Property slump drives the biggest wealth drop in seven years

Post to Facebook on 30/3/19 at 4:49 PM
Commenting on “Property slump drives the biggest wealth drop in seven years”
https://www.theage.com.au/business/the-economy/property-slump-drives-the-biggest-wealth-drop-in-seven-years-20190328-p518l1.html

There is a time buy, and a time to sell. I have been saying repeatedly that those buying a property when interest rate is low, especially those belong to the hands-to-mouth category, you have to be prepared to cop the consequence.

The Coalition government will announce a Budget surplus before the May election. It does make sense that the national economy is in good shape and yet the Australian community is facing the worse real estate calamity?

Can the ABS and RBA statistics and economy and real estate gurus prophecies be trusted?

Liars, liars, liars. They all need nose surgery!

The following is not written in the original blog.

Should any home owners fear increasing debt ratio (debt-equity ratio)? For those who buy and live in the house for a long haul should not worry, provided they have a steady or increasing income after the purchase of the property, unless they have to liquidate this major asset soon due to some financial needs including changing to another bigger one.

I do not like to have unnecessary stress caused my property investment. I am no longer in the high income bracket, and negative gearing is not something I can benefit much from. Making a loss to reduce my tax obligation is far less attractive than making money to pay tax.

Unlike some other form of investment, the transaction costs of buying and selling of properties are fairly high. In addition, the holding cost of a property can also be fairly substantial. These costs, without doubt, will decrease the worth of the property when the property market slumps.

Melbourne first-home buyers need to save for nearly six years for average house deposit

Post to Facebook on 29/3/2019 at 8:44 PM
Commenting on "Melbourne first-home buyers need to save for nearly six years for average house deposit"
https://www.domain.com.au/news/report-melbourne-first-home-buyers-saving-for-less-time-to-get-into-the-market-813478/

My first house was about $40,000, but my pay after university graduation was $5,200 pa. I could only borrow up to 60% from the bank, and no other mortgage companies existed.

Bank managers were like gods, and real estate agents then, well, were just about the same like how real estates agents behave now!

The following writing is not included in the original blog posted to the Facebook group.

Is it likely that a first-home buyer couple can save $282,000 as deposit in 13 years and 11 months to buy an entry-level home of $1.41 million in suburbs including Balwyn, Glen Iris, Kew, etc? I am not sure how realistic this is and how it is calculated, because there are so many unknown parameters, such as inflation rate, wage increase, technological advancement, immigration intake, and local and global economic situations. However, one thing for sure is that anyone relying on just working in their normal day-to-day job and saving hard with minimum expenditure will not achieve it. Within this time, the family may grow in number with extra mouths to feed and a lot more expenses incurred.

I advise first-home buyers not to aim high unless they foresee they have a windfall coming, or else they should get in the real estate market as soon as they are able to pay for the deposit of a landed property, even if it is a small one. Before any new members come along, work much harder to pay off the mortgage and get that burden off the shoulder.

For a log time, I have stressed that one must invest in landed property NOT airspace such as in multi-storey apartment. It is also important NOT to buy in a fast rising market, because most of the properties are overpriced.

Thank you for reading.

RBA research shows rate cuts inflated the property market

Post to Facebook on 11/3/2019 at 6:27 PM
Commenting on “RBA research shows rate cuts inflated the property market”
https://www.theage.com.au/business/the-economy/want-a-credit-squeeze-with-that-fall-in-house-prices-20190103-p50pg2.html

Posted to The Facebook (11/3/2019) on 11/3/2019 at 6:27 PM
Commenting on "RBA research shows rate cuts inflated the property market"
https://www.theage.com.au/politics/federal/rba-research-shows-rate-cuts-inflated-the-property-market-20190311-p513ak.html

I am right all along that rate cuts by RBA and keeping it at the same low rate of 1.5% for 27 months actually caused the property prices to rise, even without the injection of overseas investment.

Today's news confirms that "Reserve Bank research has found its cuts in official interest rates drove up house prices,..."

I neither have a PhD degree, nor own a crystal ball that helps me to foretell the future of the real estate market, but my observation, logic, and zero-base assumption give me the edge over the so called experts.

I did stick with my "prediction", and my numerous comments regarding the wrong moves by RBA have not been published by The Age. I am glad that I have not disappointed by readers and followers of my various FB groups, page and website, because they bear witness of my writing.

For the past many years, I accurately worked out the rise and fall of the market, and blogged in black-and-white.

I did study economy, and taught the subject in TAFE. No doubt many complex mathematics formulae look daunting and impressive for most people. In reality, there are a lot more intangible factors that cannot be expressed in symbols and used in calculations. I believe the model is as complex as in weather forecasting. or could be more so, because human behaviour is more unpredictable than physics.

There are a number of points in the article that I do not agree on. One that stands out like a sore thumb is about interest rate rise. The consumer confidence MUST BE restored if the economy is to move upwards. According to the research, it suggested any future interest rate rises would be very difficult unless the economy was in a particularly strong position. Why? Please explain.

Have the economists and politicians been spreading fake news about the strong economy in Australia for the past few years?

I shall leave my other thoughts in future blogs.

Thank you for reading.