Falling $AUD

[GT0132]

Originally Posted by Polyal

Yeah but our property "wealth" is false...the prices were going up while the times where good and people dont want them to go down when the poo hits the fan? Why?

Because many bought at the height of the boom to get into the market and borrowed to the max . Should values plummet their bank will be calling on them to top up their equity which they obviously wouldn't be able to afford to do..So mortgagee sale ensues, property sells for much less than the loan amount, borrower indebted to the bank for an asset he/she no longer owns.

[zilo]

Originally Posted by CQB-241

Housing drops and huge numbers of people lose their shirts and get massive issues with negative equity. Then cashed up buyers (possibly foreign) buy up the stock and rent it back to the earning but asset-depleted Aussies. Not a good wish IMO. Sounds like too much of the rest of the country.

One of those cashed up buyers will be me.

Always on the lookout for a bargain.

[zilo]

As the dollar drops our housing becomes ridiculously cheap for the chinese.

[Polyal]

I agree with you blokes, but there is an engrained culture in Australia of property always going up. I'm youngish so its always been that way, but when you look at other countries clearly its not the case.

Unemployment is up, dollar is down, general economy not traveling well and yet property holds and still climbs? Seems odd.

[GT0132]

Originally Posted by Polyal

I agree with you blokes, but there is an engrained culture in Australia of property always going up. I'm youngish so its always been that way, but when you look at other countries clearly its not the case.

Unemployment is up, dollar is down, general economy not traveling well and yet property holds and still climbs? Seems odd.

Yes mate it's an amazing phenomenon. Part of the reason could be that the RB keeps lowering rates to stimulate the economy . In old times that strategy worked as business owners would borrow more to invest , expend their business and create jobs. Consumers would borrow more to buy retail and those wanting to enter the property market would. This time all its doing is increasing the demand for property and pushing prices up while businesses are still, by enlarge, tightening their belts and consumers aren't spending .

[CoupeKing]

Double post

[SB076]

I'll stick my neck out again, dollar will be $0.70 by the end of the year, property will remain stable (no increase no decrease - in some areas that will be the exceptions) Unemployment will be slightly higher - confidence will remain down and we will have another rate cut

[MITCHAY]

Someone always wins or loses on interest cuts. No one complains when they are on the upside of it. Luckily for me I am or about to be on the good side of it this year.

[ILLaViTaR]

Once those rates go back up (that's the only way they can go as of now..) all the greedy investors with the highest geared loans liquidate and house prices become affordable again.

What are they going to do to bandaid the bubble this time? 0% interest? Soon enough they'll be giving you money to borrow..

The market for the last 4yrs has was baby boomers rolling around in mud having the time of their lives but now the age of entitlement looks to be over. Low rates are the beacon of a crashing economy, an attempt to stimulate a crashing economy.

[Pepscobra]

0% interest rates (or close to it) isn't that unfathomable... Hasn't the US and Japan being doing it for years?

The way I see it, with Mining (expansion projects mainly) on the gradual decline, the Govco needs to do something to keep people employed. Biggest industry atm is the building/construction industry... Best way to keep that active is to support new building with low interest rates. In the longer term it may result in a housing surplus which will push down prices. It'll work for the short term... And the sad thing is that's all the Govornment care about; short term achievements to win elections :(