Financial Armageddon!!

[Davo36]

Australia just cut interest rates for the 2nd time in 2 months... there is a variable rate in market in Aus now of 2.89% - almost free money

Well the thing is property prices will appreciate so that it still costs as much to own in the end.

And this is what they want, increasing property prices. Can't have them ever fall now can we?

[Don't believe the Hype]

Well the thing is property prices will appreciate so that it still costs as much to own in the end.

And this is what they want, increasing property prices. Can't have them ever fall now can we?

In Aus where there is a CGT which is a tax on value increases and a Stamp duty a % of the sale price, why would the government want house prices to come down? The government is essentially a silent share holder in EVERY house in Aus - they get their cut of the profits on sale.

On top of which in a buoyant property market people using their home as an ATM stimulate demand in the market for all other things - discretionary and non discretionary which helps the government with many of their measures with the exception of maybe Well being!!! They measure that in other countries ... right?

[JBM]

Yep. What is it they know but aren't telling us?

That GFC2.0 is coming down the line but hoping to push it off a few months with every cut hoping it will all just fix its self with maybe another world war etc

[Davo36]

In Aus where there is a CGT which is a tax on value increases and a Stamp duty a % of the sale price, why would the government want house prices to come down? The government is essentially a silent share holder in EVERY house in Aus - they get their cut of the profits on sale.

On top of which in a buoyant property market people using their home as an ATM stimulate demand in the market for all other things - discretionary and non discretionary which helps the government with many of their measures with the exception of maybe Well being!!! They measure that in other countries ... right?

Maybe, in like Bhutan or somewhere, but everywhere else it's GDP of course. Nonsense measure but there you go.

Yes, associated with stamp duty, the state governments are hooked on a constant turnover of properties, because they get say $40k each time someone buys one. So if house sales halve, their income from this (and it's gazillions) halves. And we know how all levels of governments love their money. So already they are wanting other sources of funding in Aussie i.e. other taxes to keep the money tap flowing.

[Davo36]

That GFC2.0 is coming down the line but hoping to push it off a few months with every cut hoping it will all just fix its self with maybe another world war etc

Well the US economy seems to be welded to the fact that they have to have constant war. The 'defence' industry is a huge part of their economy and so they require a list of new countries to invade. For 'defensive' purposes of course!

[Chris W]

And this is what they want, increasing property prices. Can't have them ever fall now can we?

In free markets, what the central government wants can be very different to what they ultimately get.

Look at property prices in:

1) Ireland 2008/2009
2) Japan late 1980's to early 1990's
3) Australia since 2018, particularly Perth, and some mining towns in Queensland
4) US 2008/2009
5) Spain 2008/ 2009
6) Hong Kong 1998-2003
7) Singapore 1998-2003

[eri]

which is why

those in the know

don't like free markets

they're working on a plan

from the outside, it looks a lot like "centralised economy planning"

but apparently, with enough kumbayas

and a focus on negative economic indicators like well-being (yeah, i know, how could that possibly work...)



it will work this time

https://en.wikipedia.org/wiki/Soviet-type_economic_planning

[eri]

Up to a third of homes in parts of Melbourne and Sydney are being sold at a loss

with the rate likely to climb higher as a combination of falling prices and owners wanting to offload their properties is wiping hundreds of millions of dollars from the market.

https://www.stuff.co.nz/business/wor...sold-at-a-loss

7.2 per cent of sales in the first quarter of this year have resulted in a capital loss for Auckland property owners.

That is compared to 3.1 per cent in the same period of 2018 and 1.5 per cent at the end of 2016.

But it's not only homeowners in the biggest city who are ending up out of pocket.

https://www.stuff.co.nz/business/111...eir-homes?rm=a

[eri]

Australians live in a time of low interest rates, low wages growth and low inflation, and they keep thinking this is an aberration.

What sort of world would Australians live in if their situation continues?

One answer can be found if you go north: Japan.

https://www.nzherald.co.nz/business/...ectid=12248846

[Davo36]

Australians live in a time of low interest rates, low wages growth and low inflation, and they keep thinking this is an aberration.

What sort of world would Australians live in if their situation continues?

One answer can be found if you go north: Japan.

https://www.nzherald.co.nz/business/...ectid=12248846

And that's if they're lucky and the whole shebang doesn't blow up.

[eri]

they

and we, in the rest of the G20? type economies

are following japan down the rabbit hole

of flat growth

from 2011!

https://www.theguardian.com/business...owth-viewpoint

[Perry]

Look familiar?

Only needs a couple of name changes to suit.

[Chris W]

New Zealand at risk of a house price crash: Bloomberg

New Zealand and Canada are the two countries with the most unsustainable housing markets in the world, according to Bloomberg.
Bloomberg economist Niraj Shah's "housing bubble dashboard" showed the two countries holding the top spots.
They have the highest cost of housing compared with wages, beating Australia, the UK, Norway and Sweden - which are also vulnerable.

New Zealand has the highest house price to rent ratio in the world, and the highest house price compared to income (a ratio of 156., while Canada has the highest real house prices and the biggest percentage of credit to households, with New Zealand just behind, according to Shah.

New Zealand household credit is the equivalent of 94 per cent of gross domestic product. That compared with 100.7 per cent of GDP in Canada, 76.3 per cent in the US, and Australia's 120.3 per cent.
House prices in New Zealand's biggest city, Auckland, have softened, but low mortgage rates may head even lower, with the potential to provide a boost.

The OECD recently warned that New Zealand's housing market continued to be the biggest potential issue for the economy.
"The main domestic risk is a housing market correction, though there is no evidence of oversupply," the OECD report said. "The effects of a contraction would be magnified by the elevated household debt levels resulting from sustained house price increases."


For full article refer https://www.stuff.co.nz/business/pro...rash-bloomberg

[Perry]

Semi-prediction noted.

[Don't believe the Hype]

New Zealand at risk of a house price crash: Bloomberg

New Zealand and Canada are the two countries with the most unsustainable housing markets in the world, according to Bloomberg.
Bloomberg economist Niraj Shah's "housing bubble dashboard" showed the two countries holding the top spots.
They have the highest cost of housing compared with wages, beating Australia, the UK, Norway and Sweden - which are also vulnerable.

New Zealand has the highest house price to rent ratio in the world, and the highest house price compared to income (a ratio of 156., while Canada has the highest real house prices and the biggest percentage of credit to households, with New Zealand just behind, according to Shah.

New Zealand household credit is the equivalent of 94 per cent of gross domestic product. That compared with 100.7 per cent of GDP in Canada, 76.3 per cent in the US, and Australia's 120.3 per cent.
House prices in New Zealand's biggest city, Auckland, have softened, but low mortgage rates may head even lower, with the potential to provide a boost.

The OECD recently warned that New Zealand's housing market continued to be the biggest potential issue for the economy.
"The main domestic risk is a housing market correction, though there is no evidence of oversupply," the OECD report said. "The effects of a contraction would be magnified by the elevated household debt levels resulting from sustained house price increases."


For full article refer https://www.stuff.co.nz/business/pro...rash-bloomberg

A couple of thoughts/questions...

is there any relationship between the best countries in the world to live and the price of property? NZ, Aus, Canada. Sweeden. Norway etc...

What is the rent to price ratio they're using. are they just looking at Auckland? The yields outside Auckland are still very strong especially relative to the risk free rate of return