Where is the housing market headed? (Post 4 of 5)

Posted to The Age (13/12/2011) on 15/12/2011 at 5:00 AM
Commenting on "Where is the housing market headed?"
http://theage.domain.com.au/blogs/talking-property/where-is-the-housing-market-headed-20111213-1osf0.html

I seek opportunity by predicting dooms. There is nothing to worry about if everything is hunky-dory, until things get over-heated. Buying during good times give low to negative returns; one may even lose the initial capital if the property is disposed early. If one is greedy and does not understand that property is a very long term investment, he is no wiser than those who invest in the shiniest, fastest and latest car.

When there is shortage of food, we grow food. When there is insufficient housing, we build more houses or multi-storey buildings. However, growing food and building dwellings need one crucial thing, namely land. When land becomes scarce, we cannot grow land! Scarcity pushes price up!

Many baby boomers had the opportunity to work two or three jobs during their younger days, and have experienced at least two recessions prior. They are not spendthrift like the younger generations, and have tucked away a fair amount of money. Some baby boomers who are ready to hang up their boots may not want to invest in real estate directly, but give away their money to their offspring as deposits or partial payments towards their first homes. Invariably, this provides an impetus for stimulating the next buying upswing.

As long as external influences do not have direct impact on an Australian citizen’s financial position, he will continue to live his life style and invest in property. However, if the impact is negatively drastic, real estate industry will slide to the point until cash-up opportunists come along to grab a good deal!

The myth of the buyers market

Posted to Sydney Morning Herald (8/6/2011) on 8/6/2011 at 11:06 PM
Commenting on "The Myth of the Buyers Market"
http://smh.domain.com.au/real-estate-news/blogs/domain-investor-centre-blog/the-myth-of-the-buyers-market-20110607-1fqpa.html

Real estate market in general is cyclical, and by my calculations, the real estate market will continue to slide until reaching the bottom in April 2013.

If there is a shot-in-the-arm in median price, it is largely due to higher price range property owners can no longer hang on to their properties and have to let go of them. That is a sign of further market deterioration.

RBA which increases interest rate is no longer the culprit causing mortgage stress. The real culprits are the banks or correctly speaking the lending institutions. They are all alike, and they increase the rates higher than what the RBA has determined. The banks are no longer playing by the rule.

Many new entrants to property investment are naive and ignorant, and rather lazy to learn the basic mathematics. They are also driven by greed and expect high return in short space of time.

Many buyers think that they are good negotiators, smarter than many real estate agents. Just think about this, the number of properties sold by an average real estate agent is lot more than most people's property transactions in many life times.

For the next year or so, the return on capital will decrease, and the rental income will be well below interest rate. For those who wish to benefit from negative gearing, now their wish has come true - a lot worse than expected.

Given the present situations, with the Labor Government making one mistake after another, plus the recent banning of live cow export to Indonesia, the coming quarter will definitely hit another negative GDP growth, resulting in the recession Australia can never get out of - compliments of Julia Gillard and her incompetent team!

Debt spiral looming for Australians

Posted to Herald Sun (18/5/2011) on 18/5/2011 at 1:53 AM
Commenting on "Debt spiral looming for Australians"
http://www.heraldsun.com.au/news/more-news/debt-spiral-looming-for-australians/story-fn7x8me2-1226057787036

Australia is definitely heading towards a recession. The truth lies in the trilogy of negative demand - real properties, cars and household items.

In recent months, the supply of properties in the market has increased, but there are many people who cannot afford to buy. They have neither the earning capacity to convince the bank to lend them money, nor the ability to repay after the initial down payment. Renovation market has also slowed down.

Car is the largest personal asset item. Car sales have also slumped, and compounding the problem is the increasing petrol prices which turn away potential buyers from buying bigger cars or 4-wheel drives.

David Jones, Myers and JB HiFi are reporting slow sales for the past few months. This is the third and critical negative demand that puts the nail in the economy coffin.

Glenn Stevens and his RBA team are just not good enough to come up with inaccurate forecasts month after month. Sitting in the boardroom, looking at graphs on computer and talking with big businesses and then come up with the economic rationale to increase interest rate is unacceptable. Not all Australians are miners, and not all 95% employed are full-time workers!