Aussie Negative Equity

Discussion in 'Markets & Economies' started by AustralianAustrian, Mar 20, 2012.

  1. AustralianAustrian

    AustralianAustrian Active Member

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  2. Silverthorn

    Silverthorn Well-Known Member

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    Qld didn't fare well. I wonder how much of that is to the cyclones and flood.

     
  3. QLDSILVER

    QLDSILVER Member

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    LOL love it - the United States of Australia, after finishing laughing I got kinda scared.....
     
  4. fishball

    fishball New Member Silver Stacker

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    The % of FHB in negative equity is massive compared to home buyers in the 90s/00s.

    In hindsight renting would've made MUCH more sense.
     
  5. malachii

    malachii Well-Known Member

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    As would be expected - only taking 2 years out of a property cycle is like saying that I bought silver yesterday and it's gone down today so I've made a loss. Just noise really.

    Not sure how you could say this. Negative equity may mean a loss of $1 through to many thousands. If we assume a drop of 5.5% (the stated average drop since houses peaked - doesn't give a year but you would probably assume 2009/2010 so 2 years or so) on a $300 000 house that is only $16 500. Not much really in the grand scheme of things and less than spent on rent. I know you can split the numbers up many different ways to prove all sorts of things but I think to say it makes MUCH more sense to rent is a bit strong and misleading.

    malachii
     
  6. fishball

    fishball New Member Silver Stacker

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    The base value might not be a lot (a mere $16500) but for those FHBs taking on 30 year home loans the interest would be sizable. I know one would argue 30 year loans are dumb and you'd endeavor to pay it off before then anyway but you're still looking at a sizable amount above the $16500, maybe $30000 interest over the course of the home loan.

    I think there's a post somewhere here with the numbers before (wasn't written by me; might've been hawkeye?) and he was far more conservative than 5.5% yet still came out ahead by renting.

    I maintain what I posted, renting makes more sense financially if you aren't pissing the spread between rent and mortgage up the wall.

    By the way this is all in hindsight from the POV of the buyers (as I stated), I am not talking about a broad generalization of RENT >>>>> BUYING in case you thought I was.
     
  7. malachii

    malachii Well-Known Member

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    I agree that there are ways to make renting numbers look better - but to say that in hindight renting makes much more sense because of negative equity is a bit strong (IMHO).

    If you are looking at a 30 year investment (as you state) then running the numbers after just 2 is misleading. I'm not sure I know of anyone saying that houses will be equal too or cheaper in 30 years time than now. I know that if we run the numbers over the last 30 years we'll have cries of "unfair - we have just come through a bull market" but if you pick any 30 year period over the last 200 years in Australia I don't think you'll come up with any period where houses are worth less.

    Not saying that in some cases renting wont be better - just saying that the blanket statement of "In hindsight renting would have made MUCH more sense" is misleading.

    malachii
     
  8. malachii

    malachii Well-Known Member

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    Sorry fishball - I think you've tidy up what I was trying to get across in your edit.

    malachii
     
  9. richietheb

    richietheb New Member

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    Yes there's rent but there's also the mortgage. It doesn't matter how you fiddle the numbers. You'd have been MUCH better off renting.
     
  10. fishball

    fishball New Member Silver Stacker

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    Haha no problems, I might've failed at articulating myself properly, bit tired.

    I agree long term it would be probably a winning investment.

    Merely saying that in the past year or two rent would be winner, that's kind of like saying ASX outperformed Gold during X-Y though so I get where you're coming from.
     
  11. renovator

    renovator Well-Known Member

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    hes always editing things with afterthoughts one day he'll think about it enough & not have to edit it. :p: Do you do that so if anyone looks through your old posts you look smart fish ? :lol:
     
  12. renovator

    renovator Well-Known Member

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    10.......9......8......7....6.....5.....4......3......2.........................
     
  13. fishball

    fishball New Member Silver Stacker

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    I edit to fix up any typos or errors I make because unlike you I do not find it acceptable to butcher the English language and misuse common terms like "you're, your, their, they're, there" and so on.
     
  14. renovator

    renovator Well-Known Member

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    & .....1 gotcha fishball :p:
     
  15. boston

    boston Well-Known Member Silver Stacker

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    +1 You're a man after my own heart. :)
     
  16. renovator

    renovator Well-Known Member

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    I think your spelling mistake gave your post a whole new meaning fishbreath :D
     
  17. garmag

    garmag Member Silver Stacker

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  18. jackbrown

    jackbrown New Member

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    Most peope buy on mortgage for no better reason than they believe they are too stupid to save and invest wisely. The banks instilled this mentality into them decades ago and it is why most fhb bought in the last decade, even though it was obviously a better time to rent. Capital gains is all anyone is seeking now and that is allusion because you can't sell unless you go live in a pup-tent in the bush.

    Renting is a vastly superior investment for the average worker now, renting and investing the surplus fot the future. Housing is over, for decades, and anyone holding it will suffer loss, whether they live in it with a motgage or have an Ip. Even those that own outright would be better selling up while they can and putting that money into something safe for their future. But they wont, they will wait like the Americans and Spanish and Irish.... owners waited. Until it is too late.

    You can't teach an old dog new tricks.
     
  19. renovator

    renovator Well-Known Member

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    Yes jackboy its all good until your old & have to live in a boarding house or in public housing . something to look forward to eh ?
     
  20. richietheb

    richietheb New Member

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    I agree with you jackbrown.

    It's simple logic. There's a lot of changes coming to the west. I used to speak to a lot of people about how I see all this unfolding. They think I'm nuts!!!!!!! Though one mate with about ten investment properties came around the other night to ask what I thought given he's lost most of his ridiculously highly geared equity.

    It's six years ago I started saying things were getting ahead of themselves. Too early obviously. I sold a house five years ago and a unit in a separation fire sale three years ago for about 80% of what I could sell it for now. Agggghhhh....

    Australia's sold way too many assets including mining, manufacturing and farm land. Wages will suffer a huge amount in the near future when everyone eventually works out we can no longer live the cherished lives that have relied on asset sales and debt. Now we not only need to repay the debt but live on less. It will be very painful for some. I know lots of people with their super still in high growth funds, they have investment properties and so many fricken toys they owe lots of money on. Look out.....
     

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