right but it's the government's that pass the legislation, so in principle they make the rules with the help of their corporate mates

 

[robd]

what time frame are you looking at?

Quoting from the email 19th June at 12:02pm -

"…achieve rates (booked today) at 0.84's (6 cents above the current spot price)."

 

[cove]

Get me $5 million at that rate!

 

[moa999]

In which direction.. Could well be travelex style rates 0.72/0.84

 

[medhead]

Big difference between reading about something ... and actually experiencing it. lol

Inflation rate...

View attachment 50839

Oh, so my memories of the 1980s are not real? Think I'll file your opinion on my experiences with the rest of your BS.

Edit: This is what I mean. 17% interest rates for 4.34 months, what I wouldn't give for that with the 8% wages increase. To quote Python - You Lucky B*******s. Meanwhile, I'm lucky to get an agreed 2.4% increase and my "employer" cuts that agreed, locked in EBA, by 0.25% to cover superannuation increases.

http://www.abc.net.au/news/2007-08-08/the-reality-of-interest-rates/2525330

The 1980s were a time of high inflation, which was feeding into prices and wages. Interest rates (what economists call "nominal" interest rates because these are the rates "nominated" in loan documents and everyday language) may have been high, but so too was inflation. The mortgage may have imposed an immediate 25 per cent burden, but if wages were rising at 8 per cent a year, while the mortgage stayed constant, that burden would fall to 23 per cent after a year, 21 per cent after two years, 20 per cent after three years, and so on. (In fact, those who took variable-rate mortgages in the late 1980s peak soon found not only their incomes rising but also the interest rates falling.)
The burden of mortgage repayment was heavy initially, but it soon lightened. We have many means of coping with temporary stress, such as deferring replacement of cars, furnishing and appliances, deferring having children and extending credit card debt.
Coming forward to the present time, inflation is low, and people cannot expect such automatic relief. Even if their employment is reasonably secure, they cannot expect their income to rise much higher than inflation, which is now running at only 2.4 per cent a year.
The burden of high mortgage repayments will hang around much longer than for their predecessors, 30 years earlier. The struggle lasts longer, and, for many, the prospect of falling back to one income is unthinkable.