Let's hurt those evil investors

Well don't assume I am "poor" because I can assure you I have more net worth than most of you.

I am saying the RBA & APRA want to maintain stability. That's the ideal scenario and they're trying to manage that before it's too late. They have to support other areas of the economy without overheating the property market. Their job is to look after the entire society, not the vested interest of the property lobby.

 

My point is you, they, are fighting the nature of this beast. And this has never had any problems in the past - not in Australia. As I said these boom cycles have never wreaked any real havoc on this country. And don't put up the US straw man as a counter argument, because that shameful recklessness is nothing like what's going on here.

 

What nature beast? Do you think this is "natural"? We live in extraordinary central bank intervention of too much money chasing yield. There's nothing natural about the gargantuan monetary policy accomodation flooding the financial markets creating cheap credit. It's far from "natural".

The excess in the US is similar to Australia. They always assumed property prices always go up. That underpinned their risk taking behavior and we are seeing it emerge in this country.

When extraordinary liquidity is yanked out of the global financial markets, expect pain. Thankfully we have the RBA and APRA trying to minimize the eventual pain.

 

Because of decades and decades and decades of cycles to reflect on. They all have the same pattern of boom then periods of stagnation.

 

Bottom line is your not telling us anything that hasn't already been discussed .

Yes , we are aware of the reasons why RBA & APRA have taken action so you're not telling the forum anything new . Just because it's the first time YOU have told us doesn't mean we don't know ......

We don't " blame you " for anything , You seem to be the one who keep bringing YOU up ......

Ad hominem .... Rainbows and lollipops .... More tangents ...

Ad nausea is more like it ...

Cliff

 

A receptionist I used to work with was thinking of selling her home as the GFC is here and property prices are going to crash. Here I was a 20 something yo (23-25, I cant recall the age) telling this 50 yo with 3 kids and one of her children were about the same age as me (20 I think) about how her property was going to increase and double in about 10 years. She doubted me at first and really questioned it. I even said lets say I am wrong and it takes 15 years would you be mad?

I got a text message a year or two ago saying what I said all those years ago is coming true. I had to call her as I didn't know what she meant and she reminded me about it. Since the GFC her property has basically doubled in 7 years and it would be even more now with the recent boom here in Melbourne.

I was at an auction the other day and this little old lady bought her place for $94,000 and I paid $510,000 for a slightly better house. In my head I was like holy sugar honey ice & tea I wish I could have bought at $94,000 however in 30 years time (same timeframe) and especially in 50 years time (when im her age now) I will be that old man saying I bought this house for $510,000 and to some 30 yo who just paid $4M for their place or 16M when I'm an old man.... Even if I am out by $3M in 50 years time do you think I would care?

 

The government doesn't want to hurt their chances at the next election, so they dont make changes to NG or CGT to curb investor activity. Instead they have APRA make these changes, which may have some effect on investment activity, but will certainly increase the amount of NG property loans in Australia. Seems counter productive to me.

 

So do you have an actual point outside the emotive language of " house of cards " and " credit crack up " . What it shows is that property prices have gone up .

That's hardly ground breaking stuff ...

Gee , I could post a figures showing periods where prices have doubled in a close to a year or gone backwards over periods of many years .

All part of a normal cycle .

Cliff

 

Yep.

I had an IP which didn't go up in value and didn't go up in rent at all for 2 years.

Noone was crying then.....except me.

 

NNNNNNOOOOOOOOOO!!!!

Then all those PPoR buyers with their cheaper loans will drive up the prices.

 

I think that's a bit exaggerated.

PPoR buyers has an one to one relationship with properties they can buy.
IP buyers can have one to many relationship.

From this I think the effect from the demand driven by PPoR buyers would not drive the prices up at double digits growth which we've seen in the recent times.

 

It was a tongue in cheek dig.

You'll learn my insane humor eventually.

But seriously; I've been around for a bloody long time, and every time a boom starts; it's like a flock of penguins in the surf...one runs to shore and everyone else does.

Hence my regular references about humans being described as penguins - which upsets a lot of folk.

Nothing new about this current state of play with the booms - lowest interest rates in Aus history would have a bit to do with it.

 

Haha. I must admit I'm pretty bad at catching sarcasm.

 

I don't think it matters.

Using myself as an example; I've owned 5 IP's, and none were bought at asking price - all below.

I put in countless more (low) offers on others which were rejected.

I would guess that most folks are the same as me as investors; trying to spend less to improve the returns more.

Of course; there are some that will pay the asking and/or higher if they believe it to be good value; but I'd argue the property was advertised too cheap in the first place in these cases, and I'd also argue that not many would be doing this regularly.

PPoR buyers on the other hand tend to pay more because it becomes an emotional decision to a large degree..

 

maybe just a bit...

 

Seems like a lot has been made of increasing debt. As we all know from being property investors, debt is irrelevant. Debt is only relevant in relation to the value of the underlying assets. So if your LVR is 50%, you need more debt. If your LVR is 150%, you are in trouble! That debt chart would only be interesting if there was an estimate of the value of the assets secured against that debt. So if debt went up 30% but the value of the underlying assets went up 40%, we are in a good position. If debt went up 30% but the value of the underlying assets went up 20%, then we would have a problem.

 

I think that's the outcome come desired by the RBA. Because they consider it a social problem.

 

Investors buying below asking price does not necessarily mean they're NOT contributing to the price rises in my opinion. The prices have been increasing inline with demand. I think most would agree that this demand have been driven by investors for the past couple of years.

Sure, there may be the odd couple who are willing to pay more out of emotion because they genuinely want to live in that place. That one buyer will settle for that and they're not likely to go buy again at a rapid pace (especially if they overstretched themselves).

An investor on the other hand can keep buying at a rapid pace without limitation and there's no end to it. This drives the supply down rapidly hence the price increase.

 

Seriously ...

Is that what you believe ?

Most of the high prices I've seen in Sydney are driven by OO's

Investors buying at a rapid pace without limit ... I think you'd find that most of the investors on this forum would disagree with that statement .

Cliff