The overwhelming fear of his five year old son being priced out of the property market – forever, has forced a Sydney property lawyer to act. He has moved to secure his son’s future by purchasing a one bedroom $710,000 Potts Point apartment.
Reserve Bank Governor, Glenn Stevens said today “lenders and borrowers alike would be well advised to take due care,” and “that decisions be based on sensible assumptions about future returns”
While it is his opinion there is no bubble and overall credit growth is still subdue, he warns “borrowing is increasing quite quickly in some pockets” citing finance approvals for Sydney housing have surged 40 per cent in the past year. “So this is an area to which we will, naturally, pay close attention.”
» Lawyer buys $710,000 city unit to set up son, 5, on ground floor of property market – The Sydney Morning Herald, 29th October 2013.
» Remarks to Citi’s 5th Annual Australian & New Zealand Investment Conference – The Reserve Bank of Australia, 29th October 2013.
More evidence of government incompetence, hypocrisy and corruption. Why are self-managed superannuation funds wasted to buy established homes as investments but ordinary Australians who have super are not entitled to use their funds to pay off their mortgage? How can we stand such biased policies that only serve the corrupt government/bank/real estate trio’s interests alone? Why don’t we all ask out local political offices as to why this is allowed?
SPREAD THE WORD-DONT BUY NOW!!!
I read self-managed superannuation funds are allowed to be used for buying established houses as investments and yet most Australians are not allowed to use their super to pay off their mortgage-Why this hypocrisy? This is something we should all ask our local political offices.
SPREAD THE WORD-DONT BUY NOW!!!
Wow… I didn’t think you could get much worse than what The Age reported the other day:
“First time buyer Claudia, 23, a student at Uni, paid more than $1 million for a two bedroom terrace in Sydney’s Surrey Hills” (with the help of her parents)
But yup… this idiot lawyer takes the cake! I wonder if this frenzy of buying like crazy will sky rocket the housing market so much that it’ll just crash and burn…
It’s only going to get worse. Go Australia!
Oooohhh! This is getting very exciting just like a climax in some disaster movie. Can’t wait for the ending.
Haha yer this sounds about right. Rich staying rich and the poor just keep on getting pushed to the outer suburbs. and you wonder why 94% of finance is investors lololololol. It’s because of this.
99% chance that kids going to end up doing an arts degree at a polytechnic institute overseas after staying at home till he’s 25 playing Xbox.
Good to know that when his dad dies he will claim dependant status then just use his dads estate to buy McDonald’s every night and get high. Lol seen it happen so do many times with professionals and their kids. They know how to work but they have no idea how to raise their children.
one call from RE ask if I would be intrested in selling as a house in my street was just put the market for 175k. despration has hit the towns in NW Victoria
It is now the fun phase where people behave more and more irrationally. Wonder when we are going to tip over the top. Will be a bumpy ride down.
The fastest way to transfer a $750k – $1m superannnuation fund from a lifetime ‘saver’ into the account of a lifetime ‘non-saver’ is for a 30 – 40 yo to purchase a house off a 50 – 65 yo and borrow the price difference ‘from a bank’. No tangible asset is changed in this equation other than the deposit account of the ‘non-saver’ and the loan account of the ‘saver’. There is still only one house at the end of the transaction.
When will this madness end?, for the vast majority of people their wages, are simply not keeping up with these crazy property prices. There must be some scary mortgages out there, and God help them if they happen to lose their jobs. What’s going to happen when the Australian economy starts going pair shaped?
Master Yoda – it’s only those that get in at the peak crazyness that will be hardest hit.
Only 3-4% of properties change hands each year and most property owners have significant equity.
BUT this madness will push many into financial ruin once this ponzi runs out of steam – its only a matter of time.
Personally, I’m happy to sit on the sidelines renting at a 2% net rental yield, saving and waiting.
@ Master Yoda:
“What’s going to happen when the Australian economy starts going pair shaped?”
Have you spoken to anyone who has been to Europe or the USA lately? Most people only go there on planned vacations. Those that go there to experience the place soon find that what is going on is far worse than the news presents.
The USA is screwed, Europe is screwed, Japan isn’t screwed on the same level:-Yet!
It will get as bad as we imagine. Just remember that people are using tomorrows money to pay for things today:- and these things are not true assets. Ever seen a house owned for 40 years with out any maintenance? Do cars, holidays, tv’s, furniture improve your future?
So if your using tomorrow’s money to live today, how is tomorrow going to turn out?
Remember all this money is FIAT money, it’s created by the banks out of thin air! They are buying houses with an (in theory) infinite resource…the only limit to how much these guys can borrow is purely the interest repayment, but even that is too much and then people refinance and borrow against the “equity” in an “asset” that they DO NOT LAWFULLY OWN and has risen in value only because of market conditions, not because like a good capitalist they added value.
When the day comes to pay back banks, remember, that people have already used tomorrows money to live in the past: their old faithful trick of remortgaging will fail and they will be left with an eviction notice that is stapled to a loan that still needs to be repaid.
I sincerely hope our states get their finances under control, because crime WILL spiral out of control. Severe financial stress will make usually sane individuals do stupid things.
I know families that have remortgaged and remortgaged and remortgaged to the point of insanity: Example: An initial $140K house, now has a debt tied against it of almost $500k, and what is to show? Not much to be honest: Two new falcons, now traded in, and a territory that was new, now out of warranty with no resale value, and a photo album of overseas trips:
Don’t get me wrong, you need to enjoy life: But this guys earns minimum wage in an unskilled job that is almost solely tied to Holden: ie. No holden, no income: No job prospects of any value. Two kids, a wife on part time retail income: Seriously, is there any chance they can pay back $500k? They have been tricked like most of the population. If/when they ever pay this back, it will be the result of living a terribly restricted life.
The system has been manipulated to set you up to fail: While we are a democratic western, capitalist nation, where almost anyone who seriously tries can live a fantastically wealthy life that most of the world can only ever dream of: The big corporations and banks have got hold of our political system, our education system, our welfare system and health system to trick you into thinking you can have it all while being a regular employee if your willing to risk a little with borrowed money.
It’s crazy, as a student of math’s who focused on chance: It’s clear the house always wins: always! The corporations, banks, politicians are the house: why let them set your fete?
MAKE YOUR OWN!
Australia is different, but only in the negative sense. We are essentially an one-trick pony. The only reason our housing market didn’t collapse during the GFC is because there were still loads of money floating around from the mining boom. With the end of the boom, the RBA tried to compensate with lower interest rates. There is no further option when interest rates hit bottom and the money supply stops expanding. Bye bye boom. Hello bust.
But the government, banks and other vested interests know the bubble can’t grow forever like this without all the foreign investment and massive immigration levels. That’s why we have them. So the guy with the $500K mortgage who works for Holden will lose his house, but some foreign investor or SMSF negative-geared investor will buy it. Or someone who has been previously priced out of home-ownership might buy it at a discount. As always, the last of the greater fools will suffer the most.
Matty as usual, you are spot on. You get it! It’s such a shame many others are not so enlightened.
All I can say is I’m very glad my only dependant is a 3kg dog. I decided years ago that there was no way I could afford to support children and give them what they need to thrive in this world. So I denied myself the desire for procreation. It’s probably one of the most sensible choices I’ve ever made in my life. I really feel soory for the young generations and the kids born into this messed up, unfair, greedy, self absorbed existance.
The best time to be born over the last century was 1940’s to mid 60’s, they may not have had all the gagets but at least they could house themselves on average salaries.
Here in Geelong you can start to see the cracks showing – rentals are up in numbers, and they stay unrented for weeks and months for some properties. high rents previously paid by willing tenants now reduced and still vacant. One particular property asked and got 375/wk 1.5yr ago. it came up market months ago, and went from 375 to 365 to 355 currently. 3 bd houses well under 300 sit vacant for months on end in our hood.
wonder when this will show up in the SQM numbers…
rural hobby farm properties are for sale all over the place, as are land parcels.
we have seen fair few job losses here as is well known to most, so as job losses and hours reductions mount, it will all come down.