Another rate cut is coming

[notpom]

And few more after that.

 

Iron ore plunges below $50.

 

http://www.news.com.au/finance/business/bad-news-for-australia-iron-ore-plunges-below-us50-budget-facing-3-billion-writedown/story-fnkgdg1h-1227288936290

 

"The falls have sparked speculation the Reserve Bank of Australia will cut interest rates again next week to boost the economy."

 

News.com think it is the bad news. In fact, the whole resource boom was a bad news. It has made a damage to the economygreater than WWII and all hostile activities of foreign spies brought together.

 

In short, resource boom:

1. Did not benefit any Australians except these holding mining shares

2. It did generate only handful of jobs, as all mining processes are highly mechanised and automated

3. It allowed RBA to keep interest rates artificially high, which resulted into two things:

a. Non mining sectors of economy largely destroyed

b. Building stagnation which lead to the housing crisis

 

Thanks God, this insanity depleting Australian natural deposits for a song has come to an end.

 

Now RBA has nothing else to do but cut rates to 0%. And this is not going to help - additional stimulus will be needed.

 

Low interest rates combined with the housing shortage can only result in one thing - property boom.

 

Last Saturday Auction Clearance rates in Sydney reached 88% - highest figure ever. This was despite the state elections and the record number of properties auctioned. Real clearance rates shot well above 90%, as for some obscure reason properties where auctions were cancelled prior still count as not sold, and for another even more obscure reason Sydney auction statistics include areas well outside Sydney.

 

Just a reminder for the people who did not follow my previous posts:

1. Australian property booms ALWAYS start from Sydney

2. After Sydney they ripple to the rest of the country

3. Adelaide starts booming approx 2 years after Sydney (which is now)

[Tamara (Homes Down Under)]

Thank you for sharing your wisdom.

I saw the news item about the falling iron ore price and the $3 billion hole in government funding.

 

If you would like to lend me some money I can buy some beachfront property:smile:

[Guest Husky]

Not good for those of us who are mortgage free with savings in the bank though!

[Keith & Linda]

Thank you for sharing your wisdom.

I saw the news item about the falling iron ore price and the $3 billion hole in government funding.

 

If you would like to lend me some money I can buy some beachfront property:smile:

 

I think you could build home like he does for a Tenner!

[Tamara (Homes Down Under)]

I think you could build home like he does for a Tenner!

 

What do you mean "a Tenner'? You could bring Poms to Oz for a tenner in years gone by!

[Keith & Linda]

What do you mean "a Tenner'? You could bring Poms to Oz for a tenner in years gone by!

 

And I think they have proved their worth:notworthy:

[Tamara (Homes Down Under)]

And I think they have proved their worth:notworthy:

 

So it was ten quid well spent then!

[notpom]

Thank you for sharing your wisdom.

I saw the news item about the falling iron ore price and the $3 billion hole in government funding.

 

If you would like to lend me some money I can buy some beachfront property:smile:

 

I would not mind couple of billion bucks myself.

In a current market to double it in 3 years is no brainer.

 

That would give you a possibility to pay your debt off and get on BRW rich list.

 

Dreams alone, there are some hard core mortgage brokers (not the usual garden variety) who can get a loan for almost anyone.

[notpom]

I think you could build home like he does for a Tenner!

 

If it is sarcastic - it is misplaced.

 

In fact I (as anyone else) can build a house for free. Look for free stuff on gumtree, scavenge through the builders' skips (they are very happy to give away surplus materials as they save skip space), demolitions, etc.

And you do not need to be an Oxford professor to lay the bricks or hammer the nail into a piece of wood.

 

If you can not do this, then your passage about poms worth every penny of a tenner is a bit of exaggeration.

[Guest Guest14361]

If it is sarcastic - it is misplaced.

And you do not need to be an Oxford professor to lay the bricks or hammer the nail into a piece of wood..

 

no you are correct for once...by the way if it's that easy.......have you built your own home:cute:or did you get the brickie and chippy to do it for you??

[Karen S-D]

Well, I'm inspired. How hard can it be? I was s**t hot at making the stuff on Blue Peter and I got an A once for a Ceramic vase I made in 3rd year...

[Jessica Berry]

When we left the UK in 2007 I had someone 'in the know' telling me that I shouldn't sell my property because property prices were going to double in the next 5 years. I didn't share their view and I sold up. Months after that prices started drastically dropping and since 2007 until now, I could return to the UK and buy back the property I sold for around a third less than what I sold it for. Of course this is not the case for everyone and everywhere in the UK, but that was my experience.

[notpom]

When we left the UK in 2007 I had someone 'in the know' telling me that I shouldn't sell my property because property prices were going to double in the next 5 years. I didn't share their view and I sold up. Months after that prices started drastically dropping and since 2007 until now, I could return to the UK and buy back the property I sold for around a third less than what I sold it for. Of course this is not the case for everyone and everywhere in the UK, but that was my experience.

 

Are you aware that current rate of growth in UK is about 16% pa ?

 

Unless you are in US where they have overbuilt to the extent of having 32 million surplus dwellings (which will take couple of generations to absorb) property will go up in value.

 

Yes, stupid Government (or central bank interventions) can cause irrational panic and idiotic temporary sell-offs among human herd, but at the end of the day property will double in price on average every ten years - and it is guaranteed as the fact that Sun will rise tomorrow.

 

To be precise this GFC "downturn" should have never happened in UK. It was just an artificial phenomenon - result of media scaremongering. And media does not do anything without a purpose - it is a business. And the purpose of the business - generating profits. Somebody stacked up on property sold by people who did not understand the game - and now they are having capital growth. And you don't.

Edited April 3, 2015 by notpom

[NicF]

Are you aware that current rate of growth in UK is about 16% pa ?

 

 

Not sure where you are getting your figures from but according to the office for national statistics the annual house price growth rate for the UK in January was 8.4% (http://www.ons.gov.uk/ons/rel/hpi/house-price-index/january-2015/stb-january-2015.html). Much of this growth was due to the increase in house prices in London and the South East. Prices elsewhere grew by 6.5% for the year.

 

If you look at the chart on this page http://www.ons.gov.uk/ons/rel/hpi/house-price-index/january-2015/stb-january-2015.html#tab-House-Price-Index-UK-Summary you can see that annual house price growth in the UK has not exceeded 15% in the last 10 years.

[NicF]

When we left the UK in 2007 I had someone 'in the know' telling me that I shouldn't sell my property because property prices were going to double in the next 5 years. I didn't share their view and I sold up. Months after that prices started drastically dropping and since 2007 until now, I could return to the UK and buy back the property I sold for around a third less than what I sold it for. Of course this is not the case for everyone and everywhere in the UK, but that was my experience.

 

We bought our house in the UK in 2004 in a market where house prices were raising practically daily. Houses were being sold before even being advertised. When we sold in 2012 we got back what we paid for it plus the cost of putting on an extension. Someone around the corner from us was having to sell their house over 10% less than what they paid as they had to sell and house prices had taken a fall since they bought and still had not recovered. I considered us to be lucky that although we bought while the market was on the up it was not at the very top and we didn't have to sell when it was at the very bottom so we didn't loose large amounts of money. And yet the whole time prices were rising in London. A bit like they are in Sydney at the moment.

[notpom]

Not sure where you are getting your figures from but according to the office for national statistics the annual house price growth rate for the UK in January was 8.4% (http://www.ons.gov.uk/ons/rel/hpi/house-price-index/january-2015/stb-january-2015.html). Much of this growth was due to the increase in house prices in London and the South East. Prices elsewhere grew by 6.5% for the year.

 

If you look at the chart on this page http://www.ons.gov.uk/ons/rel/hpi/house-price-index/january-2015/stb-january-2015.html#tab-House-Price-Index-UK-Summary you can see that annual house price growth in the UK has not exceeded 15% in the last 10 years.

 

Thanks, you are correct. UK is 9th of the fastest growing property prices at 8.4%. 8% is exactly the level of growth which gives you doubling in price at 10 year term.

 

Australia is 16th at around 7% for the last 12 months. The worst property in my empire did 16%.

[notpom]

We bought our house in the UK in 2004 in a market where house prices were raising practically daily. Houses were being sold before even being advertised. When we sold in 2012 we got back what we paid for it plus the cost of putting on an extension. Someone around the corner from us was having to sell their house over 10% less than what they paid as they had to sell and house prices had taken a fall since they bought and still had not recovered. I considered us to be lucky that although we bought while the market was on the up it was not at the very top and we didn't have to sell when it was at the very bottom so we didn't loose large amounts of money. And yet the whole time prices were rising in London. A bit like they are in Sydney at the moment.

 

Even in Sydney you can lose money on property if you do anti-intelligent things.

 

Can tell yo hundreds of stories. One guy has bought a house and decided to save on pest inspection. Then he decided to save on property manager.

Naturally, he has got undesirable tenants who were on bad tenant database. These people have learnt their lesson and after a year of hard times finding rental property they were scard to report anything to their landlord.

 

Their washing machine was leaking and they flooded the house, but they preferred to tell nothing. Landlord was happy, did not do inspections? so house frame got warped, then rot taken over and it sagged, and then termites moved in.

 

Tenants left, and the guy sold the house at the land price minus costs of demolition ($50K was the quote).

 

Guess who bought the place. Two days to remove roof tiles, two days to remove roof timber, a week to remove internal frame, two weeks to do a new frame inside the brickwork, three more month to do all internals. $20K later - brand new house for third of the price.

 

You have got to remember the foremost rule of real estate - never sell. Selling always a loss. You lose all the future value.

 

Selling property before you held it for at least 10 years must be criminalised - crime against oneself.

[Guest Husky]

Australia is 16th at around 7% for the last 12 months. The worst property in my empire did 16%.

 

Were you disappointed?

[Tamara (Homes Down Under)]

I wouldn't be disappointed if my empire returned 16% in a year!

[Guest Husky]

16% isn't too bad... Have seen worse... But then again have seen better!