Channel 9’s 60 Minutes has tonight shown a story about record number of Australia’s struggling to keep up with their mortgage repayments, suggesting renting may just keep you ahead of the game.
A transcript of the story will be available tomorrow.
» The Big Squeeze – 60 Minutes, 7th August 2011.
I’ve been renting the past 12 years and intending to keep on renting for at least the next 5. Don’t know if I’m a head of the game, or whatever position I’m in. I can say life is no financial struggle, quite comfortable actually. If the economy does land real hard, and I loose all sources in income/revenue, I need not worry (well I will in a way) for quite a while.
All thanks to renting. And yes I’ve heard and been told numerous times, if you bought a property at such time, you’d be this far a head, blah, blah, blah. They’re the same people (I know) that wished they never signed that big mortgage contract, the one that was going to make them rich. Never buy anything that’s overvalued, especially in orbit overvalued.
The sad thing is this is going to get alot worse. People are going to start losing their houses and there are going to become less and less rentals avialable because all the investors will go under. Alot of the Aussies keep pointing the finger at the US and Europe and just dont want to realize they need to be worrying about their own backyard. Its in a mess and I believe is going to be even worse than what Europe and the US is in because of the all the stimulus.
We have enough to put a 60% deposit on a house to live in but are still renting for it just doesn’t make sense to buy at the moment. It looks like more people will be thinking like that in the future when the mortgage would be double the rent we are paying now if we borrowed the whole amount.
You wouldn’t know there was a housing issue here in Western sydney. Our place has become the new front-line in the developers endless drive west-northwest.The peace and quiet has been shattered; after sixteen years of neighbouring vegetable farms, chicken farms and cows grazing contentedly; now it’s all over. These guys have been going with military precision; they arrive at dawn and work into the night – save for three days rain; funny that, I never thought combat operations cease during inclement weather. First, we had the advance guard – the surveyors – then the infantry – labourers – and finally the armoured divsion – the excavators. I briefly engaged the colonel – developer – he proudly advised that there would be no respite as business is brisk and that he was under enormous pressure and time constraints. He then gestured west and proudly boasted his ultimate objective; the Nepean River (they apparently have never experienced defeat). I blithely acknowledged his strategic vision (perhaps hoping he didn’t seek to make me a POW and send me away for ‘re-education’). Dick Smith is right; time for some serious hand-wringing and urgently train, equip and commit some countervailing force. We have a 127m2 house on a 480m2 block. The new neighbours’ blocks are 350m2, all double storey (200m2+) and built to the property boundary; Jennings claim prices start from 590K (what an absolute bargain). Blacktown council’s website depicts the whole neighbourhood being carved up (eventually some eighty-thousand homsites); I’d imagine the developer’s ‘contributions’ will keep them well in retirement; unlimited panama hats, banana lounges and cocktails in the Mediterranean.
Have to go and help them pour a slab, and to think this all started just four weeks ago.
well.. you can never predict the future can ya.
Australia is a very different market to the US and europe. with all the resources required in asia alone, australia will never be as bad as the US.
most australian capital cities are still undervalued as compared to others around the world (we have true metropolitan capital cities, with everything at out doorstep).
slight property downfalls and market corrections are expected from time to time – but if you can hold a property for 5-7yrs you will reap the rewards (this principle still applies even if there is a property bust for 2-3yrs of those 5yrs).
so cheer up fellows, nothing drastic is going to happen atleast here 🙂
i hope there are going to be a lot of foreclosures,then the average person might be able to efford a house,let me think ??should i be worrried about property speculators and fools who paid too much for their house of should i be more worried about my childrens future that they can efford to buy a roof over their heads…its a no brainer
When foreclosures go into overdrive, go to the bank with a meagre $50k, take your pick and make an offer. Reckon bank will take it. Especially when Councils are chasing banks for rate money as they are the new owners.
LBS: “People are going to start losing their houses and there are going to become less and less rentals avialable because all the investors will go under.”
When an investor goes under the house doesn’t magically disappear 🙂
It will either be sold to another investor who will rent it out or a current renter like myself will buy it as my primary place of residence. Either way renters are going to be fine.
And if the USA and Ireland experiences get replayed here then rent prices are going to fall hard. I think I read somewhere that Irish rents are down something like 30% from the peak?
Cyrus,
“When an investor goes under the house doesn
wanna be investor Says:
August 8th, 2011 at 1:21 pm
well.. you can never predict the future can ya.
Australia is a very different market to the US and europe. with all the resources required in asia alone, australia will never be as bad as the US.
Then why are global fund managers shorting Australia banks. What happens to the 3-4 Trillion dollars the Aussie govt has guarnanteed goes pear shape. You right Australia is different is going to be more screwed up than US and Europe. Resource demand from China is dying and with China on its way to its own crisises its going to get worse. Commidity price crash is underway go look at the markets
This whole house of cards hinges on employment. It’s fine holding massive debt provided you retain the capability to repay them; when then goes awry that’s when the reality of Aus’ full recourse lending impresses itself. Our current situation has been exacerbated by Gov’t tax policy skewed heavily in favour of property investment; and don’t get me started on those weak foreign investment laws. As much as I don’t want to see it happen, the property falls in the US, UK, Ireland, Spain, (oh yeah, Japan) will be replicated here – I expect upwards of 40% drop over time. Again I repeat, employment is eveything.
LBS, “Then why are global fund managers shorting Australia banks.” – and the Banks know it. I sense it is showing through the way they’re presenting themselves to the public. As for resources and mining, there is a deeper picture to this that is opposed to the Mining will be our saviour myth, especially if there is any truth to this;
Australian mining industry 83% foreign-owned: study
http://au.news.yahoo.com/thewest/a/-/world/9753059/australian-mining-industry-83-foreign-owned-study/
Not sure if it was you (LBS) that put me on to this link;
http://www.abs.gov.au/websitedbs/d3310114.nsf/0/1cbac1ab0cca2049ca256d8f0080ec28/$FILE/Table%2031%20Gross%20External%20Debt%20Liabilities%20MQ2011_53020%20March%202011_1.pdf
But the last lines says much more than the pub-myth, “…and we have China…”. China isn’t for everybody, we are still experiencing a huge *INVESTMENT* resource-commodity (not really) boom, not a resource-commodity boom. Are you an investor in resource-commodities, then you have China, if not, you don’t have very much China. Has it occurred to the “but we have China mob” why an Australian Prime Minister was so hell bent on taxing this industry? Cause we don’t get much of it. The mining-resource industry accounts for around 1.7% employement, and 8.4% GDP. Does the knock on effect from this save the economy? Sure, sure, if it weren’t for mining we’d truly be syuffed, actually I don’t know, I just agree when that’s thrown my way, but nobody elaborates this further.
Debt will be our, just like it was every other economy, un-doing. On that note, something to stare at but I’ll also add no point staring too long, its’ not getting any smaller.
Australian Debt Clock
http://www.australiandebtclock.com.au/
THIS IS JUST THE BEGINNING !!!!!!!!!!!!!!
WAIT UNTIL UNEMPLOYMENT SPIKES
Then the fun begins.. Save your powder folks, because bargains galore in due course.
Happy investing. The equity super funds are going backwards bigtime now. I love the policies our government has implemented, if it was designed to crash the economy, they are doing a fine job indeed. But we are well placed???? to crash hard.
On a side note: Do we really need a Carbon Dioxide Tax now? It might cause riots like in London.
Where is this China crash everyone has been saying is going to happen?
I don’t usually bag the mass media. But a certain TV host David Koche said today that it was more important to read your children a bed time story that worry out about the sharemarket and house price levels.
Come on – Is this country totally inept. Would it not be prudent to be informed and take measures to preserve your wealth. It is this inaction by the average punter that will ensure they lose their wealth. Why is gold $1800 an ounce???
WAKE UP AUSTRALIA !!!!!!!
We are getting what we deserve big time here. Our economy is crashing and we are worried about gay marriage or a few thousand refugees? Who cares.
When Unemployment skyrockets London scenes may appear in a capital city in Australia. Then what Martial Law?
Harvey Norman closing 25 stores.
Retail is in a depression and the sooner people wake up the better.
Happy days are ahead for those that don’t listen to the rubbish propaganda of our “experts”
Anyone who believes the myth Property prices goes up forever, for what ever reason, ie growing population, growing migration, is taking a rather ignorant skewered view. Unfortunately the myth has been propped up by negative gearing, the first home buyers grant, and easy money from the banks in better times. PR companies on news sites and economists have acted as fronts for the banks, telling the sheeple, that home ownership investment is the best form of investment you can make. This is wrong, and anyone who believes in the property myth should read Niall Ferguson’s (Harvard Professor) the Ascent of Money A Financial History of the world, Chapter 5 Safe as Houses. He examines the great property boom and bust property story around the world, and looks at Japan’s Property bust of early 1990’s, when prices escalated to record levels, and then deflated to record low pricing. Property prices are currently less than 1/10 of what they were in the early 1990’s. Ever since this happened, the property market has never since recovered . n Australia, we have now an interesting situation, record levels of high Household debt running at 120% of GDP, a tightening of lending by the banks, and lower consumer spending. We also have higher inflation, where prices have escalated for things such as fuel, food, electricity, council rates putting cost pressure on family budgets. Wages are not necessarily growing, and there is a lot of uncertainty in the economy. Clearance rates are dropping, and you should see how many houses are up for sale on the Northern Beaches of Sydney.. There may be some bargains around in the next few years, as more and more people are forced to sell. Housing in Europe, is so much more affordable than this country, that is for sure, interest rates there are low, at around 4%, and you don’t get excessive increases of around 20% a year like this country with speculation. What a joke! The Great Crash is coming sheeple, Australia deserves this wake up call..