Housing Bubble ?

[casstony]

Originally Posted by DavidU

I got wiped out in the late 80's collapse and got wiped out last year with the GFC. I have no hope of affording a house now.With rent's the way they are we may have to move to some small country town.Very disappointing.

You'll get another chance at home ownership in a few years David IMHO. The decades long party and 'have it all now' attitudes are about to end and we'll all get to learn the same harsh lessons our grandparents faced, amidst rising unemployment, falling assett values and fragile world peace (I'll consider us very lucky if our kids manage to avoid another world war). Some would call these attitudes alarmist, I'm just taking lessons from history.

[Nesti (Mark)]

Originally Posted by casstony

You'll get another chance at home ownership in a few years David IMHO. The decades long party and 'have it all now' attitudes are about to end and we'll all get to learn the same harsh lessons our grandparents faced, amidst rising unemployment, falling assett values and fragile world peace (I'll consider us very lucky if our kids manage to avoid another world war). Some would call these attitudes alarmist, I'm just taking lessons from history.

Actually, with the state of affairs in China right now; uncontrolled commercial expansion with a governance which is unaccustomed to western investment, China may turn into a giant Dubai/Florida.

Our very own primary industries have a good percentage of their hopes and income pinned upon that very Chinese bubble.

I dunno...this is a very, very precarious position we're in...we could well end up living the village lifestyle again...would that even be a bad thing?!

[Nesti (Mark)]

Originally Posted by avandonk

The current real estate market is in my opinion even far worse than any Ponzi Scheme. In a Ponzi Scheme people are driven by greed, in housing it is a simple need to have an affordable roof over your head.

Bert

I've never thought of it as a Ponzi Scheme...but in reflection, it really does look, walk, and quack like a duck!

[casstony]

Originally Posted by Nesti

I dunno...this is a very, very precarious position we're in...we could well end up living the village lifestyle again...would that even be a bad thing?!

I'm sure we'll adapt providing we can afford the neccessities of life - food, shelter, telescopes. And providing the Chinese don't attempt a hostile takeover of the mine.

[casstony]

Originally Posted by avandonk

, in housing it is a simple need to have an affordable roof over your head.
Bert

Before I could afford a house I lived in a caravan. Before my parents could afford a house they lived in two dirt-floored tents by a creek. My nephew, fresh out of uni and ripe for picking by the govt first home buyers con-job, has just taken out a $300,000 loan to build a new house!

Expectations are too high these days. If any asset is too expensive don't buy it - make do with something else.

[star1961 (Lisa)]

one thing not mentioned is wages as compared to mortgage payments
and the buy now pay later system
australians are pretty responsible with their money and don't put themselves under too much stress usually
we pay off our credit cards etc
we love to shop and spend and while we can afford to we'll keep doing it.
the only way to reduce spending and cool the economy is to punish through higher interest payments
it will only be temporary six months and they'll come back down again
i think!

[Miaplacidus (Brian)]

Before the property bubble burst in Japan they started offering multi-generational mortgages. That's right, banks offered punters loans that were for sums larger than they could pay off in 100 years! (So it was up to your kids to assume the repayments long after you'd moved to smaller premises below ground.) So bubbles can continue for many more years than most people imagine (or as Keynes said it: "Markets can stay irrational much longer than you can stay solvent.") And they won't necessarily correct as much as people hope, either. (Prices can move sideways for a mighty long time just to achieve the same result.) Personally, I have no idea what houses are worth or what house prices will do, and I sure wouldn't wager climbing to the top of Kosciuszko about it.

I reckon buying a home to live in is much like having kids: there's never really a right time to do it, and you shouldn't hold out much hope for a financial return. Chances are you do it impulsively and for all the wrong reasons, all the benefits are largely intangible, paying for it causes endless gnashing of teeth, there are always problems that need solving and fresh causes of heartache, and at the end of the day you wouldn't have it any other way.

[gman (Grant)]

When I first got my house loan, the Bank would not let me to pay back anymore than 30% of my disposable income per week over the loan period even though I could afford more.
I did pay off my house early.
Mortgaged now for investment property though.

I say, if you can afford to get in the market, do so. If you cant, then you will remain paying off some elses house until you can.
The arket will always be fluctuating but over an extended period, it all works out and property never devalues over a loan period.

I have told my boys to pool their money and buy a house together, rent it out, stay at home and get someone else to pay off the major part of the loan

[renormalised (Carl)]

Originally Posted by Miaplacidus

...I reckon buying a home to live in is much like having kids: there's never really a right time to do it, and you shouldn't hold out much hope for a financial return. Chances are you do it impulsively and for all the wrong reasons, all the benefits are largely intangible, paying for it causes endless gnashing of teeth, there are always problems that need solving and fresh causes of heartache, and at the end of the day you wouldn't have it any other way.

Except if you like living in a tent or teepee...which if trends keep going like they have been for the last couple of years, people might have to resort to doing because they won't be able to afford much else!!!. Especially those caught on the rental merry-go-round at present. It can be just as financially stressful as paying off a mortgage, yet you're getting nothing out of it. Either way, it's not something to be envied. Unfortunately, things will only get worse before any relief might come. If it ever does.

[casstony]

The slow motion global economic disaster has already happened - the debt already exists - here in wonderland we just haven't realised it yet. Once the truth hits home people will get scared, sentiment will change and house prices will fall, just like they are doing in other western countries. Even China doesn't have a money tree and can only extend and pretend for so long.

The world could have gone through a managed recession; instead we're risking depression in an attempt to deny the fact that there is a downside as well as an upside to the economic cycle.

[GrampianStars (Rob)]

Originally Posted by DavidU

I got wiped out in the late 80's collapse and got wiped out last year with the GFC. I have no hope of affording a house now.With rent's the way they are we may have to move to some small country town.Very disappointing.

WTF 80's was 30 years ago!
what happened "Greed take over"
Love my small town 250 people
NO Bright lights at night & down to mag 7.2 naked eye viewing

[Nesti (Mark)]

Originally Posted by renormalised

Unfortunately, things will only get worse before any relief might come. If it ever does.

Economic systems pertaining to fiat wealth don't contract, they fluctuate and collapse, and they collapse because people know that at the end of the day it's all just built upon perception and expectation.

History has shown boom-bust cycles of fiat economies hundreds of times but they are spaced out far enough for lessons to have been forgotten.

Hell, the Bank of England used the technique to collapse other economies.

[Nesti (Mark)]

Marc Faber on China and Australia.

http://www.youtube.com/watch?v=yIQ8k...eature=related
http://www.youtube.com/watch?v=eZ1YS...eature=related