WESTPAC, ING and National Australia Bank increase interest rates

Remembering that the big four banks pay no attention the cash rate (which is the only rate controlled by the reserve bank), they only care how domestic and international money markets react to reserve bank actions. This is a good example of that, domestic and international funding costs have spiked post the US election, pressuring bank interest margins and forcing their hand. No one is immune for it unless they are only funded by deposits which is virtually impossible.

 

You don't understand.

When a mortgage is taken on a property that was already paid for once and now the next buyer is buying it. Nothing new has been created and all the work of a human being is being placed into something that has used no resources.

 

Mines are real estate that produces new goods that are sold.

The Chinese are buying because their own government is an uncertainty of unknown magnitude, people are fleeing with their wealth to safer harbours and getting whatever chance they can.
Apart from that Chinese state corporations are buying natural resource assets everywhere. Do you think they are buying it at exhorbitant prices to do Australia a favour and to show how great guys they are? Do you think the Aussies selling it to them are great smart businessmen because they are getting high prices? You chipmunks don't even know what's coming, when it hits you it will be too late. Dumbest on the planet.

The Chinese have a cheaper lifestyle here then in crazy Beijing or Hong Kong. Both ruled by mafias, and Australia will be ruled by that mafia also soon.

In WA wheat is produced, put on a train and transported to a harbour then sent to China. The farms are owned by the Chinese as is the wheat, the train is even theirs and the harbour is even theirs as is the ship. Australians don't even get 1 cent for millions of tons of wheat that have used Australian soil, water to grow and used taxpayer funded infrastructure to transport. We don't even get the wheat back as food.

There are no restrictions on foreigners buying property if they properly apply to do so.

 

They own the best coal and iron ore mines in the country already, as well as the best farms on the best soils, still nobody wakes up here about what that means.

 

Do you think the Chinese do not know that they are paying exhorbitant prices for property?
they are doing it to sink the economy that is not housing, by deliberately corralling all the nations wealth into the banks hands as debt on a unproductive asset. Mortgages on homes and causing a boom and competition for houses. The banks, completely unregulated, don't mind, they are always on the lookout for a dumb customer and there are more here then anywhere else. The developers are just looking out for themselves so limit supply and love the situation of building the most rubbish housing at the cheapest cost and selling at world epic high prices to the hordes of absolute dumb dumbs that mortgage a lifetime of work to pay money back to the banks and then wonder how long they will be able to live as retired before they must euthanise themselves because they can't afford their bills anymore.

 

Nope.

But banks like high interest rates so any excuse will do.

 

That may or may not be true. I bought a 50% share of a house/granny flat in June. The previous owners basically botched it. Anyway, in that area there is demand for 4x2 housing but a serious under supply. We are spending thousands and consuming a lot of resources to convert this property to a fully renovated 4x2. The previous owners spent nothing to upgrade the property so we are having to spend a lot.

 

You don't understand.

Many of us create equity through Reno or development. Equals Jobs through trades, materials creation, hardware stores right down to local sandwich shop.

Even those that don't end up affording a higher lifestyle as a result of their financial planning. Lifestyle equals spending equals jobs.

 

I suppose they employ only Chinese labour who eat only Chinese food from only Chinese owned shops who use only Chinese grown food and only pay Chinese taxes too.

Gov isn't as stupid as they look. They'll just eventually regulate the price that items are worth and tax accordingly.

Don't get me wrong I don't like the idea of overselling our resources. But that simply is not happening. Several years ago it was the Japanese now it's the Chinese. Yet the actual percentage of farm land they own is lower than the US And UK. In fact the total foreign ownership of Australian farmland is just over 10% last time I looked.

But yer blame the Chinese. Greedy Chinese.

 

Omg have you been taking the minutes in my meetings. That's exactly how our agenda reads.

 

We bought an absolute wreck of a house a year ago, we demolished it and are now building a new one on it.

The trades and services we are using and will use are "many and varied" we will be buying furniture, building a pool, landscaping etc etc etc.

There is a lot of employment supported by building in Australia.

Definitely not an unproductive asset.

 

Most investors buy a property and don't renovate a thing.
Most employees in this country send any profit they make for their work into a bank as payments for their property that was bought at exhorbitant prices and ties up the wealth of the country by a foreign owned bank such as any of the big four.

When you sell the renovated property, you are selling the entire property again at abig her price and the new owner pays a mortgage for a majority portion that has been sold several times over. That's the unproductive bit.

Imagine a home owner buying, paying for and selling his own property 3 times over to himself but each time paying with money he has never used before, each time mortgaging the property and each time the property price doubling except the last time he sells it to himself at the price he paid last time. That would mean he paid for the entire value of the house three times over and with inflation. He never makes a profit, despite the property price doubling.

Contrast that against using all that money to set up a manufacturing business that produced a product that made a profit and is just sold onwards.

 

Actually i don't care anymore.

I know what the economic future holds for property and what this means for investors.

I have the optimal properties and have set everything up so that it works like a Swiss clock. I don't have any unsustainable debts.

Good luck everybody I have a few more things to do before the end of the year. Use your own brains and look at bond rates and buying and selling activity if you want to understand interest rates.

 

Disagree. Most investors must either buy new (hugely productive up to the point they settle) or recently renovated (again just gone through this cycle of productivity) or in need of renovation/repairs. How do I know this? Because buildings are only built with a 50 year lifespan and there is greater demand than supply. Further there is a reason that your allowed to depreciate an investment property, and write off repairs, why is that? Because guess what the property does degrade and things do break requiring repairs.

Is a business (potentially) more productive than property? Yes. Is everyone capable of starting and running a business? No.

You continually contradict yourself...

Property is unproductive. Start a manufacturing business.
Business is bad MOST send all their profits offshore.
Property is bad going to crash more doom and gloom.
I have a great portfolio runs like the Swiss.

 

Correct, they are more stupid than they look.

Not only China, but the oil rich countries of mid east are buying farmland in Australia. Many mines are chinese owned and whats left is exploited by the American multinationals like apple and google.

While we spend billions of dollars buying obsolete american weapons to kiss their bum all in the name of "what if china invaded us", China is invading australia very peacefully with a smile on their face.

 

Good lord man!

I am pleased that you have posted, I was beginning to wonder if there was any other intelligent life out there.

Thanks for thinking.

 

No contradiction,
The right property bought, with 80% deposit is likely to be fine.
Manufacturing is great, even manufacturing houses, but not if it enslaves the entire population and kills their spending power by an artificially high price.

The issue in Australia is that we have a legal drug that is widely available and destructive to some and harmless to others. It has the property that if you take a low dose you are fine and you will thrive. If you take a high dose you will see your backside handed to you on a plate. It becomes an obsessive habit and people who use it loose all touch with reality. When the drug first came out it was only available in small quantities, now it's freely available in high doses and everybody in the country is using it. Everybody is no longer thinking about anything else except this drug. The drug is credit fuelled real estate purchasing. At a low dose (low credit) it's harmless and does you good and the many people who made a lot of money did so by starting early. Anyone who gets into it now and takes the high doses being sold, will be destroyed by the drug.

 

Hard to argue with this.

 

Every Banks AGM I have sat in over the last few months and one in a few days have all in different ways said the same thing..most banks portfolio's of interest only loans that span across retail no retail and the residential mortgage portfolios are all susceptible to massive losses if the interest rates rise or a decline in property prices and all banks are exposed to defaults in the simple event of a rapid deterioration in otp apartment markets
but even within the banks they cant predict these changes accurately or quickly enough..

 

I'm on the drug... I'm on the drug... I'm on the drug that killed River Phoenix.