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Cambodge said..

petermac33 said..
I have a 57 year old friend who lives in a 3 bedroom unit in Carlisle.

He lost his job of 20 odd years two years ago and is still unemployed. He is looking to downsize to a property of less than 300k. I told him to sell asap and rent but did not get past go.

His property at its peak was worth around 530K. He has put it up for sale and he told me last week he will not accept less than 490K - he could be waiting forever

This time,it does look like its not going back up.

Actually,I am predicting his property will be worth less than 400k soon - and possibly a lot,lot less.

Strangely, PM33's predictions aren't entirely swaying me.

To quote Nassim Taleb... "Talk is cheap.". Pretty much my reaction to every commentator - amateur or professional. Only pay attention to those with skin in the game... And only to what they do, not to what they say.

Yes, very true. Telling someone to sell is a call that is easy to make but different if you have to live with the outcome.

Unfortunately its also difficult realising a loss. If you were to somehow know that the market was going to fall apart its easy to sell and accept a loss, but if you think that it will be are uncertain, selling makes that loss permanent.

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FormulaNova said..

Cambodge said..

petermac33 said..
I have a 57 year old friend who lives in a 3 bedroom unit in Carlisle.

He lost his job of 20 odd years two years ago and is still unemployed. He is looking to downsize to a property of less than 300k. I told him to sell asap and rent but did not get past go.

His property at its peak was worth around 530K. He has put it up for sale and he told me last week he will not accept less than 490K - he could be waiting forever

This time,it does look like its not going back up.

Actually,I am predicting his property will be worth less than 400k soon - and possibly a lot,lot less.

Strangely, PM33's predictions aren't entirely swaying me.

To quote Nassim Taleb... "Talk is cheap.". Pretty much my reaction to every commentator - amateur or professional. Only pay attention to those with skin in the game... And only to what they do, not to what they say.

Yes, very true. Telling someone to sell is a call that is easy to make but different if you have to live with the outcome.

Unfortunately its also difficult realising a loss. If you were to somehow know that the market was going to fall apart its easy to sell and accept a loss, but if you think that it will be are uncertain, selling makes that loss permanent.

Agreed! And property has such high transaction costs (especially on the buy side) it makes it a much stickier investment for riding out a downturn.

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Haircut said..
does anyone know anything about the goldcoasts jewel highrise development holdups?

my 3rd hand info is there are two funding it, one was hongkong based which sold to chinese, and now the chinese are having troubles funding it and its more than multiplex and yuhu agreement issues?

They sacked 150 internal workers .. to replace with cheaper labour ..they can legaly do this as an agreement for labour hire signedby both parties with vietnam workers benifiting .. no need to test the market with adds etc .. was in the Gaurdian a few weeks back .the site agree ment is a bit over the top for the GC

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Storm Ahead said..
Those Auction results are not looking good!

We went to one yesterday, price guide (unofficial) 630+ (for land value) - Passed in. The house is a demolition job. Several nosy neighbours and four RE agents made it look like a small gathering.

Did my sums on this one - no way one could make this work at the asking price (unless the Bank was giving away free money....)

Interesting times ahead.....

Is this is a website you have visited and contacted the agents? www.horizongosford.com.au/

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bazz61 said..

Haircut said..
does anyone know anything about the goldcoasts jewel highrise development holdups?

my 3rd hand info is there are two funding it, one was hongkong based which sold to chinese, and now the chinese are having troubles funding it and its more than multiplex and yuhu agreement issues?

They sacked 150 internal workers .. to replace with cheaper labour ..they can legaly do this as an agreement for labour hire signedby both parties with vietnam workers benifiting .. no need to test the market with adds etc .. was in the Gaurdian a few weeks back .the site agree ment is a bit over the top for the GC

thanks. is their sacking a certainty? Could they be re employed but at a different rate, or overseas labour a sure thing now?

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ChristianBertl said..

Storm Ahead said..
Those Auction results are not looking good!

We went to one yesterday, price guide (unofficial) 630+ (for land value) - Passed in. The house is a demolition job. Several nosy neighbours and four RE agents made it look like a small gathering.

Did my sums on this one - no way one could make this work at the asking price (unless the Bank was giving away free money....)

Interesting times ahead.....

Is this is a website you have visited and contacted the agents? www.horizongosford.com.au/

It's a real house that I went to in GC which was passed in at auction. But get this.....NOW THEY ARE ASKING 735k WTF???

Maybe they are hoping that some SYD or MEL-ite will drop in and buy it while on holidays....Hey, C'mon, what's a Million'$$ here and there???? We are talking about Aussie property that ALWAYS goes UP! (Sarcasm).

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Haircut said..

bazz61 said..

Haircut said..
does anyone know anything about the goldcoasts jewel highrise development holdups?

my 3rd hand info is there are two funding it, one was hongkong based which sold to chinese, and now the chinese are having troubles funding it and its more than multiplex and yuhu agreement issues?

They sacked 150 internal workers .. to replace with cheaper labour ..they can legaly do this as an agreement for labour hire signedby both parties with vietnam workers benifiting .. no need to test the market with adds etc .. was in the Gaurdian a few weeks back .the site agree ment is a bit over the top for the GC

thanks. is their sacking a certainty? Could they be re employed but at a different rate, or overseas labour a sure thing now?

Cant help you there .. they can modify the design and retender work quite legaly .. will bankrupt some suppliers who preordered .. sad close to xmas

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Storm Ahead said..

ChristianBertl said..

Storm Ahead said..
Those Auction results are not looking good!

We went to one yesterday, price guide (unofficial) 630+ (for land value) - Passed in. The house is a demolition job. Several nosy neighbours and four RE agents made it look like a small gathering.

Did my sums on this one - no way one could make this work at the asking price (unless the Bank was giving away free money....)

Interesting times ahead.....

Is this is a website you have visited and contacted the agents? www.horizongosford.com.au/

It's a real house that I went to in GC which was passed in at auction. But get this.....NOW THEY ARE ASKING 735k WTF???

Maybe they are hoping that some SYD or MEL-ite will drop in and buy it while on holidays....Hey, C'mon, what's a Million'$$ here and there???? We are talking about Aussie property that ALWAYS goes UP! (Sarcasm).

A bit more info on this one as it's got me a bit wound up.

The property is a demolition job. It has rising damp and the slab appears to have settled below ground level. It's not worth renovating imo (done a few builds and renos in my time).

When I was viewing this property, a builder/developer was also interested, he offered 475k to the agent on the spot who subsequently said that they were looking for offers over 630k.
The property then went to auction and was passed in.
Now they are asking 735k.

All I can figure out is that they are overpricing the property in an effort to get 630k+ (ie. 735k - 10% discount for negotiation - sales commission and legal).

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Haircut said..

bazz61 said..

Haircut said..
does anyone know anything about the goldcoasts jewel highrise development holdups?

my 3rd hand info is there are two funding it, one was hongkong based which sold to chinese, and now the chinese are having troubles funding it and its more than multiplex and yuhu agreement issues?

They sacked 150 internal workers .. to replace with cheaper labour ..they can legaly do this as an agreement for labour hire signedby both parties with vietnam workers benifiting .. no need to test the market with adds etc .. was in the Gaurdian a few weeks back .the site agree ment is a bit over the top for the GC

thanks. is their sacking a certainty? Could they be re employed but at a different rate, or overseas labour a sure thing now?

So... wait.

Land gets sold to foreign developers, who sell to other foreign developers, who replace local workers with foreign workers, to sell to foreign investors.

I guess it's cheaper and safer than a military force.

Indeed.

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Haircut said..

bazz61 said..

Haircut said..
does anyone know anything about the goldcoasts jewel highrise development holdups?

my 3rd hand info is there are two funding it, one was hongkong based which sold to chinese, and now the chinese are having troubles funding it and its more than multiplex and yuhu agreement issues?

They sacked 150 internal workers .. to replace with cheaper labour ..they can legaly do this as an agreement for labour hire signedby both parties with vietnam workers benifiting .. no need to test the market with adds etc .. was in the Gaurdian a few weeks back .the site agree ment is a bit over the top for the GC

thanks. is their sacking a certainty? Could they be re employed but at a different rate, or overseas labour a sure thing now?

over seas labour hire ..... a lot is trade construction related but also health care .
www.theguardian.com/australia-news/2017/dec/19/revived-trans-pacific-trade-deal-undercuts-australian-jobs-market-unions-say

A Perfect Storm is heading our way as house prices fall, valuations lowering, tightening credit, some 40% of loans which are interest only maturing (approximately $400 Billion being converted to P&I over the next 3 years) and tighter regulation following the Royal Commission.

A Perfect Storm that does not look like abating but is rapidly gathering speed. The RBA has no room to further ease with the next move now being telegraphed as up (not that a rate cut would help).

Investors in particular are likely to be severely hit. The writing has been on the wall (so to speak) but few have paid attention.

Prices holding firm where I live in Sydney.

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Harrow said..
Prices holding firm where I live in Sydney.

No ones rushing for the exit yet, hence not too much movement. Most people won't sell now for a loss, so prices will continue to hold firm, but as soon as they need to sell that's when the party begins.

No chance of sitting on property if the IPs are foreclosed by the Banksters. The buyers will then offer less and drive prices down further destroying any equity that the investor may have.

Banks win. Investors lose.

Yeh and unless we want our dollar to capitulate, banks will have to raise rates to meet the normalisation of rates in the US.

Banks. We've mortgaged the earth to them through the enclosure of economic rent on land...

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Storm Ahead said..
A Perfect Storm is heading our way as house prices fall, valuations lowering, tightening credit, some 40% of loans which are interest only maturing (approximately $400 Billion being converted to P&I over the next 3 years) and tighter regulation following the Royal Commission.

A Perfect Storm that does not look like abating but is rapidly gathering speed. The RBA has no room to further ease with the next move now being telegraphed as up (not that a rate cut would help).

Investors in particular are likely to be severely hit. The writing has been on the wall (so to speak) but few have paid attention.

To be fair the writing has been on the wall a very, very long time.

Most investors would have a very sizeable buffer.

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Storm Ahead said..
Banks win. Investors lose.

There are no wins for the banks when property prices fall.

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Harrow said..
Prices holding firm where I live in Sydney.

Probably because where you live is primarily owner occupiers - and they're not selling yet.

Any international shock or unemployment rise will see an end to owner occupier security too.

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AUS1111 said..

Storm Ahead said..
Banks win. Investors lose.

There are no wins for the banks when property prices fall.

Yeah right....

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Adriano said..

AUS1111 said..

Storm Ahead said..
Banks win. Investors lose.

There are no wins for the banks when property prices fall.

Yeah right....

Just for the sake of my curiosity, how do banks win if property prices fall across the board?

My assumption is that if property prices fall across the board, there is no one that can really buy them as credit is more expensive and harder to get because of the risk.

If at the same time unemployment rises, then prices fall even more. If you get enough people defaulting, how can the banks profit?

So, your $400K home drops to $200K. If the person defaults on the loan, who is the bank going to sell to? Its okay when its an individual house that sells into a market where there are still buyers, but what if there is an oversupply of houses?

I just hope the banks are coordinated enough to avoid this scenario, but I am worried its just a bunch of people that look after their own little section and don't realise that together they have an impact.

Banks win because they will also go after your primary assets which includes your family home.

Put another way, Banks will try to get their money back at the expense of the investor. The investor is on the hook for the entire amount + all interest.

If Labor win next election they will probably buy unsold units for public housing bailing out the major developers.

GC property seems to have hit a wall in the areas that I am following. Asking prices/seller expectations not meeting the market - yet.

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Storm Ahead said..
Banks win because they will also go after your primary assets which includes your family home.

Put another way, Banks will try to get their money back at the expense of the investor. The investor is on the hook for the entire amount + all interest.

Lets put it yet another way. How many significant assets do people really have above their family home?

So, the market falls, and lots of owner occupiers are in negative equity and the banks want to sell up. What do they get? Well they get half of what the loan is worth, plus a car, a boat, and a jetski.

End result, the banks have lost out.

The more homes that are foreclosed the lower the prices are for the remaining stock.

So, why would a bank want to do this when they can keep earning from regular interest payments as people try and keep supporting their houses.

I can't see any long term benefit that the banks would get out of this. In the short term they will try and increase the interest rate, but at some point it becomes a dangerous thing, and I suggest that its not something the bank would want.

If you had no family home, and an investment property that was now negative, what would you do if it was now worth half and the banks wanted to foreclose? Would you battle on and pay the bank back $200K for a long time, or would you try and declare bankruptcy and start again without the stress?

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dmitri said..
If Labor win next election they will probably buy unsold units for public housing bailing out the major developers.

Is there some precedent for that down in Victoria? Here in NSW developers seem to be on any side of politics, depending on who is in power. Council corruption up here seems to have been based on no one political team.

Why would you bail out major developers anyway? The biggers ones will survive and the smaller ones will die off until next boom time.

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Storm Ahead said..
GC property seems to have hit a wall in the areas that I am following. Asking prices/seller expectations not meeting the market - yet.

Well, given your choice of username, would you report otherwise anyway?

"There are no wins for the banks when property prices fall" .................... absolutely bang on, the banks definitely try to limit their exposure to bad debt. The last thing they want is to repossess an asset in a falling market.

However, I was reading somewhere the other day that the banks are actually in a bit of a lending frenzy trying to sell money quickly before regulation limits their activities. This seems to verify AUS1111's claim that Australians are servicing their debts quite well and the banks aren't too worried yet.

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Paddles B'mere said..
"There are no wins for the banks when property prices fall" .................... absolutely bang on, the banks definitely try to limit their exposure to bad debt. The last thing they want is to repossess an asset in a falling market.

However, I was reading somewhere the other day that the banks are actually in a bit of a lending frenzy trying to sell money quickly before regulation limits their activities. This seems to verify AUS1111's claim that Australians are servicing their debts quite well and the banks aren't too worried yet.

Theres a difference between what the banks want and what they get. Yes they would prefer business as usual with homeowners wallowing in maximum debt as property prices rise or even just stabilise after a circa 10 to 15% pull back. This gives them a nice earnings growth as interest margins widen on global rate rises and little negative equity to deal with.

BUT we arent the US and you cant easily walk on your debt by handing back the keys. The banks medium term still win even in a property collapse- they get housing stock that they gradually unwind ala the US banks post 2007, they get whatever other assets the defaulter has and they get a piece of their future earnings to boot. Much better deal than the US banks had.

So yeah some short term pain but into the next cycle they still win and in a leveraged way too. If/when we get the collapse the banks will be a far better buy by multiples than picking up the mortgagee in possession houses on offer. IMHO

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FormulaNova said..

dmitri said..
If Labor win next election they will probably buy unsold units for public housing bailing out the major developers.

Is there some precedent for that down in Victoria? Here in NSW developers seem to be on any side of politics, depending on who is in power. Council corruption up here seems to have been based on no one political team.

Why would you bail out major developers anyway? The biggers ones will survive and the smaller ones will die off until next boom time.

I am not sure TBH.. just thought would be cheaper to buy at discounted prices, rather than building from the scratch..
They built a lot of public housing around Melbourne during Rudd/Gillard era, you know..