Aussie landlords swallow losses to bet on price gains

Posted to my FB page Sin Fong Chan Real Estate on 13/1/2015 at 1:48 AM (The Age does not accept comment)
Commenting on "Aussie landlords swallow losses to bet on price gains"
http://www.theage.com.au/business/property/aussie-landlords-swallow-losses-to-bet-on-price-gains-20150112-12medj.html

It is a myth that property prices will bounce back in a ridiculous rate like before; not at least for another 10 years or longer. In some areas, the prices in real term actual go backward.

Buying property as a form of investment when interest rate is low can be a great risk. When the interest rate goes up, the return may not cover the loan interest payment. Indeed, many investors do not know how to calculate the risk-return over the long term. Most gain may be swallowed up interest repayment, management expenses, rates and charges, loss opportunities, etc. One must not forget the government taxes such as stamp duty, land tax, capital gains tax, etc.

There is no justification for apartments to be sold at such high prices, but it is all due to the ignorant and arrogant buyers who are so willing to line the pockets of developers and real estate agents with their hard earn money.

Many apartments are left vacant due to lack of tenants. Unfortunately, some are rented to a lead tenant who in turn sublets the property without the owner's permission to multiple tenants, treating the property as an illegal share accommodation.

Remember, scarcity of land results in rise of property value, which means landed property will always worth more by comparison.

Auctions looking up as rates go down

Posted to The Age (4/12/2012) on 4/12/2012 at 4:39 PM
Commenting on "Auctions looking up as rates go down"
http://theage.domain.com.au/real-estate-news/auctions-looking-up-as-rates-go-down-20121204-2asok.html

The only way we can see a real recovery in the real estate industry is not a rate cut, but good news in the employment front.

Almost every week, we read or hear about either companies going down the gurgler or jobs being outsourced overseas. What so big deal with another $40 or $100 less in loan repayment when all the other utility bills or rates and charges keep going up, leaps-and-bounce by more than 25 percentage point each time. Such increases swallow up any positive cut by the RBA and thankfully from the bank.

Without job security, there is no certainty in one's future, let alone one with a family. Those at the ivory tower with 6-figure pay cheque cannot understand the pain and suffering of the "working families" or very soon the "non-working families". For goodness, it is time the pollies grow up and stop the idiotic squabbles in the Parliament, and come up with constructive policies and strategies to curb the decline of employment.

The Chinese are dealing with real stuff hands-on, with R&D knowledge and blue-prints handed to them free-of-charge from the so-called smart Western nations including Australia, while our university graduates know basically nothing more than just theories and designs on papers. Many Chinese factory workers are working on hi-tech machines while we still ponder when we will have the opportunity to see one.

Ten of thousands of home owners prepared to switch over rates

Posted to Herald Sun (9/2/2012) on 9/2/2012 at 2:58 AM
Commenting on "Ten of thousands of home owners prepared to switch over rates"
http://www.heraldsun.com.au/news/more-news/ten-of-thousands-of-home-owners-prepared-to-switch-over-rates/story-fn7x8me2-1226266201942

It's easier said than done. Furthermore, most people find it too troublesome to keep switching banks - CBA may be higher in interest rate today, but after switching ANZ may take the cake. This is no difference from shopping around for cheap petrol.

In many cases, real interest rates chargeable are not published publicly, and until one sits down to negotiate with the lender, there is no guarantee that the self-proclaimed bargain hunting expert actually wins the day.

Negotiation demands confidence and skills. Many borrowers are unlikely to do a good job when confronted by experienced professional lenders. Compounding this is that negotiation normally takes place at the lenders office, and therefore gives the lenders a winning edge, at least at the psychological level.

Borrowing approval criteria are getting more and more constrained; those whose income has been reduced due to reduced hours of work may not have the same borrowing power as before. Borrowers are stuck, and unable to refinance their loan at the same magnitude.